Hartford, Conn.'s multifamily market is poised for solid growth in 2006, spurred by the more than $2 billion in public and private investments that have been infused into revitalizing the city's urban core. Hartford's redevelopment plan is being modeled in part after New Haven's urban revitalization efforts, which began a few years ago. "After years of planning, false starts and frustration, Hartford's renaissance is finally moving into high gear," according to the Hartford Business Journal.
A key piece of the revitalization effort is the 33-acre, $860 million Adriaen's Landing project, which includes a new convention center, upscale hotel, retail, and office space as well as cultural attractions. The hotel, convention center, and parking garage are complete, and ground was broken for the science center in fall 2005. Another major development is the 409-key Marriott Hartford Downtown Hotel, which opened its doors in August 2005. These projects are expected to attract more business to Hartford, which in turn is expected to lure more retiring baby boomers, as well as echo boomers. Increased demand from these two segments of the population would boost the multifamily market in Hartford this year.
Buoyed by Boomers
Also boding well for the for-sale apartment market is the number of affluent retirees who wish to maintain a residence in Hartford. The renewed urbanism (urban sprawl) should quickly absorb the 1,000 new owner-occupied housing units coming on line. Some retirees want to keep a residence in Hartford while participating in the "snowbird" trend of heading to Southern climates for half of the year. This portion of the population also has an impact on multifamily numbers; some maintain their homes, keeping single-family residences out of the market, while others rent during their seasons in Hartford.
The second demographic shift comes from echo boomers. Echo boomers are typically classified as the children of baby boomers, born between 1982 and 1995. Descended from America's largest and wealthiest demographic category, the adult segment of the echo boomers (aged 18 to 24) brings money and attitudes that are extremely favorable to multifamily property investors in the midst of Hartford's revitalization. These young adults value cultural ideas of fitting in, upscale and eclectic dining, retail shopping as an event, and being connected to a diverse community, and their presence in Hartford should help improve occupancy levels by the end of 2006.
The echo-boomer influx and attitude may be crucial components in the success of Hartford's downtown redevelopment. The city is taking cues from markets nationwide that are responding to attitude changes about geographic relationships between life and work space. The suburban trend of substantial distances between the workplace and home is showing signs of reversal. People are more interested than ever in the combination of these two zones.
Shaping the Sector
Nationwide, users have embraced the live/work unit at levels so intense, they haven't been witnessed in 50 years. The choice is often economically and environmentally preferable, and fits well with professional and business-services sector employees who are tired of wasting valuable living hours gridlocked in rush-hour traffic. The seclusion of a subdivision is coming at a high cost in terms of time, fuel, and stress. New multi-use projects in Hartford's downtown area are designed to capitalize on this shift in perspective. Apartments constructed in these multi-use spaces appeal to echo boomers' cultural preferences for accessible retail, conforming to a community identity, and the diversity associated with urban lifestyles. From a development perspective, the creation of a 24/7 central business district means catering to a population that works, dines, shop, and thrives in revitalized downtown districts at all times of the day.
This approach has worked well in New Haven's central business district. Asking rents have been pushed up to an average of $1,498 per month for Class A apartments, with effective rents climbing at a similar rate to an average of $1,437 per month. New Haven's multifamily vacancy rate is projected to fall 20 basis points to a low of 4.3 percent by the end of 2006. In turn, interest in properties which can be renovated to luxury status has risen in New Haven as revenue growth for Class A apartments is forecast to exceed 6 percent. Class A multifamily properties in downtown Hartford such as Hartford 21, Sage Allen, and Trumbull on the Park will surpass New Haven rents by 10 percent to 20 percent; this is greater than any other market in Connecticut outside of the Gold Coast of Fairfield County.