After Scrapping Condo Idea, Owner Plans Apartments In Office Supply Building
By KENNETH R. GOSSELIN | Courant Staff Writer
April 01, 2008
Two years ago, the new owners of the Hartford Office Supply building in Hartford envisioned turning the former factory into condominiums as talk of condo conversions swept through the city.
Not long after, the talk stopped.
The housing market was showing the first signs of decline and lenders began to tighten up on financing, even for borrowers with good credit.
Today, as the market struggles to recover and recession appears inevitable, New York-based Tarragon Corp. still sees people, particularly young professionals, living in the Hartford Office Supply building on Capitol Avenue, only now they see them not in condos, but in apartments with cheaper rents than those found downtown.
The loft-style apartments would be in space where Pratt & Whitney toolmakers — a different company from the aircraft giant in East Hartford — once labored at the turn of the 20th century, when the area was bustling with manufacturing plants, even before Aetna built its grand headquarters on nearby Asylum Hill.
But the conversion plans suffered after Tarragon, a big condominium developer, was hit hard last year by the housing market downturn. Now the company says its financial health is improving after selling off properties.
Another step came Monday, when it was announced that Tarragon agreed to merge its apartment holdings with those of Northland Investment Corp., the largest commercial property owner in downtown Hartford.
The deal doesn't include the Hartford Office Supply building or other properties Tarragon has acquired for development. Northland may get involved in the Capitol Avenue project later, according to a person familiar with the two companies.
The plans for the Hartford Office Supply building face other obstacles. The city has had trouble attracting young professionals downtown, a possible recession threatens jobs and could limit hiring, and the neighborhood has struggled with crime.
But if the apartment project is successful, the "Lofts on Capitol" could be a much-needed catalyst for neighborhood development, encouraging more shops and restaurants with staying power.
"We see it as an area that's in desperate need of feet on the street," said Bob Hohler, executive director of the Boston-based Melville Charitable Trust. The trust, which helps foster community development, has invested $10 million in the area in the past five years, including the Lyceum and the Firebox restaurant.
Hohler said he hopes the lofts — with 20-foot ceilings, exposed brickwork, massive wooden beams and tall windows — will attract artists, office workers and musicians: "The kind of yeasty mix that creates an exciting urban center," Hohler said.
Tarragon said it plans 113 apartments in the 150,000-square-foot building with parking next to the building. It is estimated that the monthly rent for a 1,000-square-foot space could run about $1,400 without utilities, or about $1.40 a foot. That's 30 percent lower than the $2 a square foot average for apartments in Hartford's downtown central business district, according to commercial real estate services firm CB Richard Ellis.
Once begun, construction will probably take 18 months, Tarragon said.
While Tarragon missed the window for condos, it may do better with apartments. People who might have bought a home when lending standards were loose may now no longer qualify, making them turn to apartments. Others are sitting on the sidelines, waiting to see where the housing market will go.
Candace Schafer, who heads development and acquisition for Tarragon, said the developer is aware of the challenges of the project. The building is within walking distance of the city's insurance giants and many state government offices.
"We have a good set of plans," Schafer said. "But our confidence is hedged by whatever happens next in the economy."
Tarragon knows the pain and depth of the current housing downturn. A big developer of condos and apartments in the Northeast, Texas, Florida and Tennessee, Tarragon faced a "liquidity crisis" last summer as the sales of condos slowed significantly, forcing the company to sell off properties to satisfy creditors.
Despite its troubles, Tarragon said it has made strides in lining up financing for the project, securing both state and federal historic tax credits. The state credits, alone, are expected to provide $2.7 million in financing for the Capitol Avenue conversion, Schafer said.
To secure the tax credits, Tarragon had to agree to preserve the structure's brick and brownstone exterior, some of which dates back to the late 1800s. The building was expanded as Pratt & Whitney's business producing tool-making machinery flourished in the early part of the past century.
Pratt & Whitney had a major industrial complex at Capitol Avenue and Flower Street, covering much of the area now occupied by The Courant's parking lot and the I-84 viaduct.
To qualify for the tax credits, Tarragon also had to agree to replace the 1970s vintage windows with ones that were true to the original "20-over-20" sashes.
Deep in the basement, there are still belt-drive motors, stamping tools and other implements that are believed to belong to the original Pratt & Whitney occupants.
Inside, there also are remnants of the office supply business, which most recently occupied the building.
The plans have been endorsed by the Hartford Preservation Alliance, and all city approvals — short of the permit to commence construction — have been obtained.
Schafer said the interior will have an industrial look, a nod to the building's past. It also, she hopes, will be a strong draw for "people looking for an unusual space."
"It's quite spacious," Schafer said.
Reprinted with permission of the Hartford Courant.
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