The partners who are redeveloping a former convent in West Hartford into high-end rentals are betting their purchase of six apartment buildings elsewhere in the city will give potential tenants another cheaper housing option.
Lexington Partners and LAZ Investments, both Hartford-based and partners in the One Park convent conversion, plan to spend $4 million on improvements at 771, 773, 839 and 843 Farmington Ave. as well as at 415 and 577 Prospect Ave.
The 121 apartments, which were purchased for $22.9 million and built between 1917 and 1954, will receive new cabinetry, new appliances, tile backsplashes and enhance existing wood floors. Landscaping will be crucial to improving “curb appeal”.
Martin J. Kenny, founder and chief executive of Lexington, said there will be the One Park feel inside the apartments, but there won’t be the focus on amenities and all the amenities. “bells and whistles”.
So a two-bedroom apartment in One Park, where the first units could start renting in the spring, could rent for a mid-$2,000 a month. Rents for older but renovated apartments could be between $400 and $600 less per month.
“We have options now,” Kenny said. “We can attract someone who may not be able to afford a park. We have properties that we can show them that may work.
These options may be limited, however, as the occupancy rate in all six buildings now stands at 96%.
The rents for the six buildings would approximate the city’s desire to increase rents accessible to a wider range of incomes. The construction of new, high-end apartments in West Hartford Center is expected to test the upper limits of asking rents. Farmington Avenue properties under the six-building deal are less than three blocks from the center.
At One Park on Park Road, West Hartford City Council has approved a rare tax break in exchange for “affordable housing”, which is 10% of 292 apartments, offered for 20 years, up from 10.
According to Kenny, average rents in West Hartford have increased 17% over the past year. Current tenants in the six buildings could face rent increases if property values increase with renovations, but those decisions would be made on a case-by-case basis, Kenny said.
Renovations will be done on a unit-by-unit basis as tenants vacate their apartments, said Joe Beaudoin, Lexington’s senior vice president of acquisitions and asset management.
Economists fear that price inflation – the highest in 40 years – could push the country’s economy into recession. But Kenny said rental housing would become an even more popular option if the country plunged into recession.
“A lot more people are renters than renters by choice,” Kenny said.
Lexington, a decades-old developer in and around Hartford, and LAZ Investments, a branch of parking giant LAZ Parking and its founder Alan Lazowski, have been close collaborators in recent years.
In downtown Hartford, where Lexington now manages 600 rentals, the partners are part of a team redeveloping upper-floor office space on the south side of Pratt Street into rentals.
In late 2020, Lexington and LAZ Investments purchased a 50% stake in four downtown apartment projects: Spectra on the Park on Trumbull Street across from Bushnell Park; Spectra Pearl, which includes two buildings at 101 and 111 Pearl; and Spectra Plaza, the former Sonesta Hotel on Constitution Plaza.
Lexington has grown its rental management business, now owning and managing over 3,650 apartments on the East Coast.
Hartford’s large market has added thousands of rental units over the past decade. In downtown Hartford alone, 2,900 new apartments have been added or are currently under construction.
Kenny said he remains optimistic about the area’s apartment market. He sees the need to pace the addition of new apartments in downtown Hartford to ensure that demand keeps pace with rental supply.
For example, he said he believes the city needs to see how leasing plays out with the hundreds of units hitting the market before the Capital Region Development Authority advance with South Bushnell in the parking lots east of the Bushnell Center for the Performing Arts. The first phase alone could add 250 to 350 units, although construction could take a year or more.
Kenneth R. Gosselin can be reached at [email protected]