Ten Hot Topics in the Real Estate Market
Finding Opportunity in the Downturn
By Beth Cooney and C.J. Hughes
PHOTOGRAPH ISTOCKPHOTOGRAPHY ©AIMIN TANG
The truth is, not much has changed in real estate since last year. Few people are buying homes and values dipped slightly. On the commercial side, about the same percentage of office space has remained stubbornly empty.
In the meantime, the residential rental market continues to expand, as developers are capitalizing on the sales slowdown and building ever larger rental properties.
What has changed is our attitude. A few years ago, we hunkered down and waited for signs of improvement. During that wait, we’ve gained perspective and even begun to recognize opportunity in the downturn. There are lessons to be learned—things we can do to maximize our position in the market, experts told our writers. The rental boom is an indicator of planning in the face of difficulty.
So read up on what the experts—brokers, attorneys, developers, designers and planners—think about the state of the real estate market in Stamford, and the topics recently driving the conversation. The news amid the slowdown may be relatively flat, but small changes are happening around us.
1. Dark Clouds Should Part On Foreclosures
A foreclosure probably isn’t any homeowner’s idea of a good time. It can lead to the loss of a house if the owner can’t figure out a way to get current on the delinquent home loan.
Even if foreclosure is staved off with, say, a short sale—when a home is sold for less than what’s owed on it—a credit rating can be destroyed, docking it as much as 150 points, lawyers say, which could make it hard to qualify for future home loans.
But silver linings may be emerging in 2012. For starters, the once epidemic foreclosure crisis seems to be easing locally. Stamford’s Housing Development Fund, an affordable-housing group, says it handled twelve foreclosure cases in 2011, down from thirty-seven in 2010 and the same number in 2009, according to Joan Carty, its chief executive.
In related positive news, those who saw their credit whacked are still finding rental housing, says attorney Burt M. Hoffman, who’s handled 600 short sales since 2009. Besides, credit scores can be repaired within two years, he adds, citing a client who paid $800,000 for a Stamford home in 2003 with a risky “ARM” loan, and subsequently lost it in 2006. The home went in a short sale for $625,000. But a few years later, with his credit rating back up to 690, the client went shopping for a home again and wound up with a new house— his former one—only this time for $460,000. “There is hope,” Hoffman says. — CJH
2. Chelsea and NBC Rising
The new development that may arguably make the biggest splash in 2012 is Chelsea Piers Connecticut, scheduled to open in early July. There won’t just be pools in the 418,000-square-foot, three-level space, which is a sportier version of the namesake New York City property. Inside the vast space, which used to be a Clairol factory, there will also be twelve squash courts, seven tennis courts and a 60,000-square-foot turf field that can be carved into four smaller fields, plus an Adventure Center with a Jump Zone, and a mezzanine level; from there, parents can watch their kids play hockey on either of the two ice rinks below.
Though the renovation cost $45 million, Chelsea Piers is leasing the space for fifty years from Spinnaker Real Estate Partners, Steven Wise Associates and the Connecticut Film Center, which paid $17.5 million for the thirty-acre site in 2010.
Day passes could start at $10, though don’t expect to find as many leisure-time pursuits as the Manhattan site offers. “It will be geared toward competitive athletics,” says David Tewksbury, president of Chelsea Piers Connecticut.
Meanwhile, in an apparent home run of a recent deal, NBC Sports will lease an adjacent 300,000 square feet at the site. With the move, which will be completed by 2013, NBC Sports will say goodbye to Rockefeller Center and consolidate most of its broadcast operations and management in Stamford.
Why the draw? The former factory offers unusually tall ceilings and reliable power sources, which are ideal for studios, said Chris McCloskey, an NBC spokesman.
But to make sure the deal happens, the state, which values the deal as being worth $100 million to Stamford, had to kick in a $20 million loan. If NBC Sports lives to its promise to bring 450 jobs to the city, that loan will be forgiven. Demolitions are now underway, and the first NBC Sports execs are supposed to arrive next winter.
“We landed the big fish,” said Kevin Segalla, founder of the Connecticut Film Center, which promotes for more TV production in the state. And with WWE, YES and A&E already having a presence, “it’s pretty clear that we’re able to develop a real industry in Stamford.” — CJH
3. A Lift Debated
Such snazzy new facilities for Chelsea Piers and NBC Sports at the former Clairol site are a surefire way of reviving an empty old industrial lot, generate buzz and boost Stamford’s profile. But will they give a bounce to home values? Experts say “maybe.” Relocated NBC employees from Comcast Sports Management Services in Philadelphia will likely have to buy homes nearby, which would boost demand. But other employees who now work in Manhattan and live in the area would not hunt for homes at all.
Still, there could be more roundabout benefits, courtesy of marketing brochures that can tout Chelsea Piers. “You can add them to the list of things to do here, which will enhance the value of our location,” says Stamford Mayor Michael Pavia, also a residential developer who has used similar strategies for his own homes.
But a fitness center, even one with all kinds of bells and whistles, is not likely to make or break a home purchase, says Michael Muffoletto, a broker with the Stamford-based Brocor Group. “You are not going to put your house on the market to be close to a gym,” he said, adding, “but it will be something nice for Stamford.” — CJH
4. Quiet Cubicles
Dark windows on the skyline confirm what we have known for years: Stamford’s offices remain stubbornly empty, even as other sectors of the market have improved.
Indeed, in the third quarter, the vacancy rate in the top downtown buildings was 26 percent, according to real estate firm Colliers International, which means there’s barely been any change since a year ago, when it was 27 percent.
Many analysts expect more of the same this year. “I think 2012 will be completely flat,” says Tim Rorick, a Stamford-based Colliers broker who blames the stagnation on the struggles of Wall Street, which has close ties to Stamford. “Corporate America is running lean and mean. They’re getting a higher level of productivity out of their employees, so extra office space isn’t needed.”
Some relief could come soon. This past December, Building and Land Technology, the developer transforming the South End, purchased 695 East Main Street, a 614,000-square-foot office tower owned by defunct Lehman Brothers that has been ensnarled in bankruptcy court proceedings in recent years. As of this writing, no price has been announced for the property, which has been largely vacant since General Reinsurance downsized to a Long Ridge Road location in 2009.
News of the sale should raise hope, says Mayor Michael Pavia. Because the clock-tower-topped building, now the BLT Financial Centre, is so large, filling it with tenants could drastically reduce the vacancy rate, to 14 percent, he estimates. The rate “will be chipped away,” he predicts. — CJH
5. Think Beyond the Kitchen
Neatness counts. When Stamford realtor Gail Stone of William Pitt Sotheby’s International Realty counsels clients, she encourages presenting homes in a “slightly staged” fashion. “I’m not one of those realtors who thinks you have to dilute your home of all your personal possessions and photographs, but there are certain things that don’t do it for a lot of people when they are house-shopping.”
One of them is “dynamic colors,” she says. “They may look great and suit your style, but they can completely turn off a buyer if they hate them. Having rooms freshly painted in neutrals can help prospective buyers imagine their own possessions moving in and also give people the sense the place is clean.”
Beyond fresh paint, “kitchens are No. 1 on the hit parade. A home with a dated kitchen and two magnificent bathrooms is not going to sell as quickly as a home with two beat-up baths and a fabulous kitchen.”
Burke A. Cheney, a designer for Stamford-based Deane Inc., often consults with clients who plan kitchen upgrades for the purpose of home marketing. He recently planned one such renovation for a family who had tried unsuccessfully to sell their home for a year. “They sold it one month after their new kitchen was completed,” he says. “They were, of course, thrilled to have found a buyer, but regretted not being able to enjoy their beautiful kitchen longer.”
Getting the best sale price goes beyond presenting showstopper rooms, says realtor June Rosenthal of Juner William Pitt Sotheby’s International Realty. “I don’t think enough can be said about the importance of good, old-fashioned curb appeal,” she says. “What you see and experience when you are standing at the front door waiting for the realtor to let you inside, is very, very important.” — BC
6. 'Hoods Redux
Whether you are looking for waterfront property, a lush, multiacre home in the woods or a condo downtown, all roads in Stamford lead to neighborhoods distinguished by their intriguing diversity. Sure, there are plenty of cachet addresses in tony Westover and Shippan, but there are plenty of other areas that are great for planting roots.
Hubbard Heights, just north of Stamford Hospital, is one such zone noteworthy for its handsome colonials and proximity to Scalzi Park. “It has some stunning, well-maintained homes and really appeals to someone who appreciates a more urban feel and values being close to everything,” says realtor Gail Stone, adding it often appeals to relocating New York families.
Shippan, Stamford’s waterfront jewel, is an elegant peninsula of updated vintage homes and well-integrated new construction; many residences boast views of Long Island Sound. Its allure is a given, but realtor June Rosenthal is big on the charms of nearby Cove, which also boasts some waterfront access. “It’s charming and often overlooked as a great place to live,” she says.
Rosenthal is also a fan of Springdale and Glenbrook. “These are true neighborhoods that have a lot of darling starter homes, but also great, larger homes that many people stay in forever.” Stone says both communities boast a “small-town feel” with their own shopping districts, train stations and plentiful condominium options, “making them extremely convenient for living and commuting.”
While North Stamford is synonymous with estate properties, its inventory of smaller homes is also worth a look, suggests Rosenthal. “A lot of people don’t think of those neighborhoods just north of the Merritt, especially on Long Ridge Road. You can get quarter-acre lots there. I like to think of it as a best-of-both-worlds situation. You have a bit of the country feel, but you’re still close to everything.” — BC
7. Rentals Reign Supreme
Are there any limits to Stamford’s rental market? For the last year or so, developers have built hundreds of upscale apartments around the city, and hundreds more are planned in 2012.
If those builders are to be believed, the fortunes of Stamford’s real estate industry hinge on droves of twenty-something singles with deep pockets and short-term residential plans, presumably the kind of people who often live in these types of homes.But the success of a rental market may be coming at the expense of a sales market, and Stamford today is no exception.
Average single-family home prices actually dropped 6 percent in 2011, to $658,964 from $701,994, while condos fared no better, falling 9 percent over the same period, according to data from Greater Fairfield County Consolidated Multiple Listing Service. “The confidence just isn’t there yet for buyers,” says Randy Salvatore, president of RMS Companies, a developer that’s riding the rental wave.
Last year, his BLVD, a new ninety-four-unit rental at 1231 Washington Boulevard where one-bedrooms start at $2,100, leased in six weeks; Salvatore has since sold a 90 percent stake in it to the Wolff Company of Arizona.
Today he’s building a 124-unit rental at 1340 Washington Boulevard, where the City Place condo was planned before succumbing to foreclosure in 2008. (It’s also where Canaan Lofts was supposed to go up last year.) Not yet named, the one- and two-bedroom building is to open in June.
On a much different scale is his planned conversion of the 1200 Bedford Street office building, into a sixteen-unit rental; there’s also a fifty-eight-unit ground-up project at 163 Franklin Street, on a parking lot, though it requires zoning approval.
There are others. The Stamford Advocate building was razed in December to make way for a 350-unit complex from Greenfield Partners. And a new fourteen-unit project at 25 Bank Street is under development by Seaboard Properties. Its one-bedrooms will go for “market rents,” says Seaboard vice president Greg Stanton; brokers put those as upwards of $2,000 a month.
Though the four-story Seaboard building, to be completed by summer, will be located just blocks from RMS’s new project on Washington Boulevard and the new Advocate apartments, those developments, with their hundreds of units, are huge, and therefore incomparable with Seaboard’s. “What we are building is small-scale, a quality product that does not exist,” Stanton says.
To be added to the portfolio will be Summer House, recently unveiled by Thomas L. Rich, president of F. D. Rich, whose Trump Parc condo has struggled. Though it still requires zoning approval, the twenty-four-story rental high-rise at 220 Summer Street will have 226 studios and one-bedrooms, and will be finished in 2014, which would put Rich’s project out of the line of fire of rising competition in 2012 and 2013, he says.
Beyond the downtown area, there are thirty-five single-family homes for rent—former sales properties that couldn’t find buyers—which is five times what there was during the boom, brokers say.
But clearly most activity has been concentrated in the South End, with the neighborhood-reordering Harbor Point project, which has added about 900 rentals since 2010, out of a planned 4,000. The newest building, with 226, at Henry and Pacific streets, is expected to rise this year. Though the developer, Building and Land Technology has met with recent controversy, the new apartments will go up amid a burgeoning mix of new businesses, including the restaurant Harlan Social.
While rentals may be a hedge, their risk might also be minimal. Since they have such fancy finishes, developers could ostensibly transform them into condos when the market improves, says realtor Gail Stone, explaining that a lot of inventory has to be absorbed before prices improve. “It will take a few years,” she says.
But in a twist, depressed property values likely won’t result in lower tax bills, vis-à-vis this year’s revaluation; the city urgently needs the revenue and will probably adjust the mill rate to make sure its coffers stay full, guesses realtor June Rosenthal. “This town is not in the best condition, just like everywhere else,” she jokes. — CJH
8. Set the Stage
If location, location, location is the realtor’s mantra for driving home sales, “lose the clutter” has to be the motto for professional stagers.
“I’m being a little dramatic, but clutter is an epidemic; it really is one of the biggest things that keeps people from seeing the potential of a home,” says Krista Collins, a staging and estate dissolution expert who works extensively in Stamford. “It’s kind of like women with their clothes. They wear a few things, but have closets full of things that just sit there.”
In some of Collins’s jobs, staging can be as simple as encouraging clients to discard items or just tuck things away for showing. “In the kitchen, we all live with stuff on our counters every day. It’s what people do,” says realtor June Rosenthal, who often refers clients to staging pros. “But when people come in to look at your house, you don’t want them to look at a kitchen with stuff all over the place. It’s distracting.”
For bigger projects, Collins focuses on removing anything that looks “shabby.” (Think tattered rugs and upholstery.) She then concentrates on creating appealing focal points. Sometimes she imports new furnishings temporarily, but often she eyes existing décor to create enticing arrangements. “When people walk into a room, you want their eyes to hit something very appealing. It’s the visual stimuli that hit people right away; that make them feel good about a room and a home.” — BC
9. Living Downtown
When interior designer George Snead and his partner, Tony Hanley, decided to downsize after years of maintaining an antique charmer in Maine, their “dream” was a Manhattan address. But budget considerations and their Glenbrook-based design resource business, The Wakefield Collection, made a Big Apple home prohibitive.
“We couldn’t be happier that New York didn’t work out,” Snead says. Instead the pair bought a condo downtown and soon fell in love with the neighborhood. “The beauty is we can walk to almost everything we need,” says Snead. “Tony almost never gets in his car. I think he puts on fifty miles a week and that includes going to work.” The couple has three movie theaters within walking distance, and although they love to cook—they can pick up groceries at Target and CVS, and produce at La Marqueta—they’ve become fans of several downtown restaurants. (Their tip: Try ZaZa.)
What appeals to the couple most about their address is their neighbors in the building: They include other mature couples, as well as younger singles. “We are supportive of each other without being overly intrusive. It kind of is what small-town living used to be like.”
An unexpected fringe benefit of their move is witnessing downtown’s increasingly vibrant nightlife. “We have a nephew in his twenties who is also living downtown and he’s just as happy as we are. In some of the towns around here, the streets are dead at five o’clock, but here things get hopping at nine p.m.” — BC
10. Thinking of Downsizing?
George Snead and his partner, Tony Hanley, had to sort through a lifetime’s worth of possessions when they decided to move into a downtown apartment. But they welcomed the opportunity for a fresh design start, and updated their furnishings from a traditional style to something Snead describes as “modern transitional.”
Their decision to sell their home completely furnished paid off. “It helped us sell to buyers who were attracted to the idea of moving right in,” Snead says. “But it also made the decision of what to take and what to leave a lot easier.”
But they did pack some cherished possessions. Their editing choices are the same ones Snead suggests to clients: “Family photographs, art, antiques, small case goods, things you’ve collected traveling, which may have great meaning, are the things you really should focus on incorporating into your new home.”
Often, he says, clients must let go of bulky items, such as sofas, armoires and expansive dining room tables. “Even if you have a sentimental attachment to them, the truth is a lot of times they just won’t fit.”
If your furnishings are of good quality, George also recommends divesting them through high-end consignment shops. (He’s often placed goods at Severed Ties in New Canaan.) Getting items accepted by better consigners may be more challenging in this economy, however. “So many people are selling their homes that the inventory at the good consignment shops is excellent, but if you can consign, it is the best way to get some of your investment back.” — BC
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