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August 19, 2024 Deal Watch

Vessel Technologies’ CT multifamily development portfolio aims to be showpiece for national expansion

HBJ PHOTO | HANNA SNYDER GAMBINI Josh Levy is the executive vice president of Vessel Technologies, which has a growing multifamily development portfolio in Connecticut.
By Hanna Snyder Gambini

A New York-based, upstart multifamily housing developer that entered the state nearly three years ago is preparing to bring its first Connecticut project online this fall, with several more in the pipeline as it faces some growing pains amid ambitious expansion plans.

Vessel RE Holdings — an affiliate of Vessel Technologies — is nearly ready for tenants to occupy a five-story, 30-unit apartment building in New London.

It also has projects in various stages of development in Cheshire, Rocky Hill, Simsbury and Avon, with nearly 350 new apartments planned, and some already under construction, but none yet occupied by tenants.

The company, which has completed one project so far in Trenton, New Jersey, has touted a novel approach to addressing the state’s housing shortage: it uses prefabricated panels in its building design, a model that is supposed to allow for quicker builds — in eight or nine months vs. two years — at a lower price.

The New London project, however, didn’t meet that shortened time frame. It broke ground in spring 2023 and was originally set to debut last fall, but is still awaiting tenants.

Vessel Executive Vice President Josh Levy said he expects residents to begin moving into the building by next month, and that future Vessel projects will move more swiftly once initial construction wrinkles are ironed out.

“New London was our first production version building and as a product company striving for excellence, we felt it was imperative to move slowly to document each stage of the process and use the opportunity to improve on all aspects of the materials and design,” Levy said in a recent sit-down interview with the Hartford Business Journal. “This learning was carried over into our other developments and improved our precision and timelines.”

The pipeline

Vessel’s small, energy-efficient apartments are “attainably priced,” rather than strictly affordable. That means they are built for middle-income professionals like first responders, teachers and other residents who don’t qualify for subsidized housing, but for whom luxury or even market-rate rents are out of reach, Vessel CEO and Founder Neil Rubler said.

A rendering of the two-building apartment complex Vessel has planned in Rocky Hill.

Vessel’s designs incorporate green technology, like solar panels, heat pumps, LED lighting, low-flow water fixtures and landscaping. Large windows allow for more natural light, and the units, most of which are one bedroom, are equipped with smart-home technology for heating, continuous air filtration and energy-efficient appliances.

Vessel’s next project likely to come online will be in Cheshire, where a five-story, 70-unit building at 146 Realty Drive, off Route 10, is underway after breaking ground in November 2023.

The building will have 66 one-bedroom apartments and four two-bedroom units, with rents likely to be 20% below market rate. Twenty-one of the units will be affordable.

Levy said he expects that project to be ready for occupancy by the last quarter of 2024.

A Rocky Hill development, at 125 Henkel Way, is Vessel’s largest to date. It will feature two, four-story buildings and 96 mostly one-bedroom units, with 29 set aside as affordable. That’s slated to come online in the first quarter of 2025, Levy said.

Other projects in Simsbury (44 units at 446 Hopmeadow St.) and Avon (64 units near Route 44) are expected to break ground late this year, or early next year. A 42-unit development at 37 Hartford Ave., in Granby, is in the permitting process.

Vessel is backed by investors, such as Miami-based homebuilding company Lennar and investment firm Mosaic General Partnership, Levy said. Its construction lender has been JPMorgan.

Construction delays haven’t been the only roadblock Vessel has encountered in Connecticut.

Many of the firm’s initial project proposals have been revised and scaled back following some resistance from local land-use boards.

For example, the Simsbury project was originally pitched as a four-story, 80-unit complex, but faced strong opposition from town residents over project scope and density. The scaled-back, 48-unit plan was able to move forward following a lawsuit settlement.

In Rocky Hill, Vessel first proposed a five-story building on Main Street with 30 units, but that plan was denied by Planning and Zoning officials who cited concerns over traffic flow, inadequate parking and electrical grid capabilities.

Vessel initially sued Rocky Hill, but both parties came to an agreement that relocated the project to a vacant, six-acre parcel along Henkel Way, which will allow for a larger development.

Levy said Vessel carefully selects sites where housing is needed, and he hopes other towns will seek out and embrace the firm’s model as more of its projects come online.

A model of a Vessel building.

In New London, Vessel’s modern, modular apartment complex sits in stark contrast to most of the 19th-century buildings downtown. Mayor Michael Passero said he’s supportive of Vessel’s model due to the great demand for attainable housing.

Vessel also targets leftover or hard-to-develop sites, such as the long-vacant New London location, at 174 Bank St., which has sat empty and undeveloped for decades, Passero said.

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

While the development has taken longer than originally outlined, it still moved faster than traditional construction, Passero said. There was a learning curve for the developer and town.

Passero suggested Vessel could use more prefabricated plumbing systems. Also, with the advanced technology in Vessel’s building design, it took some time to sync with municipal building codes, Passero said.

Nationwide growth

Levy said Vessel targeted Connecticut because of its demographics, with many desirable cities and towns, young people moving into urban and suburban areas, and the continued demand for attainable housing.

Part of the company’s strategy is to develop several projects as “proof-of-concept” showpieces. Eventually, the firm wants to move away from project development and become more of a product supplier for other developers to use the Vessel model across the region, and eventually nationwide.

Vessel recently announced a partnership with California-based multifamily real estate investor and operator Avanath Capital Management LLC, which is looking to develop 5,000 Vessel-style units across the country over the next five years.

“What we always intended to do was to be a seller of a system that empowered other people to be able to develop their sites and to become local owner-operators in their communities, activating properties that were not easy to develop,” Levy said.

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