New York’s Capital District is ranked 11 out of the top 25 metro markets in the Northeast (according to REIS), but the area is most certainly making noise in the world of multifamily construction projects. A huge demand in the apartment sector, stemming from technology-based job growth, has forced the hands of local and regional developers to get off the sidelines and start tackling sources for much-needed construction financing to meet the demand. To name of few active developers, Tri City Management, Prime Companies, Capital City Properties, and Albany Partners LLC have a total of more than 1,000 units recently built, under construction, or funded and ready to build in the next 16 months.
Permit filings were up more than 30 percent from 2009 to 2010, indicating a solid trend for new development slated through 2012. Major projects have been popping up all over the region. The Woods, a 60-unit luxury community in suburban Troy, leased up its first few units in May and had 48 of the 60 units rented long before the grand opening in November. One- and two-bedroom unit rents range from $1,100 to $1,490 for 882 to 1194 square feet, averaging roughly $1.50 per square foot according to owner and builder Tri City Management.
Prime Companies’ newest project, Watersview, is a 222-unit luxury community currently under construction in Cohoes just down the road from Prime’s 170-unit Riverwalk complex on the shores of the Hudson River. Watersview was a product of a HUD 221(d) 4 loan for $30 million arranged by Paragon Prime Funding at highly attractive finance rates. Pre-marketing began at the end of September, and the project had deposits on 14 units by the end of October. Official lease up began December 1. Rents, which will average around $1.33 per square foot and range from $1,175 to $1,890, are bolstered by an affiliation with the Marriot Execustay program. “The key to our area is great site selection and strong rental demand from the state employee pool and new tech sector,” says Dean Devito, a principal of Prime Companies.
Capital District Properties (CDP) is expanding its 336-unit luxury apartment community The Paddocks of Saratoga located in Saratoga Springs. The expansion will bring the total count to 420 units. The expansion also includes The Paddocks Sports Club featuring a 2,000-square-foot fitness center, a yoga and exercise studio, tennis courts, basketball court, sundeck and grilling area, as well as a private movie screening room. Simon Wilde, chairman of CDP, had this to say about the growth in the Capital Region: “Running a global business, I have a global perspective of the U.S. and world real estate markets. What is happening in the Capital Region with the massive expenditure on the development of new technology has transformed this market into one of the few bright spots in the United States.” The property expansion will be complete in early summer of 2012. Rent for one-bedroom, two-bedroom and two-bedroom-with-den units range from $1,300 to $1,800 for 895 to 1,454 square feet, averaging around $1.42 per square foot.
Continued positive rent growth of more than 65 percent (according to REIS) for units built after 2009 coupled with solid price-per-square-foot rents and a rapidly expanding tech sector job pool are the key ingredients in a lucrative cocktail that developers want to sip on in this emerging secondary market. The Albany MSA is a hot area to keep an eye on over the next few years as the multifamily construction sector heats up again and is posturing towards a full recovery.
— John Bevilacqua is the New York State director of Multifamily Sales for Coldwell Banker Commercial’s multifamily group. He is based in Albany, New York.