The Greater Hartford area is proving to be fertile ground for investors looking at multi-family housing complexes. And New Britain is standing out as a prime location for big apartment complex sales.
At the very least, the evidence is showing more buyers willing to take risk that there is value to be had and money to make in the Hardware City.
The city has seen a sharp increase in the number of multi-family units sold, especially in the past few months. From April to June, there were 12 different apartment complexes that changed hands. By comparison, there were four sold in Wethersfield and one each in Newington and Farmington during the same time frame.
Hartford County, as a whole, has seen transactions and price both maintain a solid pace in the last year despite the recent drop-off in residential housing sales, according to Steven Witten, senior director of the National Multi-Housing Group for Marcus & Milichap Investment Real Estate Services.
Demographic Shifts
Two key demographics for renters, 25- to 34-year-olds and 55- to 64-year-olds, are both increasing steadily in Hartford, with the “empty nester” contingent expected to jump 17 percent in the next five years. That trend, combined with the fact that apartment developers have scaled back on new projects, could lead to tighter vacancy rates and rising rents at existing buildings.
In fact, asking rents are on pace to climb 3.6 percent by the end of the year in Greater Hartford, an indication of demand.
Harriet Geragosian, a broker for Unique Realty in New Britain, said outside investors are coming in to the city looking for value.
“People are buying up a lot of property and it’s a really good trend for the city,” she claimed. “There have been a lot of people from outside the area, outside the state, that have come looking at New Britain.”
The reason behind the migration towards the city is a simple matter of economics.
“It’s just because everything is so expensive everywhere else,” said Geragosian. “You can come into New Britain and buy a [multi-family unit] for a reasonable price where you can’t do that elsewhere.”
But others say it’s not that New Britain properties sell for less that makes the city attractive, as much as it that the municipality has a strong renter base.
In Hartford from April to June, there were 13 apartment buildings sold, including a $2.3 million purchase of 76 Webster St. and a $1.1 million sale of 89 S. Whitney St.
Yet Witten said he tracked 10 sales of apartment buildings in New Britain that cracked the $1 million mark in the past 18 months. That’s similar to other communities, but other area towns might have more properties selling at higher prices, too.
For example, two transfers in Newington and Farmington since April each sailed past $5 million.
From Jan. 1, 2006, to July 23, 2007, there were 894 total apartment units sold for $51.5 million, an average of $57,657 per unit. Those numbers, said Witten, are “generally consistent” with the performance of Hartford County for larger sales.
Renters Galore
The recent swing in sales of apartment units, specifically sales in the six-figure range, in New Britain, can be attributed to simple economics or an expected shift to an area that has not been ransacked with buyers yet.
The latter is the view of Rick Chozick, of West Hartford’s Chozick Realty, who noted the company has brokered seven deals totaling 288 rental units in the past year.
“If you look back three years ago, it seemed like we were selling every apartment building in East Hartford,” said Chozick. “These things tend to fall into cycles for different communities. For a period of time, there is a focus on a certain community or a certain area.”
A month ago, Chozick Realty brokered a $1.3 million deal for 18-22 Lincoln Street in New Britain, a 24-unit building that was only marketed for 30 days before the sale was completed. Chozick said the building had multiple offers on it in less than a month.
“We are very active in New Britain and I believe we’ve brokered the lion’s share of buildings that have sold there,” he said.
