New home construction focuses on apartments
In Fairfield County, new home construction focuses on apartments
Published 8:45 pm, Wednesday, April 2, 2014
The days of developers building large tracts of single-family homes in Fairfield County -- confident that they would snapped up by buyers -- may be over, but the desire for more new apartments continues to keep the construction trade busy, as the millennium generation seeks out urban housing and baby boomers look to downsize.
Some young adults can't afford a down payment on a house, while others prefer to rent a new upscale apartment in a downtown atmosphere. And their baby boomer parents, seeking a less-cluttered lifestyle, may be looking for much the same housing in an urban environment or a location within walking distance of shops and restaurants.
That is what Boston-based Trinity Financial was considering when it planned Park Square West, a 209-unit complex in Stamford scheduled for occupancy next spring.
Built for convenience, the 15-story building will have 6,000 square feet of ground-floor retail space, and apartments ranging from studios up to three bedrooms. Trinity is also scheduled to start building a similar 207-unit tower next door. The company has pegged the total cost of the two buildings and improvements to the nearby Summer Street garage at $130 million.
According to a Downtown Special Services District survey, young professionals dominate the demographic profile of Stamford's downtown rental market, according to Maixuan Phan, senior project manager at Trinity.
"This is obviously an important audience," she said, "but we think the prime location and quality of our building will also appeal to a broader audience of people -- including baby boomers -- who don't want the burdens of home ownership or car dependence, yet still prefer an active, sociable and walkable lifestyle that they can get from an urban environment."
Stamford was a prime location for the project because of its importance as a business hub in the New York region and access to mass transit.
"It has become increasingly appealing as a place to live for people who work in and around Stamford, and for some who are priced out of the New York rental market," Phan said.
Other major apartment complexes that are under way in Stamford include The Summer House, a 23-story, 226-unit complex on Summer Street, developed by Thomas Rich, also a partner in a mixed-use project with New Jersey-based Ironstate Development that will include about 700 apartments. Construction is expected to start this year.
New leasing at The Key
Work on 75 Tresser by developer Andy Montelli is well under way. The five-story Stamford property will include 350 apartments, fitness center, club room and media room.
Building & Land Technology, developer of the 80-acre Harbor Point mixed-used complex at the south end of Stamford, last month started leasing The Key at Yale & Towne, the latest apartment complex in the development.
Monthly rents at the 107-unit complex at 110 Towne St., start at $1,825.
Construction has started at 120 Towne St., a 252-unit complex, and BLT has changed plans for a hotel at Harbor Point, deciding to convert the project into a 20-story, 240-unit complex, according to Ted Ferrarone, Harbor Point chief operating officer.
There is a large demand for apartments in Stamford as the city continues to grow as a business center, he said.
"More than 50 percent of apartment dwellers come from out of state. We're seeing a big demand for apartments in Stamford. In the past 10 years, the city has transformed itself into a 24-hour city," Ferrarone said.
In Norwalk, two major apartment construction projects are in different stages -- Merritt on the River South -- a 132-unit complex is planned by BLT on Glover Avenue -- and the first phase of Waypointe, a 460-apartment complex with 60,000 square feet of retail and restaurant on West Avenue in Norwalk developed by Greenwich-based Belpointe Capital, is well underway and should be finished in 2015.
Belpointe just received city approval for another 127 apartments and plans to submit a proposal another 69 units soon. Plans eventually call for a total of 90,000 square feet of retail and restaurant space.
Some of the apartments are already being leased, said Paxton Kinol, Belpointe managing director and partner, commenting that apartments provide a better value proposition for a developer than condominiums.
"Values of condominiums have not rebounded more than 5 or 10 percent since the bottom of the recession," said Kinol, a firm believer in the attributes of the Waypointe apartments. "I believe in building these apartments in Norwalk and keeping them forever."
In Bridgeport, Darien-based Forstone Capital is in the final stages of a full historic rehabilitation project that is transforming the long-vacant Mechanics & Farmers Savings Bank in the center of downtown Bridgeport to a modernized commercial and residential building.
The entire 25,000-square-foot first floor will be the new headquarters for Fletcher Thompson, an architectural, engineering and interior design firm. The second and third floors have been converted to 30 one-bedroom apartments, that will be available in May with rental rates starting at $1,000.
The site is ideally located for tenants seeking easy access to transportation and activities, according Scott Raasch, director of business development at Forstone, noting that it is within walking distance to downtown office buildings and entertainment venues such as the Webster Arena.
"The Bridgeport Intermodal Transportation Center, as well as a ferry port for convenient access to Port Jefferson, Long Island is only 100 yards from Landmark's front door," he said. "The location also allows commuters easy access to the interchange of Interstate 95 and Route 8/25. As one of the largest and most involved investors in the city, we are devoted to the revitalization of downtown through adaptive reuse, historical preservation and renovation of the current infrastructure. The M&F building has always been an important landmark in the city due to its architectural design and central downtown location on Main Street, but sat vacant for over two decades."
Apartment construction is driving much of home building across the county, according to Joanne Carroll, spokesperson for the Home Builders & Remodelers Association of Connecticut and publisher of Connecticut Builder Magazine.
"Banks in the last year have been most interested in lending to builders of rental units," she said, commenting that apartment living is well-suited to young professionals working in the region. "Millennials are more transitory and don't want to buy yet. The age of the average home buyer has gone up from 34 to 36. Retirees are downsizing and renting."
Referring to state Department of Economic and Community Development data, Carroll said municipalities in Connecticut issued building permits for 533 housing units in January and 171 in February -- based on reports from 128 cities and towns that issue data monthly. Of those a total of 340 were for single-family homes.
In the first two months, Stamford issued permits for 234 units, while Bridgeport issued one.
"Builders are encouraged. There's a lot of new development," Carroll said. "The total for 2014 is almost 47 percent over January and February of last year. There's no doubt that the rental market will be strong for the next few years. We should do well compared to last year. In a healthy environment, we have about 11,000 permits in a year."
While apartments are the trend in 2014, developer Randy Salvatore, president of RMS Construction in Stamford, is hedging his options.
He expects to finish construction of The Verano, a 58-apartment complex on Summer Street in Stamford by May 1, and is building Copper Square, a 136-unit townhouse and duplex development on Stony Hill Road in Bethel. He also expects to soon start construction of Mayfair, a 70-unit rental townhouse in Danbury.
Copper Square, with its 48 duplexes and 88 town houses ranging in price from the low $300,000s to the upper $400,000s, should prove popular, according to Salvatore.
"There's a lot of pent-up demand there," he said. "Everyone is building rentals. People can buy with as little as 5 percent down. I think we'll get first-time buyers, as well as step-down buyers. It's maintenance free. It's a lifestyle."
On the west side of Danbury, a mix of apartments and condominiums are being built at The Reserve, a 545-acre planned neighborhood development near Interstate 84.
Rivington, a development that will include 1,000 condominiums and townhomes, is being developed by Toll Brothers. It joins Crown Point, a 466-unit complex which opened its first phase seven years ago.
BLT also is involved at The Reserve, completing the first phase of its 470-apartment Abbey Woods project.
The projects are targeting employees of area companies like Boehringer Ingelheim, GE Capital, Praxair, Cartus and FuelCell. Only a short distance away PepsiCo and IBM are located in Somers, N.Y.
Single-family home construction still has a future in Fairfield County, said Maureen Hanley-Bellitto, president of the Fairfield County Home Builders & Remodelers Association, and senior vice president for Fairfield County at TD Bank's Wilton offices, but she said banks have tightened their lending practices for home builders.
"It's very tight on a spec basis," she said, commenting that she is not surprised to see the surge of apartment construction. "I've been in banking 20 years. It never ceases to amaze me. Apartment construction explodes after every downturn because people are afraid to buy or because of a foreclosure can't buy. When the economy improves, vacancies will occur in these new apartment buildings."
Developers would be wise to construct apartment buildings that can be easily converted into condominiums, Hanley-Bellitto said.
Building practices have changed since the recession, she said.
"McMansions have seen their day. Smart construction is the trend with more efficient homes and smaller footprints," Hanley-Bellitto said. "The new buyers aren't looking for 5,000 to 7,000 square feet anymore. This is a generation very mindful of our environment."
But Peter Gaboriault, owner of Bear Paw Builders in Westport, developer of high-end single-family homes in lower Fairfield County, said he expects 2014 to be an improvement over 2013.
"It's been trending up. It's certainly better than 2013 and 2012," said Gaboriault, who built two homes in 2013 and expects to build three in 2014. "These are in the $3 million to $5 million range. In expect that two will be spec and one will be custom. There was no financing during the recession for specs."
Most of his construction projects require the purchase of a building lot with a house already on it, requiring that it be razed. One of those lots could cost in the $1 million range, according to Gaboriault, who is also vice president of the Home Builders & Remodelers Association of Fairfield County.