As anyone who's been to New England knows, Yankees see themselves as an independent-thinking bunch. After all, New Hampshire's state motto is "live free or die."

At the same time, though, New England's multifamily markets do share a few characteristics. Infill is popular, and so are redevelopment opportunities and value-added deals. The hot spots? Connecticut's urban markets, such as Stamford and Hartford, and Boston, of course. But improving demographics and investor interest also make sleepers such as Portland, Maine, and Providence, R.I., worth watching in the year ahead.

Boston ranks as one of New England's top multifamily markets.
Andrew Gunners/Getty Images Boston ranks as one of New England's top multifamily markets.


Fueled largely by public/private redevelopment initiatives and downtown projects, Connecticut's major cities are poised for solid growth in 2007.

In Stamford and Bridgeport, where vacancy remains low at 3.2 percent and 3.3 percent relatively (compared to the national average of 5.4 percent), the scarcity of developable land has led to an ongoing push for downtown redevelopment.

Stamford offers waterfront properties and accessibility to New York City, both of which appeal to residents and luxury multifamily developers. New development will remain minimal, however, until apartment fundamentals show greater improvement.

In Bridgeport, a new project called Downtown North is reshaping the city. The effort, which involves the conversion of the Citytrust Bank building into 118 rental apartments and 29,000 square feet of commercial space, is expected to be viable in spite of the high commercial vacancy rate, since demand is expected to increase in the near future.

Investment sales activity in the Greenwich, Stamford, and Bridgeport areas remains strong, with the big deals happening–not surprisingly–in the affluent town of Greenwich. One recent deal: Milbank Commons, which commanded $25 million, or $1.47 million per unit, for the 17-unit asset, in a sales price on par with Manhattan. Other transactions are almost as rich. Last February, 100 Putnam Green, which is two properties built in 1967 and 1971, traded for $223 million. The project, which is slated for conversion to condominiums, typifies the product that sells Connecticut today: extremely well-located assets constructed between the 1950s and the 1970s.

Roy Wiemann

Other Connecticut cities are also going urban, including Hartford. The cornerstone of Hartford's downtown revitalization effort? The 33-acre, $860 million Adrian's Landing project, which is a mixed-use property with a new convention center; upscale hotel, retail, and office space; and other cultural attractions. However, while redevelopment efforts may be heating up in Hartford, new condo and rental construction will continue to be limited.

In New Haven, cultural attractions, more affordable housing than New York, and a growing student population make this city a great model for re-urbanization by both lifestyle renters and baby boomers. And, not surprisingly, given this renewed interest in downtown, overall multifamily market conditions are improving in New Haven's central business district. Asking rents have increased to an average of $1,498 per month for Class A apartments. Vacancy rates are falling, to a projected low of 4.3 percent in 2006. And, with revenue growth for Class A apartments forecast to exceed 6 percent by the end of 2006, interest has been growing in properties that could be renovated and repositioned as luxury product.

Overall, more than 5,600 multifamily units are expected to be traded across Connecticut in 2006 for a total estimated sales volume of $502 million. Spurred by a combination of echo boomer demand and capital from retiring baby boomers, the state's urban centers will continue to improve in 2007. Public/private ventures, coupled with creative historic adaptive renovation and mixed-use projects, will hasten these improvements. While Hartford is a strong growth market, well-located, value-added plays in downtown New Haven, Bridgeport, and Stamford also are solid investment choices.


Boston, which is the other leading New England multifamily market, boasts both a large number of well-paying jobs and a high cost of living. It's a good situation for apartment fundamentals, even in a cooling local for-sale housing market. While sales and appreciation is slowing, homeownership will continue to remain out of reach for a large share of Boston area residents.

Apartment construction has accelerated over the past year, but due to high land and construction costs, much of the development activity is focused on high-density Class A projects. If it's not luxury, then a project usually includes a government subsidy or an affordable housing component. Overall, Boston's vacancy rate has remained at 4.5 percent to 5.5 percent during the last three years.

Those interested in investing in properties outside of Boston must know their apartment fundamentals. With the condo conversion market retreating, investors have shifted their underwriting focus from capital appreciation to income growth. Market-wide cap rates may decline modestly over the near term as private investors look to local properties for long-term stability and consistent returns.

The average asking rent is expected to rise to $1,635 per month by 2006's end, driven in part by the addition of high-end supply. Effective rents are forecast to post a similar gain, to $1,550 per month. Rent growth is the key to dynamically underwriting and forecasting the value of multifamily properties across New England.