Building a Stronger Future
Several years after the housing collapse, the real estate market begins showing signs of a turnaround as it shifts with the times.
Five-bedroom Colonial in North Stamford boasts three fireplaces, a gourmet eat-in kitchen, media room, pool and more. (Phyllis Doonan & Associates – William Raveis Real Estate)
Finally some good news. It may not be by leaps and bounds, but the 2012 housing market in Stamford showed evidence of steady improvement, all while the amount of inventory continued to climb. And more snazzy new rental units cropping up around downtown are adding fuel to the argument that the worst of the housing downturn is truly behind us.
“I think 2012 was a hard-fought year, but a very good one,” says Barbara Hickey, a residential agent with William Pitt Sotheby’s International Realty. While she worries about some local employment trends, Hickey calls the growth last year “fast and furious,” especially in the final months, when people might have been unloading their houses to avoid perceived tax hikes this year.
Though not every sector has thrived—much of the commercial market, namely office buildings, still struggles to find tenants. What is not in dispute is how much markets have mended since the Great Recession. Indeed, from January to December of 2012, 536 single-family homes had sold in Stamford, as compared with 437 in the same period in 2008, during the worst of the real estate slump, which represents a 23 percent jump. That’s according to data from the Greater Fairfield County Multiple Listing Service, prepared for us by Hickey’s office.
Activity has also shown particular improvement in the last year. In 2011 there were 482 sales of single-family homes, an 11 percent uptick in business from 2011 to 2012, the data shows. The condominium market has slowly improved too, though the 382 sales in 2012 were still less than the 492 in 2008, according to the data.
Prices, however, haven’t staged as much of a comeback. The average sale price in Stamford last year for single-family homes was $644,000, down from $659,000 in 2011, a 2 percent slip. When compared with 2008, when the average was $779,000, it appears prices have rather a long way to go before climbing back to where they were before the downturn.
Brokers say that the price slippage can be blamed on softness in the luxury market, which consists of Stamford homes at $2 million or more; those mansions have struggled to sell at their asking price, even as other sectors are doing well. For her part, Hickey says that homes priced from $300,000 to $800,000 are “a sweet spot right now.”
“Renters are being squeezed by rents that keep going up and up and up, and they can often buy something for less than they pay in rent,” she says, adding that people who have sat out the market finally seem to be coming down off the fence. By way of example, she cites a couple that started looking in 2011 and finally bought a three-bedroom in Shippan, their first home, in the “mid-$700,000” range.
The rental market continues to dominate the scene. All told, according to Marcus & Millichap, the commercial real estate brokerage firm, 1,600 new units have opened downtown since 2010, and another 1,300 are planned through 2014.
RMS Companies continues to show confidence that affluent renters, including twentysomething professionals joining the local workforce, are still out there. Last year the development firm opened Parallel 41, a 124-unit building at 1340 Washington Boulevard with amenities that include a 4,500-square-foot roof deck and a common room with a self-serve cappuccino bar and vintage Pac-Man video game. The apartments, which start at $2,100 a month, are 78 percent leased after six months, says Randy Salvatore, RMS’s president.
His blitz of downtown continues nearby. A sixteen-unit rental, converted from an office at 1200 Bedford Street, is fully leased. Another, with fifty-eight units, is planned for 163 Franklin Street, with marketing to begin in June, Salvatore says. He’s also now seeking zoning approval for another development with fifty-eight units, this time at 750 Summer Street. »
While some former renters may be purchasing, whole other waves are arriving from outside Stamford, says Salvatore, who estimates that 75 percent of his tenants are newcomers to town. And if the economy strengthens further, Salvatore says all his units can easily be converted to condominiums. “What’s happening is positive all around,” he adds.
Others eager to tap the demand for pricey rentals include the F. D. Rich Company, which plans to erect a twenty-one-story tower on lower Summer Street. The 222-unit rental project, called The Summer House, will break ground in June on the property that currently houses Maryann’s, the Mexican restaurant, says Tom Rich, F. D. Rich’s president.
The building, which has all the necessary city approvals, will contain mostly studios and one-bedrooms (and some two-bedrooms) to cater to the young-and-single demographic that he too expects will keep migrating downtown. Prices will range between $1,700 a month for the studios and 3,500 a month for most of the two-bedrooms.
Rich downplays the suggestion by some critics that the surge in new rental units might be creating a glut of supply. “I think it will be clear sailing for all these projects,” he says, adding that his father, Robert, a longtime developer who passed away last November, would have seen the housing as validation of his urban renewal dreams. Robert Rich had always predicted that apartments would be the last piece of renewal to fall in place, if downtown was re-created successfully.
Separately, 2012 was an important milestone for Rich’s Trump Parc, which has struggled to find buyers since its completion in 2008. Rich sold fifty-six units there in 2012, making the property more than 50 percent sold.
Changing the Landscape
Other game changers are helping to redefine the skyline. Trinity Financial, a Boston-based developer, is planning phase two of Park Square West, a $79 million fifteen-story project that had been delayed for years. Those 194 apartments will rise on lower Summer Street on the site of the parking lot next to the Majestic Theater, across from Park Square West, the 143-unit property owned by Seaboard Properties.
Bullishness last year about the rental market led Seaboard, a residential and commercial landlord, to buy Park Square West from Corcoran Jennison, the developer that had been attached to the Park Square West development project when it was halted after the completion of phase one. Units are being renovated as tenants move out, says Greg Stanton, Seaboard’s vice president, and the street-level retail space welcomed an LA Boxing gym this winter.
A development at the former home of the The Advocate at 75 Tresser Boulevard is back on track. A 344-unit rental building from the team of Summit Development and Greenfield Partners is rising there.
Meanwhile Building and Land Technology (BLT) shows no signs of easing off the gas in its plan to reinvent the South End with the massive Harbor Point project. Plans are now before the city for BLT to build both 102-unit and 257-unit rental towers on Market Street, which would complete BLT’s housing goals for the multi-block Yale & Towne lock factory site.
Apartments are mushrooming in other parts of Stamford, too, and not all of them should break the bank for renters. For instance, Richard Freedman of Garden Homes Management Corp., known for its affordable homes, is planning an eighty-eight-unit complex at 1032 Hope Street. Freedman is no doubt buoyed by the success of earlier projects—at 111 Prospect Street, 25 Third Street and 800 Summer Street—which took just a few months to lease up.
But the most interesting rental story of 2012 might be the phoenix-like return of Highgrove, the luxury condo designed by Robert A. M. Stern, almost left for dead after the housing collapse. It’s now a rental property, and last fall, the eighteen-story tower, which was proposed in 2004 but never had residents, began welcoming people like Nicholas Wilson, who rents a two-bedroom.
Yes, some damage occurred in the years when the tower was empty. Sunlight damaged wood floors in some places, prompting renovations, Wilson reports. But with private elevator access and Sub-Zero refrigerators, the units at Highgrove are “like nothing else on the market,” he says.
As of December, says Matt Clickman, Highgrove’s property manager, thirty leases had been signed out of ninety-two units, which run as high as $8,900 a month for the three-bedroom penthouse.
Commercial leasing hasn’t been so lucky; Stamford’s top buildings had a 26 percent vacancy rate in the fourth quarter of 2012, according to Cushman & Wakefield.
Still, some moves last year hint that matters may turn around. Charter Communications, a national cable operator, inked a lease for 75,000 square feet at 400 Atlantic Street as it relocated from St. Louis. But since that deal is technically a sublease—the two-floor space is controlled by UBS, the nearby bank, brokers explain— the deal won’t move the needle on the vacancy rate.
But the state is surely trying to lower that rate. Charter received a $6.5 million low-interest loan to encourage them to come to town in exchange for creating at least 200 jobs, all part of Governor Dan Malloy’s Next Five incentives program.
A similar package was dangled in front of Bridgewater Associates, the huge hedge fund. To get it to relocate from Westport, Gov. Malloy offered $115 million in aid, but it may be too soon for landlords and other beneficiaries to get excited about the move. BLT has yet to build Bridgewater’s $750 million, 850,000-square-foot office, and the building still needs key city approvals, like a rezoning, which might be tough to secure after continued controversy since BLT demolished a South End marina last year. Even so, the hefty amount of state grants and tax credits flowing to Stamford so far have appeared to make a difference in the commercial real estate market. An earlier iteration of Next Five, called First Five, doled out $20 million to NBCUniversal/Comcast for its NBC Sports Group facility on Blachley Road. And last summer, Deloitte, the financial services firm, received a $14.5 million grant to expand its existing presence at South End’s 333 Ludlow Street, which is owned by BLT and Lubert-Adler, a Philadelphia fund.
At the same address, BLT also scored when Starwood Hotels relocated there last year from White Plains, New York, after a $90 million aid package, which Malloy helped cobble together while Stamford’s mayor.
Worth noting, brokers say, is that new supply could be undercutting the existing market, like One Harbor Point Square, which has tens of thousands of available square feet. White elephants also linger, like 695 East Main Street, which has 614,000 square feet of empty space. But since BLT purchased the building for $30 million last winter, it has begun an extensive renovation, which suggests its long-dormant hallways could be filled with workers again soon.
No doubt there is cause for concern, but the relocations of all those blue-chip companies could have a spillover effect by drawing more potential homeowners, renters and smaller commercial tenants to the city, says Jay Hruska, a broker with Cushman & Wakefield. “The vacancy should be taken with a grain of salt,” he says. “It’s not so terribly doom and gloom.”
Focusing on smaller commercial tenants is the gist of Seaboard’s strategy; its One Atlantic Street is 95 percent full, says Greg Stanton. The secret? Tenants who need just 2,000 square feet. Pack enough of them in and a building can easily fill up. “We are a local hands-on operator,” Stanton says, “and we believe in getting deals done.”