Multifamily market experts foresee no letup in housing demand or development interest in 2025, at least under current conditions.Amanda Faroni-Sheehan, managing partner of Oxford Realty Group, said she expects continued strong demand for housing to bolster the market into the coming year.“The reason behind this is a post-COVID influx of Connecticut residents combined with a […]
Get Instant Access to This Article
Subscribe to Hartford Business Journal and get immediate access to all of our subscriber-only content and much more.
- Critical Hartford and Connecticut business news updated daily.
- Immediate access to all subscriber-only content on our website.
- Bi-weekly print or digital editions of our award-winning publication.
- Special bonus issues like the Hartford Book of Lists.
- Exclusive ticket prize draws for our in-person events.
Click here to purchase a paywall bypass link for this article.
Multifamily market experts foresee no letup in housing demand or development interest in 2025, at least under current conditions.
Amanda Faroni-Sheehan, managing partner of Oxford Realty Group, said she expects continued strong demand for housing to bolster the market into the coming year.
“The reason behind this is a post-COVID influx of Connecticut residents combined with a limited supply of offerings,” Faroni-Sheehan said. “We believe this will continue into 2025, driving another solid year of multifamily sales.”
Faroni-Sheehan said investors are optimistic thanks to the possibility of additional interest rate reductions.
The Federal Reserve via three separate rate cuts at the end of 2024 reduced the federal funds rate to between 4.25% to 4.5%.
“Rates always play a huge factor in the sale of all asset classes of real estate, so this will be something to look out for in 2025,” Faroni-Sheehan said.
While it’s widely believed the Federal Reserve will continue to lower interest rates, a wary eye must be kept on inflation, Faroni-Sheehan said. The policies of the incoming Trump administration will bear particular attention, she noted.
“We are hoping that talks of deregulation in both the lending and building industries, coupled with pressure on the Fed, will spur the market to newfound heights,” Faroni-Sheehan said.
Amit Lakhotia, a busy multifamily developer focused on the New Britain market, said continued strong housing demand has pushed rents higher, offsetting the increase in insurance, construction and other costs faced by developers and landlords.
Lakhotia, however, does harbor some reservations, wondering if America has begun to overcompensate for its historic housing shortage.
“There is a lot of construction going on,” Lakhotia said. “Every town wants new development. They are changing (zoning guidelines) to get more housing. My fear is that, like China, we are overbuilding. We have to wait and see.”
Lakhotia plans to finish four development projects in the coming year, with the most prominent being a roughly $19 million transformation of the former Stanley Black & Decker headquarters in New Britain, at 480 Myrtle St., into 106 apartments. The first units are expected to begin renting in the first quarter of 2025.
Lakhotia also expressed some uncertainty about the impact of the new presidential administration. He said the promised policy of mass deportations might cool housing demand.
Rising rents
Daniel Klaynberg, president of Spectra Construction and Development Corp., is optimistic about his various projects either underway or planned in Hartford. The city’s growing mix of activities, retail and restaurant outlets will support the success of new multifamily developments into the coming year, he said.
Klaynberg credits the city’s use of federal grant funding to support the refurbishment of first-floor spaces for new restaurant and retail ventures.
“Something right is definitely happening,” Klaynberg said. “The rents have gone up 5% year-over-year in Hartford. That’s even with all this new inventory coming on the market.”
Over the past decade, Hartford’s downtown has added 2,401 new apartments, largely thanks to low interest gap financing provided by the state-backed Capital Region Development Authority. Another 1,500 or so units are either under construction or in the development pipeline, according to CRDA.
Klaynberg and his partners — brothers Evan and Matthew Levy — are redeveloping a former municipal office building at 525 Main St., in Hartford, into 42 apartments with first floor retail spaces. The first apartments are expected to begin renting in January or February, Klaynberg said.
They’re also nearing the end of a renovation of a former firehouse on Pearl Street in downtown Hartford into 35 apartments.
Both projects have received CRDA backing in the form of a low interest loan.
A continued easing of federal interest rates should help increase the pace of new multifamily developments, Klaynberg said.
State government is also increasing its support of multifamily projects, something Klaynberg said will be key for the industry in the coming year. The state, for example, has allocated $60 million to launch the Connecticut Municipal Redevelopment Authority (MRDA) — a new statewide organization modeled after the CRDA.
MRDA’s mission is to advance multifamily and mixed-use projects in Connecticut downtowns and around passenger rail and bus transportation hubs.
“I do think those (state programs) will provide great reasons for developers to build in those areas and complete projects that would otherwise be impossible to develop,” Klaynberg said.
