Norwalk has caught a case of Brooklynitis, embracing rentals to attract young professionals.
The so-called Gen Y”™ers who are driving today”™s rental market increasingly eschew the American dream of homeownership in favor of renting; and when they do buy they are six years older than a generation ago.
The shift happened in Brooklyn as a reaction to booming Manhattan and it is happening in Norwalk in reaction to booming Stamford.
Tidal forces crimping young home buyers include a high student debt load ”” about $550 billion nationally ”” and a first-hand look at what happened to their parents”™ nest-egg homes during the recession.
For Joanne Carroll, the past president of the Homebuilders and Remodelers Association of Fairfield County and the current publisher of the glossy trade magazine for the Homebuilders and Remodelers Association of Connecticut, the writing is on the drywall: the move is to multifamily rental construction.
“Construction lending is virtually nonexistent except in the multifamily sector,” Carroll said. “There is little money available for single-family and spec building; those projects are using private angels or the hedge funds are putting money into real estate ”” even for a single project that”™s an elaborate property ”” or they”™re self-financing. Sometimes a postage stamp of land is $1 million, so the house has to be $2 million to $3 million.”
Carroll, who noted, “Everything I do is industry-based,” reported building permits were up 37 percent statewide in 2012 and up 10 percent this year to date. But permits for five units or more ”” multifamily/rental ”” boomed, accounting for half of all permits in 2012 and 36 percent of the permits so far this year.
“And these rental units are concentrated in cities like Norwalk,” she said, “which has 60 permits so far this year, up from 40 at this time last year, an indication that much needed apartment homes and buildings will be coming on the market in the near future.”
She added: “The Connecticut Labor Department released employment and unemployment data for July today” ”” Aug. 16 ”” “showing that the state gained a robust 11,500 jobs on a monthly basis in July. That will mean more Gen Y renters in Connecticut, since that is the market that benefits most from job growth and young people are benefitting most from the improved job market. They”™re the ones getting the jobs.”
She said simply, “Norwalk is on fire and Gen Y is driving it.”
Carroll cited statistics that revealed 88 percent of Gen Y prefers action-filled urban life to the suburbs. They are also $550 billion in debt, she said, more so than any generation before them, and they will not buy a home until they are on average 34 years old, six years older than in 1980. “These are the prime customers for rentals. Gen Y is driving the rental market. Less than one-quarter of U.S. households are married with 2.5 kids. The single-person household is the fastest-growing segment of the market.”
As such, she said, places like Stamford and Norwalk will benefit.
“Norwalk is interesting,” Carroll said. “Stamford is too expensive for the Gen Y worker just starting out with one of the corporations in Stamford. They look in Stamford and find it”™s expensive ”¦ and Norwalk has benefitted. I compare Norwalk with Brooklyn in the respect that Norwalk is now getting gentrified and is exploding with growth.”
At Waypointe in Norwalk, the builder is Norwalk-based Pointe Builders. The $250 million Waypointe project envisions a total 774 apartments and 90,000 square feet of commercial space. Phase No. 1 features 444 apartments and some 60,000 square feet of street-level retail and restaurant space. Work on the first phase should wind down in 2015.
Carroll said the fact it offers amenities like restaurants within its commercial footprint ”” the “mixed use” tagline ”” will appeal to empty-nesters, as well as to Gen Y. “They”™re another huge demographic fueling the rental market,” she said.
Other Norwalk rental properties include Avalon East Norwalk, 8 Norden Place, which has begun leasing its 240 apartments that run from studio to three bedrooms.
At Summerview Square on West Main and Summer streets in north Norwalk, the final construction phase of 32 rental townhouse-style apartments has begun. Carroll said two of the units of which she had knowledge had rented to young executives with G.E. and Xerox who are living three friends to an apartment.
Also in Norwalk, The Spinnaker development at 20 N. Water St. is under construction toward an eventual 107 apartments, 17,500 square feet of commercial space and a 3,200-square-foot restaurant space.
According to web-based real estate listings, the $1,250-$1,499 rental unit is the most popular in Norwalk, with 2,017 units bearing those rents. About half that number ”” 1,099 ”” topped the $2,000 mark.
In Stamford, where a raft of tony apartments await tenants, apartments at locations like 101 Park Place, The Lockworks at Yale and Towne, Park Square West and Infinity Harbor Pointe, rents typically begin at or just below $2,000 and head north from there. The Lofts at Yale and Towne begin at $1,660.
