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April 29, 2024 Deal Watch

New Haven remains bullish on apartments as record year — with 1,000+ units coming online — projected

Contributed The Square 10 project, with its $400 million price tag, will transform the downtown New Haven landscape. The multi-phase, mixed-use project on the former coliseum site on South Orange Street will add hundreds of new apartments to the city’s inventory, with 200 expected to come online this summer. It is just one of several ambitious housing and mixed-use projects in the works for New Haven.

New Haven is poised to have a record number of new apartments come online in 2024 from several high-profile projects.

More than 1,000 new units will be available for rent in 2024, marking one of the city’s largest single-year residential expansions in the past two-plus decades, according to economic development officials.

Since 2014, the city of New Haven has added at least 3,500 new affordable and market rate apartments. There’s another 3,500 units in the works for the next few years, not including the 1,000 apartments expected to debut in 2024.

That raises an important question: Can the city absorb all those new units without vacancy rates rising and rents being impacted?

A recent report by Marcus & Millichap Real Estate Investment Services projected a rise in apartment vacancy rates in New Haven County this year.

The report said, “Brisk supply gains will drive vacancy to 6.2% by the end of this year, the highest rate noted since mid-2012, when the metric recorded a multi-decade peak of 8.1%.”

However, New Haven economic development officials say the city will have no problems absorbing the new apartments.

Ginny Kozlowski

Ginny Kozlowski, CEO of New Haven’s Economic Development Corp., said contrary to the report’s predictions, the new units coming online “are too few. We have 87,000 jobs in New Haven, we need more workers and more places for those workers to live.”

New Haven has historically had low apartment vacancy rates, around 3%, according to Marcus & Millichap data.

Steve Fontana

Those are expected to hold, especially as job creation remains strong and New Haven continues to offer a high quality of life, said Steve Fontana, the city’s deputy economic development director.

“We’re seeing apartments filling up quickly,” he said.

For example, the third phase of the city’s Audubon Square development, which obtained a certificate of occupancy in March for 63 units, is already more than 60% leased and should be fully leased by May, according to the developer.

The Audubon is a $75 million, multiphase, mixed-use project that first launched in July 2018, and has since brought online a total of 470 market rate units. The developer is Norwalk-based Spinnaker Real Estate Partners.

Developers working in the city say new builds are seeing lease-up times cut in half, down to around three or six months now as opposed to roughly nine months to a year about a decade ago, Fontana said.

New Haven is seeing strong demand for all kinds of units, including smaller studios and one-bedroom apartments, as well as two- to three-bedroom units for families, Fontana said.

“The demand is there, and developers wouldn’t be coming here if the demand wasn’t there,” he said.

A rendering of the Square 10 project.

Other major city apartment projects set to come online this year include:

  • Square 10, a $400 million, multiphase, mixed-use project on the former coliseum site on South Orange Street by LWLP New Haven development group, which will add a total of 500 units, with 200 apartments coming online by this summer.
  • DSEL Properties is building 102 market rate units in a mixed-use project on Orange Street, set to open later this year.
  • The Archive, by Chicago-based developer CA Ventures, will add 166 units in two new mixed-use buildings on Chapel Street by this summer.
  • Other major projects in the works around the city include 130 units at 500 Blake St., in the Westville neighborhood; and 150 units in the mixed-use Dixwell Plaza redevelopment.

Low vacancy rates expected to hold

Victor W. Nolletti

Victor W. Nolletti, executive managing director of investments for Institutional Property Advisors, a division of Marcus & Millichap, said New Haven will see a fair amount of new supply entering the market, but the city’s historically low apartment vacancy rates should hold stable, in the 3% range.

The city has been adding new apartments for years, and they are filling up quickly, Nolletti said.

New Haven — which has a population of just under 140,000, making it the second-largest city in Connecticut — benefits from a strong employment base that includes Yale New Haven Hospital, higher-education institutions such as Yale and the University of New Haven, and a biotech and research sector, he said.

Nolletti said there’s a natural ebb and flow in the market, and “there was a good stretch from 1990 to 2005 when there was very little new construction, a good 12 to 15 years with very few units. Now, they’re just exploding.”

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