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March 18, 2024 Deal Watch

More multifamily developments sprout in Berlin, as town inches closer to affordable housing goal

PHOTOS | CONTRIBUTED Farmington-based Metro Realty has just filled the last units in its new $20 million Flats at Little Brook multifamily development, at 833 Deming Road, in Berlin. The 12-building property features 88 one- and two-bedroom apartments.

The town of Berlin has been experiencing an apartment boom, with hundreds of new units coming online or set to break ground this year.

In fact, there’s been so much interest in new multifamily development in the suburban town of nearly 20,200 residents, that planning officials in 2022 instituted a temporary moratorium on new projects.

Jim Mahoney

Berlin Economic Development Coordinator Jim Mahoney said the moratorium, which expired last August, came into play after the number of new apartments approved in just a few years nearly doubled the town’s existing multifamily housing stock. It also came as the town was weighing changes to its development and affordable housing strategy.

Part of the town’s focus, Mahoney said, has been to encourage transit-oriented development near its Hartford Line train station, which debuted in 2018. More broadly, the town is trying to create more of a live, work and play environment that attracts new residents and businesses.

Berlin’s new residential units have, or will include a mix of market-rate and affordable studio, one- and two-bedroom apartments, divided among a half-dozen or so projects.

Farmington-based Metro Realty has just filled the last units in its new $20 million Flats at Little Brook multifamily development, at 833 Deming Road. The property features 88 one- and two-bedroom apartments spread over 11 buildings. A 12th building features communal space and a fitness center.

Ben Tripp

Thirty percent of the units are deemed affordable, which means they are leased at discounted rents to those earning 50% to 60% of the area median income, according to Ben Tripp, Metro Realty’s development director.

Market rate units are demanding rents between $2,000 and $2,400, higher than Metro Realty anticipated when it first conceived of the project back in 2019, Tripp said.

That reflects the significant demand for housing in the Greater Hartford region, he said.

“Housing is one of the few areas where it’s difficult to produce enough supply to satisfy the demand,” Tripp said. “There has been probably more market rate development in central Connecticut, more multifamily housing development in central Connecticut, in the past 10 years, than in several decades before that.”

The Flats — especially ground-level, walk-out units — have been popular with older adults, as well as residents who are moving into town or the state, or delaying major life decisions like buying a home, Tripp said.

Shifting market

The Steele Center is another major mixed-use project in Berlin, led by Southington-based Newport Realty Group/Lovely Development. When fully built out by 2026, the approximately $20 million development will include 70 apartments and 19,000 square feet of commercial space.

The project’s first two phases are complete, with 16 market rate apartments and most of the commercial space leased in a 22,000-square-foot building at 9 Steele Blvd.

Town officials recently held a ribbon cutting for the Hop Haus brewery and gastropub on the main floor of 9 Steele.

Tony Valenti

A separate 1.5-story building, at 10 Steele Blvd., contains nearly 8,000 square feet of commercial space on the first floor, and four apartments above. Only one commercial space and a single apartment remain available for lease in that building, said Tony Valenti, of the Newport/Lovely team.

Work will soon begin on a 1,650-square-foot, free-standing commercial building at 29 Steele Blvd., where a coffee/bagel shop has already signed a lease for the entire space, including an outdoor patio.

The largest 50,000-square-foot building, at 55 Steele Blvd., will include 50 apartments and is in the early stages of construction, Valenti said.

Market forces — including supply chain issues, inflation and rising interest rates — have impacted the Steele Center project since it was first proposed in 2019.

Last year, the development team reconfigured the types of units, eliminating some two-bedroom apartments in favor of more studio and one-bedroom units, which are seeing greater demand, Valenti said.

“It varies market by market,” he said. “Some can’t build enough two-bedrooms, but we didn’t see as much demand for two-bedroom lease ups.”

Another recent change was the inclusion of more affordable apartments. Twenty percent of the units at 55 Steele Blvd. will be affordable, rented at 80% of the area median income.

Adding affordable components to housing projects is important because it opens the door to federal and state grant funding and local tax abatements. Such incentives are critical, especially at a time when bank lending has tightened and higher interest rates have increased project costs, Valenti said.

The Steele Center project has a 10-year tax abatement agreement with the town of Berlin.

Other Berlin housing projects include a 72-unit luxury apartment development called Turnpike Ridge that will be located at 104 Episcopal Road, behind the Acura of Berlin dealership on the Berlin Turnpike. That development, which has a completed retail component, is being led by Executive Auto Group owner John Orsini. Construction on the residential portion is just getting underway.

Plans have also been approved for Riverwalk Berlin, a 200-unit luxury apartment development that will be located on the Berlin Turnpike. Work has not yet started on that project, but Rocky Hill-based contractor, builder and manager Commercial Services Realty is already taking lease applications.

Another developer has proposed a four-story, 100-unit multifamily development at 522 Berlin Turnpike.

Workforce housing

Meantime, even in a community receptive to new housing, challenges remain.

Another developer, Pat Snow, founder of Premier Building & Development, recently sued the town of Berlin, claiming the Planning and Zoning Commission illegally rejected his plan to build a 52-unit, mixed-income apartment project on the Berlin Turnpike.

He proposed to replace the decades-old Plaza Motel property with the six-building Spruce Brook Apartments, which would include 16 affordable units.

Snow’s limited liability company, 1906 Berlin LLC, sued the town, arguing the Planning and Zoning Commission failed to properly apply the state’s affordable housing law, known as 8-30g.

The law allows developers to sue towns that reject certain affordable housing projects. Municipalities are exempt from legal liability if 10% of their total housing stock is affordable.

Town officials declined to comment on the pending suit.

Chris Edge

However, Berlin Economic Development Director Chris Edge said the town has focused on encouraging affordable housing.

Since around 2019, the town’s Planning and Zoning Commission has been asking for at least 20% of units in new apartment projects to be set aside as affordable “because we want to provide workforce housing,” Edge said.

Edge said Berlin is about 50 units short of meeting its 10% affordable housing threshold.

New housing development is a win for Berlin, Edge added, because it can help the town attract new workers who can fill open positions at various local employers, especially manufacturers like AVNA industries and Tyler Manufacturing.

“It’s a perfect fit, because right now homeownership is incredibly challenging throughout Connecticut,” Edge said. “So, this gives people an opportunity to live in town, work in town and then, who knows, long term, maybe buy a house (in town).”

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