A Real Recovery
Much like the effort to push a boulder up a hill, Stamford’s housing market over the past several years has struggled, gaining several inches only to roll back a few.
“2013 was very hot. We’ve seen a major shift,” says Melanie Healey, the owner of NewBridge Properties, a real estate brokerage firm.
Although investor purchases explain some of the activity, home and condo sales are also being driven by people relocating to work for companies like NBC Sports Group, which cut the ribbon on its new Blachley Road headquarters last spring; 600 people work there, according to NBC, which is among several businesses to have set up shop in recent years. After a few months at their new office, Healey adds, “they say they realize that Stamford is a pretty fun and sophisticated city.”
Mindful of past predictions of recoveries that didn’t amount to much, some are cautious. “We’re not there yet,” says Mayor David Martin, who was sworn in last December. “There are still people challenged by foreclosures. But the market is trending in a positive direction. We may have taken three steps forward, and one step back, but at least we’re moving forward.” The glass-half-full crowd can cite favorable numbers to bolster their case. Last year 702 homes sold in Stamford at an average price of $664,000, according to data from the Greater Fairfield County Consolidated Multiple Listing Service prepared by NewBridge Properties. In contrast, there were 597 sales at an average price of $636,000 in 2012, the data shows, though the average time homes remained on the market stayed about the same, just more than three months.
Condos, which suffered disproportionately during the downturn, also appear to have posted gains. Last year 562 sold at an average sales price of $327,000 according to the listing service data, while 445 sold at an average of $322,000 in 2012.
What’s helping the bounce-back is that the market is “filling in from the bottom,” says Ronald Malloy, an agent with William Pitt Sotheby’s International Realty. That is to say, he explains, that the strongest activity has been with smaller-price-tag properties, especially those below $500,000 found in neighborhoods like Glenbrook and Springdale. This, in turn, has stabilized the general market and moved more buyers off the fence. “What we saw last year was a market no longer dropping, and in fact we found ourselves with multiple offers on some homes,” Malloy says.
Barbara Hickey, another broker with William Pitt Sotheby’s, says this type of “from the bottom up” recovery is a typical indicator that things will improve further. “Now that we truly have a sustained recovery, we are seeing significant demand in our condo market and entry-level single-family home market, as well as what I call ‘the meat of the market,’ the $500,000–$800,000 single-family home range. It is this segment of the market that is driving the overall improvement.”
If the market had an Achilles heel it was in the trophy category, or those homes priced for $1 million or more, explains Malloy. In order to sell, luxury properties sometimes had to slash their prices up to 30 percent over the course of their listing, he adds. In other words, a home purchased for $1.5 million in 2006 at the peak of the last up-market might get just $1 million today because “a new market bottom has been set,” he says. Plus, also working against some of those properties is their rural settings north of the Merritt Parkway when what’s in vogue are in-town locations.
Another factor is continued concern about the job market, says Gail Stone, another William Pitt Sotheby’s realtor. “Many luxury properties have been purchased [in the past] with bonus money, and that money has generally decreased,” she says. “People are still fearful of corporate shrinkage, downsizing and mergers, all of which can result in the loss of jobs.”
These concerns resulted in less borrowing and spending adds Hickey. “Buyers in the luxury market are in that category because they are higher wage earners; they have capital and they wish to preserve as much of that capital as possible in the event of job loss or other economic fluctuations,” she says. “They want manageable monthly housing expenses, and a smaller house and grounds means lower monthly carrying costs across the board. It’s very common today for couples who are both wage earners to use just one salary to base their buying power on, so that in the event one loses a job, or decides to stay home with children, there is virtually no financial impact.
“Buyers today are consistently buying 10 to 20 percent less than what their borrowing power will allow, which is in very sharp contrast to years [before] 2006.”
Despite any softness in the luxury market, it improved in 2013 anyway. There were 101 sales for $1 million or more in 2013, as compared with seventy-one sales in 2012, according to data from William Pitt Sotheby’s, even if the sales-to-list price ratio last year was 94 percent, indicating that most sold for below list price.
While the sales market has strengthened in Stamford, fancy, gleaming rental towers continued to sprout like mushrooms after rain, as they have in the years since the recession began. “Stamford has really evolved into a twenty-four hour urban location,” says Ted Ferrarone, COO of Harbor Point, the massive mixed-use neighborhood in the South End which, once completed, will include roughly 4,000 apartments for rent. “There’s no city like [Stamford] in Fairfield County. It has great diversity, a great nightlife, a great downtown, an active waterfront and parks. People want to live here.”
To give people what they want, the Harbor Point developer, Building and Land Technology (BLT), opened the 228-unit 111 Harbor Point at 111 Towne Street last summer and the Postmark Apartments at 301 and 401 Commons Park South, a 402-unit rental in adjoining nine-and twelve-story towers, earlier this year. Later this spring will bring the opening of the 107-unit tower at 110 Towne Street, which, along with the 252-unit 120 Towne Street now under construction, will bring the awaited completion of the twenty-acre Yale & Towne complex.
But just because developers continue to build rentals doesn’t mean they don’t recognize that people signing leases today might consider purchasing that apartment tomorrow.
Many of the rentals can be converted to condos fairly easily should the market winds shift even further, says Randy Salvatore, the president of RMS Companies, whose units, like those of other developers, were built with roomy layouts and stylish extras largely for that purpose. “If I need to, I can turn my buildings around,” says Salvatore, whose units sport condo-quality stone counters and bamboo floors.
Last year saw the opening of The Moderne, a fifty-eight-unit property RMS developed at 163 Franklin Avenue. Also, after buying a property at 750 Summer Street for $3.5 million, and winning a zoning change, RMS also broke ground on another fifty-eight-unit project, where one-bedrooms are expected to rent for $2,100 a month. Salvatore says he has another 118-unit project in the works.
In 2013, other rental towers got underway from the South End to Springdale, and included some affordable complexes too.
The list includes a 344-unit rental rising at 75 Tresser Boulevard, where The Advocate newspaper was located for decades; though the building did not open last fall as planned, it’s expected to welcome renters some time this year.
Earlier this year, foundations were being poured for Summer House at 184 Summer Street, a 224-unit rental from a team that includes longtime local firm F. D. Rich Company. Slated to wrap up in 2015, the building will feature 3,000 square feet of storefront for a restaurant, dry cleaner or florist, says Tom Rich, F. D. Rich’s president, who adds that “there are so many things that the growing residential population needs.” What seems certain is that Summer House, at twenty-two stories, will be a skyline game changer.
What’s more, Malkin Properties and Jonathan Rose Companies unveiled a plan for a second phase of their Metro Green development by the train station, which would have 155 affordable units across two buildings, joining the 100 units that are already there.
A significant piece of long-anticipated real estate news to come down the pike is that the “hole in the ground” across from Stamford Town Center—a muddy reminder of both the urban renewal era and failed development schemes—is poised to get 700 apartments, arrayed in a circle of six-story buildings.
Other pieces dropping into place on renewal parcels, about five decades after Stamford razed its aged downtown to make way for corporate highrises, include 66 Summer Street from Trinity Financial, a Boston developer. The $46-million project will feature a fifteen-story, 209-unit rental tower, says Maixuan Phan, a project manager for Trinity, plus 6,600 square feet of retail, which is slated for a restaurant. “It’s clear that there’s urban vibrancy here, which is attractive,” Phan says.
Though this Summer Street development most recently contained a parking lot, the site, next to Bow Tie Cinemas, is also part of the footprint of Park West Village, an earlier development that never completely came to fruition.
But it wasn’t for lack of trying. In the 1990s the city tried to seize nearby Curley’s Diner through eminent domain, though the state Supreme Court ultimately put a stop to it, ruling in the diner’s favor.
With so many development parcels being gobbled up, condo conversions, instead of building them from scratch, might be a matter of necessity and not choice.
For years, the borders of downtown have increasingly been pushed outward by a Government Center that encouraged rezoning of former commercial areas. At the same time, the office vacancy rate has remained at a stubbornly high 25 percent, which means that there’s been plenty of dark office space sitting around, ripe for conversion.
Mayor Martin, for one, suggests those fundamentals could change. Zoning in the city should be tight enough that multi-family towers don’t end up creeping into low-slung, single-family neighborhoods, he says.
Plus, with so many new faces now populating the city, companies should soon follow suit, he says, which could help fill those empty cubicles and lower the vacancy rate. “I am pro growth, but at the same time, growth has to be kept in balance,” says Mayor Martin, whose predecessor, Michael Pavia, was a developer and seen as sympathetic to the real estate industry.
Whatever becomes of the rental buildings, they will likely enrich whomever owns them. Indeed, a series of big-ticket trades in 2013 indicates that Stamford’s apartment buildings can fetch a premium.
Take the case of Highgrove, the troubled condo on Forest Street named for Prince Charles’s estate and designed by Robert A. M. Stern. Last summer it was sold by Starwood Capital Group to Winthrop Realty Trust as part of a four-building transaction for $246 million; Starwood owned it after purchasing the assets of Corus Bank, a collapsed lender. Assuming that Highgrove’s share was about $62 million, each of the ninety-eight units sold for about $600,000 a unit, a hefty figure.
Similarly, there have been some recent deals involving BLT. In the last year or so, BLT has sold three of its South End towers for notable prices. The 329-unit Lockworks sold to a Kuwaiti group for $130 million, or about $395,000 a unit. Also, the 242-unit Infinity Apartments sold to Clarion Partners for about $100 million, or $408,000 a unit. And the 226-unit 101 Park Place sold to Capri Capital Partners for $135 million, or about $600,000 per unit.
Those elevated values came about because the buildings showed the ability to lease up quickly in a downturn and stay occupied, brokers say. “They fill those buildings as fast as they can build them,” says William Pitt Sotheby’s Malloy.
In a sense, BLT’s transactions helped cushion the impact of its recent stumbles. An attempt to build a 85,000-square-foot headquarters for Bridgewater Associates, the Westport-based hedge fund, on a waterfront parcel in the South End has been blocked by the city after BLT in 2011 demolished a marina there. The city, which issued a stop-work order against BLT in 2012, claims the firm razed Brewer’s Yacht Haven West illegally; officials also say they want BLT to build a replacement nearby. But BLT has said the stop-work order should have never been imposed and that it has a viable plan for a substitute marina.
While that turf war drags out, other developers and city officials are focused on downtown, where the University of Connecticut seeks to expand its presence by turning its commuter branch into a residential campus.
In September the school’s trustees voted to explore ideas to build housing for 400 students around the Broad Street campus, where 1,400 students are currently enrolled. Officials of the school, which has been in Stamford since 1951, say the project’s budget could be $10 million, though partnerships with developers for new dorms are possible. Monthly rents, they add, would ideally be about $800.
Mayor Martin, among many business and civic leaders, is keen on the prospect. “Great cities around the world usually have great universities attached to them,” he says.
Others are not so sure. Would students, who may have the option of living at home for free, shell out the extra money for a dorm, even at a below-market rate of $800? “Count me as a skeptic,” since the added housing costs could effectively double students’ tuition, says Richard Freedman, the president of Garden Homes Management Corp., a landlord and developer.
In any event, young people continue to drive the rental market, says Freedman, who is about to build an eighty-eight-unit rental complex on Hope Street in Springdale. He’s also urging the city to discontinue Stanley Court near UConn, so he can take it over and build multifamily housing there, he says.
In the end, what most people seem to agree on is that the worst years are behind us and the best is ahead—and, for some, the rosy reviews are not just lip service.
Healey, the NewBridge broker, for one, just bought a one-bedroom condo on Bedford Street that she will rent out as an investment property to take advantage of the burgeoning interest in the city.
In words that could apply to the whole of the market as Stamford shrugs off the aftermath of the recession and picks itself up, Healey adds that: “the days of getting something like this are going fast.”