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February 20, 2023 Deal Watch

NY firm’s prefabricated apartment developments could help fill CT’s affordable housing gap

RENDERING | CONTRIBUTED A proposed apartment complex by Vessel Technologies was denied by the Rocky Hill Planning and Zoning Commission. The developer plans to submit a revised application.

New York development firm Vessel Technologies Inc. is moving into Connecticut and bringing a novel approach to tackling the state’s housing shortage by quickly and efficiently building “attainable” units geared toward middle-income residents. 

Vessel has one 30-unit building under construction in New London, along with proposals for 30 apartments in Rocky Hill and an 80-unit building in Simsbury.

All three projects follow a similar formula of primarily one-bedroom apartments targeted at residents who don’t qualify for subsidized housing but for whom luxury or even market-rate rents are out of reach.

Vessel founder and CEO Neil Rubler said this type of “missing middle” housing is geared toward working-class people like firefighters, teachers, municipal employees, young people and senior citizens.

Neil Rubler

“I hear from medical institutions, they can’t get residents, from parents whose kids can’t move back to their hometown” because they can’t find affordable housing, Rubler said.

Affordable housing has become a top priority of state officials, especially amid a prolonged workforce shortage that has left Connecticut employers with more than 100,000 open jobs.

Lack of available and affordable housing is seen as a detriment to the state’s growth prospects.

Gov. Ned Lamont’s recent budget proposal nearly doubles the state’s investment in affordable housing development to $600 million over two years. His plan aims to incentivize developers to build 6,400 housing units during that time period. 

Prefabricated units

Vessel Technologies, founded in 2017, is looking to fill Connecticut’s housing gap by not only building attainable units, but doing so in a fraction of the time of traditional apartment builds, Rubler said.

Vessel’s construction model relies on prefabricated units that are more “panelized” as opposed to modular.

Rubler and Vessel Executive Vice President Josh Levy best describe it as “the IKEA method,” where panels that make up a building — like walls, ceilings and floors — are built off-site, broken down, packed and shipped flat, then reassembled on-site.

Each Vessel building follows a near identical architectural and “optimal” design and engineering blueprint, reducing the time and cost for each development, Rubler said.

Units are “designed to come together in well thought-out ways with limited tools,” he added.

A Vessel building can be ready for occupancy in under a year from breaking ground as opposed to the traditional time frame of 18 to 24 months for market-rate or luxury apartments. 

Vessel’s approach is also less intrusive to a community than a traditional build with less truck traffic and noise and fewer construction workers, Levy said.

Lower costs for design, shipping and building mean Vessel can charge lower rents, Levy said.     

Rubler said Connecticut’s missing middle includes renters with median incomes between around $60,000 to $75,000.

Developers are “hardly producing any units targeted toward this demographic,” Rubler said. 

The Simsbury plan calls for 24 of the 80 total units to be rent-restricted for 40 years. Monthly rents for an affordable one-bedroom would range from $1,054 to $1,265, and between $1,302 to $1,563 for a two-bedroom unit. 

This is Vessel’s 80-unit apartment development being proposed on Hopmeadow Street in Simsbury.

Other units would likely start around $1,650, which is still attainable to young professionals and Vessel’s target market, Rubler said.

In Rocky Hill, a Class-A rent is about $2,000, with Vessel rents at around $1,700.

Vessel wants to build this 30-unit apartment building in Rocky Hill.

Vessel executives said they hope to target additional Connecticut markets.

“We’re hoping communities will invite us back, there is so much need for this,” Rubler said.

Rubler has been a prominent developer and landlord in New York for years and received some media attention in the past, including for a dust-up more than a decade ago with then-Attorney General Andrew Cuomo over tenant-eviction practices.

Municipal, employer needs

New London Mayor Michael E. Passero said Vessel’s model checked a lot of boxes on his city’s housing- and development-needs list.

Michael E. Passero

Thirty-five percent of New London’s housing stock is considered affordable, a much higher percentage than many other Connecticut municipalities. Still, the city has a need for more affordable workforce housing, even as it’s in the “middle of a market-rate boom,” Passero said.

One 208-unit, market-rate development currently under construction already has a 600-applicant waitlist, the mayor said. 

Passero said the Vessel model fits into the “sweet spot between subsidized and market rate” housing.

New London has three colleges in the city and two more in the area; a hospital and others in surrounding towns; and a nearby major employer, General Dynamics Electric Boat, which is in need of thousands of new workers as it ramps-up production to fulfill a multibillion-dollar contract with the U.S. Navy to build a new fleet of ballistic missile submarines.

Electric Boat officials have cited the need for more affordable housing in order to fill those jobs. 

Vessel also targets leftover or hard-to-develop sites, such as the New London location, Passero said.

The Bank Street property has been undeveloped since a fire nearly 40 years ago left it looking like the “missing tooth” in the city’s downtown streetscape, he said.

Developers shied away from the area because of the economics and logistics of building within that tight space — something Vessel is able to accomplish with its small footprint and modular method, Passero said.

Donald Poland, managing director and senior vice president of urban planning at East Hartford real estate advisory firm Goman+York, said modular building concepts aren’t new but are less common in Connecticut, particularly for multifamily developments.

Don Poland

Vessel’s approach, he said, is reminiscent of the 1940s suburban building boom in New York and New Jersey that relied on an assembly-line construction model with scores of trade workers — foundation layers, carpenters, plumbers, electricians and roofers — going from house to house.

This prefabricated or manufactured approach is beneficial in supplying more housing for working-class households with a fraction of the construction time and cost, Poland said.

“It cuts down on cost and that translates into affordability,” he said. 

The post-pandemic rental market also has more one-bedroom renters than ever, with empty nesters and young professionals competing for units.

“We've seen a shift in the market toward multifamily over single family and there's a need for housing at various price points, or various income levels,” Poland said. “So, even if it's not technically affordable housing, if it's more moderate rate that's more accessible to a middle-class household or a working-class household, then that's a good thing. Any product that can be added to the marketplace will be beneficial.” 

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