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Opportunity Knocks

Demand for housing could revitalize downtown Hartford

By Greg Bordonaro

February 13, 2012

The strong demand for housing in downtown Hartford could fuel the long awaited revival of the urban core.

Aided by Gov. Dannel P. Malloy's pledge to help Hartford get more people living in the central business district, developers are taking fresh looks at a handful of projects. But developers say the usual hurdles difficulty obtaining financing and the need for government incentives or other participation continue to slow progress.

For his part, Malloy said downtown Hartford could use another 3,000 to 4,000 housing units. City officials say at least another 1,000 units are needed to reach a tipping point.

"That number says you can have more retail activity," said David Panagore, the city of Hartford's chief operating officer.

Despite historically high office vacancy rates in downtown Hartford, the city's apartment complexes, particularly ones built in the last 10 to 15 years, have remained well-occupied. That is sparking interest in adding housing units designed to attract more young professionals as well as empty-nesters, a target population that has largely eluded the city so far.

But for many projects on the city's front burner, obtaining financing for development remains a significant challenge.

Here's a look at where major downtown Hartford apartment projects stand:

Summer start for old Clarion hotel-to-apts?

The housing project that appears to have the most momentum is the conversion of the former Clarion Hotel into 199 apartment units. The $25 million project is in the design and financing stage, authorities say.

Jeff Ravetz, president of New York's Girona Ventures, a co-partner of the development with Wonder Works Construction Co., said they are moving through the preconstruction and capital phase right now and have targeted the summer to begin the conversion of the 12-story building anchoring Constitution Plaza into 199 apartment units and retail.

Ravetz said his group is working with private and public organizations to put together a financing package, which he characterized as a challenging process. He said banks have raised concerns about the high commercial vacancy rate downtown, but he's confident a deal will be done. He expects government incentives or assistance will likely be part of the equation.

"The economics support the development of the project because of the strength of the multifamily rental market," said Ravetz who added that political support for the redevelopment has been "very positive."

The 200,000-square-foot former hotel was purchased in January 2011 for $500,000 and will contain mostly one-bedroom units and studio apartments, as well as two-bedroom and two-story loft-style dwellings.

He said rents ranging from $900 monthly at the low end to $2,400 at the upper should be affordable enough to attract singles and couples to the development. Occupancy would begin by the second-quarter of 2013.

Amenities will include a library, media center, health club and valet parking as well as 15,000 square feet of retail space, Ravetz said.

Front Street apartments back in play

While the Front Street development has been clouded by delays, developer HB Nitkin Group is finally moving forward with plans to build 115 apartment units, despite a slow leasing environment for the project's 60,000 square feet of entertainment and retail space.

Peter Christian, the head of development for HB Nitkin Group, said Nitkin has recently gone to market and is working on obtaining a construction loan for a residential building on one of the remaining Front Street parcels, between the existing retail/entertainment buildings and the Wadsworth Athenaeum.

Currently the space serves as a surface parking lot.

The building will contain 115 units, predominately studios and one-bedroom apartments, Christian said, along with 16,500 square feet of ground floor retail.

Christian said Nitkin would like to start construction in mid-to-late summer, but it will all depend on obtaining the financing, which will be no easy task.

"We'll know where we stand with the loan in the next six-to-eight weeks," Christian said.

Front Street is the final phase of Adriaen's Landing but the project has been hit with delays and false starts for years. Originally the residential and retail/entertainment components of the project were to be built in concert, but those plans were scrapped in 2008 when the souring economy made obtaining financing nearly impossible.

But it appears Nitkin sees an opening to move forward, even though the retail/entertainment venue remains vacant more than a year after being built. Spotlight Theatres Inc. has agreed to open a movie theater at Front Street and is scheduled to start construction soon. The founder of the Norfolk music palace Infinity Hall has signed, or is close to signing, a lease to open a live music venue in Front Street, a sign of potential momentum.

777 Main St. needs a rehab before conversion

Downtown Hartford landlord Michael Grunberg said his office tower at 777 Main St. would make for a perfect conversion into apartment units.

The building's high ceilings, large windows, and extensive views of the city and Connecticut River would make it an attractive spot for potential tenants, he said.

But without help from the city and state to pay some of the redevelopment costs, Grunberg said the office tower will remain empty.

"When a developer comes our way, we entertain them," Grunberg said. "But unless there is involvement by the state, that building will remain dark."

One of the key hurdles to redeveloping the 26-story tower is asbestos. Grunberg said he estimates the cost to remove it would be about $4 million. Once the remediation is complete, however, Grunberg said the property immediately becomes much more attractive because it is structurally sound and located in the heart of downtown Hartford.

Grunberg said he is offering the building for sale and lease, and he sees converting the top floors of the tower into apartment units as a viable development. It's an idea he's floated in years past, but it never happened, largely because the tower's previous tenant, Bank of America, wouldn't move from the space.

Bank of America has since relocated, leaving the building empty.

Another option, Grunberg said, is for the state to purchase the building outright and use it as office space. The state is looking to buy a major office building in downtown Hartford.

Grunberg said his building would be a good acquisition target for the state because it is one of the most needy downtown office towers that isn't likely to find new tenants without a major rehab. An investment and purchase by the state would help the central business district's commercial real estate market as a whole, by filling up what is likely to remain an empty tower, he said.

Old YMCA rehab not likely

While most of the attention on Northland Investment Corp. has been on the Massachusetts developer's troubled office space holdings, the company's years-old plans to build an 18-story residential tower at the site of the former YMCA facility have flown under the radar.

And it appears things will stay that way.

Northland still owns the property, which it bought in 2005 for $3.2 million, but it doesn't appear a residential tower will be built anytime soon.

While the location is pristine, with views overlooking Bushnell Park, the price tag to build a residential project on the site may be too big, especially in an unsteady economic environment.

When Northland purchased the property in 2005, they unveiled plans to demolish the site and erect a nearly $120 million residential complex that would include 200 upscale condominiums and 100 apartments.

Financing a project like that would be difficulty today, although Northland declined to comment on what its future intentions are with the property.

So why not try to rehab the facility instead? The price tag could be just as unattractive.

Panagore, the city's chief operating officer, said the problem with the YMCA building is that it has communal bathrooms on several floors, making a simple gut and rehab inadequate because the building would also require new plumbing.

"It's not cost effective to do that," Panagore said. Instead, the best option would likely be to demolish the property and build a new, but there is nothing planned in the short-term.

101-111 Pearl Street in government's hands

State and city officials have begun discussions once again about reviving the vacant buildings at 101-111 Pearl St.

The adjoining buildings have been in the cross-hairs for redevelopment for years, but no plans have ever come to fruition.

The structures are owned by the city and state respectively and developer Martin Kenny, who was the brainchild behind the successful Trumbull on the Park apartment complex, also has a stake in the property.

Kenny has long eyed the site for redevelopment proposing everything from new apartment units and ground floor retail to a hotel.

Now, with the state's and city's focus to bring more housing to downtown Hartford there is hope that some type of agreement could be hatched.

But the timetable remains unclear.

Kenny declined to comment on any plans for the property, but Panagore, the city's chief operating officer, said "there is a lot of developer interest in those buildings."

Lisa Kidder, a spokeswoman for the Connecticut Housing Finance Authority, which controls the state's stake in the property, said the quasi-public agency "is reviewing its options on 111 Pearl and how the building can fit into Hartford revitalization."

Panagore said the first step in determining the properties fate is for both governments to determine who will take the lead on the development.

The complex has been vacant since 1987.

Capitol Center conversion eyes 2014 completion

A plan to convert Hartford's Capitol Center office building into 40 apartment units is still in the works, but completion of the project is still a few years away.

Rosanne Haggerty, president of the not-for-profit Community Solutions, which is heading the development, said the organization is looking for financing for the project from both government and private sources.

Once the financing is in order, the rehab of the building is expected to take 12 to 14 months, with the hope of renting out the first apartment unit by mid 2014.

Plans for the building at 370 Asylum St., which was donated by the foundation of Stamford technology entrepreneur Milton B. Hollander, include converting the bottom two floors into retail space as well as an innovation ecosystem hub where entrepreneurs could come and grow start-up businesses.

The remaining floors would be turned into 40 mixed-income housing units.

Reprinted with permission of the Hartford Business Journal. To view other stories on this topic, search the Hartford Business Journal Archives at http://www.hartfordbusiness.com/archives.php.
| Last update: September 25, 2012 |
     
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