The Jonathan Rose Cos., a national developer of mixed-income and affordable housing and other mixed-use redevelopment projects, earlier this year announced a $500 million purchase that has added one Stamford property to its presence in Fairfield County.
Headquartered in Manhattan, the real estate company acquired Forest City Realty Trust’s affordable housing business, which included 48 affordable housing communities in seven states. In Stamford, the buyer paid $24 million for Shippan Place, a 148-unit Section 8 senior housing complex at 521 Shippan Ave.
“Seniors pay one-third of their income to live there,” said Caroline E. Vary, the Stamford-based managing director of asset management for Jonathan Rose. “It is well-operated, well-kept and seems to be a very strong community. We felt it was a smart investment to make.”
At a time when many residential real estate developers in the region are building or planning luxury apartment housing targeted especially for millennials, commuting professionals and empty nesters, Vary said her company is focused on exploring the opportunities in the often-overlooked affordable housing sector.
“We are a mission-based real estate company,” she said. “We are for-profit but we have a twofold mission. One, we are aiming to be environmentally responsible in our development and operations. And secondly, we want to make sure we are investing in the well-being of our residents.”
At Shippan Place, the new owner plans to spend approximately $1 million in initial capital improvements that will include a green retrofit to reduce energy and water consumption, upgrades to the commons area and fitness center and enhanced social programming for residents. “We do resident surveys to ask them what they feel their needs are,” said Vary.
For the last decade in Stamford, Jonathan Rose has worked as co-developer of the residential component of the Metro Green complex, a transit-oriented development adjacent to the Stamford Transportation Center in the city’s South End. The three-phase, $98 million housing development is part of a mixed-use complex that includes Empire State Realty Trust’s eight-story, 285,000-square-foot Metro Center office building and that Manhattan-based company’s planned 17-story, 385,000-square-foot Metro Tower office property. Jonathan Rose is co-developer of Metro Green Residential with Malkin Holdings LLC, owner of the site and of Empire State Realty Trust.
“There are 100 units in the two existing buildings and we are now building an additional 131 units,” Vary said of Metro Green. “This has been in development for over 10 years.”
Seventy percent of the Metro Green residences are affordable units, based on HUD’s household income standards for the area, and 30 percent are market-rate apartments. Ten years ago, the development, built on a brownfield site in an area that had little housing, experienced difficulty attracting some tenants.
“In 2007, when the first building opened, the apartments priced at 60 percent of the area median income were harder to lease,” Vary recalled. “The apartments at 25 percent and 50 percent of area median income moved very quickly. By 2009, when we opened the second building, the 60 percent apartments leased immediately. Within a two-year period, we saw a change in the market.”
“The first phase really helped stabilize that corner,” Vary said. “It showed how affordable housing can become a platform for improving a neighborhood.”
The first two Metro Green Residential buildings received gold certifcation from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program and the third building has been submitted for the same certification level, Vary said. The complete Metro Green development is a candiate for gold certification from the LEED for Neighborhood Development program.
Vary said Jonathan Rose renovates properties like Shippan Place to meet the nonprofit Enterprise Community Partners’ green communities standards. “It is important that we have third-party verification of what we’ve done,” she said. “It’s not just about saying that we’re green, it’s about being green. We even publish a green guide for residents to encourage them for best environmental practices.”
Elsewhere in Fairfield County, Jonathan Rose has worked as a for-fee developer for the New Canaan Housing Authority, as it also has for the Meriden Housing Authority in New Haven County. Last year, the company paid $70 million for Squire Village, a 379-unit affordable housing development in Manchester in Hartford County.
Vary said the company was eager to pursue more projects in the state in a housing sector where competition is limited.
“Affordable housing is more expensive to operate than market-rate housing because of the requirements and compliance that we have,” she said. “On top of that, people are simply paying less for rent. So, you have operating expenses that are either equal or more (than market-rate properties) and you are getting a fraction of the rent. It is difficult to make those numbers work.”