Mill River Office Building Sold For $4.65M

Not that I know anything about real estate, but the decision of the new owners of 414 Chapel to hold off on its conversion to apartments suggests that we are at or near the crest of the development boom. There are hundreds of units under construction and well over another 1,000 that have been approved. There clearly are a substantial number of people who want to live in town and who can afford market rents. But I suspect that many of the developments that been approved recently won't be built.

In this case the building covers itself financially in its current configuration as office space so there is no rush to spend a few million dollars to convert to residential quickly. It will likely be phased floor by floor as commercial tenants vacate.

But the beauty of the CPC Special Permit and Site plan approval is that it's good for five years with an as of right five year extension.

If the boom is peaking; why have rents not gone down if peripheral areas yet? And where are all these folks dying to live in central NH coming from? Any idea?

CityYankee, I really don't know anything about real estate but here goes. The impact of the new developments will likely be first felt in neighborhoods where competing housing is located. Some of the residents of the new developments would have otherwise lived in East Rock and similar neighborhoods. You now see "for rent" signs in East Rock year-round, something I never saw in the 30 years I've lived here. I don't know that this has reduced rents in the neighborhood, but it has likely held them down. Conversely, I suspect that very few of the residents of the new developments are coming from West Rock, the Hill, etc., and it is unlikely that the developments have done anything to reduce rents there. Perhaps this will happen in the long run. But as J.M. Keynes once said, "in the long run we shall all be dead."

Some of the residents of the new developments are medical, law, and SOM students. Others are youngish people working in biotech and IT. And others are empty nesters who no longer need a three- or four-bedroom home in the suburbs and who want to live in-town. Each of these groups is relatively small. I don't know that all of them, taken together, would be enough to support all of the developments that have been approved.

Ben Trachten, on the other hand, does know something about real estate. It would be interesting hearing his take on your questions.

Most single adults and young families can no longer afford to buy and maintain large suburban homes, especially if they have student loans and there is a chance they might move to several different cities over the course of their career.

On the other hand, our adults aged 60 and up, who have accumulated a great deal of wealth on average, are staying in their homes well past when they retire and are living much longer on average.

As a result, there is easily a need for 30,000 additional apartments in New Haven over the next 10 years. The apartments that are under construction will fill up quickly. It is possible that rents will be stable or drop by a few percentage points as a result of the additional supply, but that would be a good thing given that rents are at historic highs.

I suspect that some of the commenters and others who oppose and/or are skeptical of new development are landlords, and they really would like to see the apartments they own continue to increase in price at a rapid pace, as they have over the past 10-20 years. Motivated by self-interest, they want to slow down the development (sometimes in the name of "historic preservation"), even if the resulting higher rents mean that there will be greater homelessness and financial stress among people who are under age 60.

Of course, landlords like these are more likely to attend and/or chair neighborhood meetings, write op-eds and comment in the Independent, vote in local primary elections, and have influence on politics far beyond their numbers.

Hopefully city leadership will recognize they are a small minority and continue to fast-track new development, which is in the interests of the majority, including both renters as well as middle-income single-family property owners who want to see lower tax bills.

Everyone benefits from more housing choice even if the majority is at the top of the price range. I don't know how this plays out over the long term, but I don't think were even in a boom. I think we're in a time where middle to upper middle income renters want amenities and are willing to pay for the convenience of having those amenities. Also, location is tremendously important. So many people are choosing to not own cars. Not just young people.

The residents of these new developments are really diverse. I don't think you can say that they're all connected to Yale or local startups. There are young people and older people. There are singles and families of 4. Occupancy rates are strong from what i hear. Even the new Audobon development that isn't complete is welcoming new renters every week. Go New Haven. I think New Haven has these special characteristics that will sustain our attractiveness through an economic downturn, even a substantial one. I don't see developers bailing any time soon.

Yes, anonymous, the greedy small landlords who have maybe 2 or 3 units and are barely making enough to pay the mortgage and taxes and insurance and water and sewer and damage and court costs can hardly wait to stop development in NH. The developers who get all the tax breaks that we have to pay for while they rake in the dough are really good for New Haven.

You like gentrification and exorbitant rents? You like slumlords like Mandy and the other New Yorkers coming into town buying up everything? You will be very happy when little landlords are driven out, I think.

As CityYankee (and bitter local landlords) make clear, all this development really is pushing down rents in smaller buildings with fewer amenities, which is good news for local renters who are willing to forego the fancy new buildings, but bad news for those landlords. If their buildings are really unprofitable at current assessments, then their property values will drop at the next assessment and the buildings will go back to cash-flow positive. Someone will own those unites and rent them out.

The alternative is that we demand building stops as soon as it starts helping rents, which would be a really perverse attack on local renters.

As for where the renters are coming from, Yale is growing, local biotech and software firms are mildly growing and the new Hartford line adds new commuting possibilities to the many old ones. There are hundreds of thousands of jobs in commuting radius from New Haven, so one thousand new apartments are a drop in the bucket as compared to employment options. Throughout this gentle upward building cycle (which I agree is hardly a boom), many building plans have been delayed and abandoned and so the "peak" is hard to call.