County accounts for 52 percent of state’s multi-family building purchases
By LAURAN SCHREIER, Hartford Business Journal Staff Writer
February 04, 2008
In one fell swoop, 870 Hartford apartments recently changed hands for a $60.2 million price tag. The sale was just one example of how Hartford dominated the state in apartment sales in 2007.
Hartford’s favorable position and, paradoxically, the nation’s housing bust, are primary factors for the city’s upward leap in multi-family ownership turnover, according to area real estate brokers.
Hartford County blew other Connecticut counties out of the water in terms of apartment sales, according to Marcus & Millichap’s National Multi Housing Group’s recent report: 2007 was a high year for apartment sales across the state, and Hartford County accounted for 52 percent of all transactions. New Haven County, the runner-up, had only 23 percent of Connecticut’s apartment transactions.
In the city of Hartford, anecdotes back up the numbers.
Bally Realty sold off its 870 Hartford units to New York-based Marks Group in a deal that closed Dec. 21. Owners such as Bally, who bought up Hartford apartment housing in the mid-1990s, are selling it off at a substantial profit, said real estate broker Rick Chozick.
Chozick, who represented Bally Realty in the deal, said the Marks Group has bought up housing in Hartford and New Britain, as well as commercial properties in West Hartford. That major sale was in addition to another sale Chozick brokered for Mark Twain Apartments — 65 units recently went to Farmington Apartments for $3.2 million.
Another major deal may be on deck: a New York-based company is expected to purchase Clemens Place, a string of more than 500 apartment units located mostly in Hartford’s West End.
Steve Witten, senior director at the Marcus & Millichap group, reported that apartment sales are up all over the state partly because of the housing bust. The credit crunch means tighter mortgage requirements, which will help retain renters; and with adjustable rate mortgages resetting at higher rates, many homeowners will head back to apartments.
But Hartford is helped by its position as a burgeoning market, Witten said.
“The problem with Hartford is in the part, Hartford would take two steps forward and one step back,” he said — now, it looks like the city is on more stable footing in terms of economic development.
Chozick said many of the sellers he’s dealt with had bought their inventory at bargain rates in the mid-1990s and now had the chance to make a solid return on the investment. For example, MT Associates, the recent seller of Mark Twain apartments, bought the complex for about $650,000 and sold it for $3.2 million, and Chozick said Bally Realty was able to follow a similar pattern.
“The incentive to sell is tremendous for people who purchased in the mid-90s,” he said. Sellers made their profits by getting in early, and buyers are looking to come in and reap the benefits from the upward trend. “It’s not that people are exiting, it’s that other people see value in Hartford.”
Richard Sandell, an owner of the Marks Group, said the group saw an opportunity in the area.
“Hartford is on the way up, and we’re trying to position ourselves for the uptick,” he said. He added that the group had previously bought properties in Hartford under the title of Surrey Group.
Those high price tags are good for sellers, but they make tenants nervous, said Jennifer Hadlock of renters’ advocacy group Hartford Organizing for Power and Equality. With credit at such a premium, tenants wonder why businesses such as Marks would take over so many properties. Residents fear that buyers — particularly New Yorkers such as Marks Group — paid high prices because they plan on raising rents, a move that would force people out of their homes.
Many have been particularly skittish about new ownership in light of the ongoing battle with David Nyberg of College Street, who bought up apartments in the West End and Asylum Hill specifically to make major renovations.
Sandell said Marks isn’t planning any major renovations or changes for the properties they’ve bought, but it intends to keep its current management in place. Chozick said the group has kept most management employees in place at the newly acquired buildings.
“I don’t foresee any changes in the way the buildings are operated,” he said, noting that Bally Realty had kept up occupancy rates at about 98 percent.