Office landlord Monday Properties is expanding its residential holdings in a bid to cash in on the sizzling multifamily sector. Its market of choice: Stamford, Connecticut.
The New York-based investment firm paid $131 million last week for 75 Tresser Boulevard, a 344-unit apartment building in the city’s downtown, the Stamford Advocate first reported. Less than a decade old, the four-story property sits a few blocks from the Stamford Metro-North and Amtrak station and 677 Washington Boulevard, an office complex that recently added Philip Morris International and World Wrestling Entertainment as tenants.
Its proximity to both makes the apartment complex, which is 95 percent occupied, a convenient choice for renters with a New York City commute or those with a desk in downtown Stamford, said Adam Carr, the Monday Properties’ executive vice president of investments.
“Its location is a huge plus and driver for the asset,” he said.
The deal marks the second Stamford multifamily play in the last year for the firm, whose portfolio primarily consists of office buildings in Northern Virginia. Last April, Monday Properties snapped up the Harbor Landing Apartments, a waterfront property less than a mile from the Stamford Transportation Center, for $73 million in a joint venture with Dubai-based real estate management firm NeoCapital.
For Monday Properties, the push into Stamford is a bet that the city’s affluence, coupled with rising rents and an influx of New Yorkers will deliver a considerable return.
“We’ve been actively monitoring [Stamford] for a while now, just based on its outstanding demographics, growing millennial population and transit time to the city,” Carr said.
Stamford attracted 17,000 New Yorkers in 2020, according to a study by Hearst Connecticut Media, a 72 percent increase from 2019.
“Overwhelmingly, the biggest shift in migration patterns were young, affluent, urban-dwelling, educated adults,” Eric Willett, director of research and thought leadership at CBRE, which has been tracking migration patterns, told Patch. “We think that’s a permanent group.”
But Carr said Stamford has also transformed into a city that offers many of the same amenities that characterize New York’s allure, but without the hustle and bustle of the big city.
“Years ago, Stamford was all about: You come for work and then you leave,” Carr said. “But over the last ten years or so, it’s improved, offering more of a live-work-play lifestyle.”
Like at the 75 Tresser Boulevard property, when the firm picked up Harbor Point last year, 95 percent of its units were leased. Carr said many of those renters are millennials who can enjoy the area’s restaurants, shops and waterfront boardwalk, as well as an easy commute to new, nearby offices.
In contrast, office buildings, which make up the majority of Monday Properties’ assets, have been slow to recover from the pandemic. On average, office occupancy rates in the 10 largest U.S. metro areas have struggled to stay above 35 percent, according to Kastle Systems, which tracks keycard-swipe data at 2,600 buildings across the country.
That uncertainty has led some traditional office landlords to pivot to apartments. In October, Empire State Realty Trust, owner of the Empire State Building, picked up two Manhattan apartment buildings for $307 million, the REIT’s first multifamily play. The move puzzled some analysts, who noted that before the pandemic, multifamily REITs had been generally reducing their exposure to heavily regulated rental markets in New York and California in favor of Sun Belt cities.
By focusing on Connecticut, Monday Properties can sidestep most of that political rattle. The city has no rent stabilization laws, and the specter of good cause eviction legislation appears to be less of an imminent threat in Connecticut than in New York.
“It certainly makes it an easier investment,” Carr said. “Just to be able to enjoy the rent growth.”