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.
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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.”