The Sound at Gateway Commons (CT Examiner/Stroud)

Developer Explains the Housing and Retail Market in East Lyme

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EAST LYME — “If you drew a big triangle down Route 2 to Groton, and back along I-95 almost to New Haven, there was nothing — no highly-amenitized, new-ish, multi-family communities. And, I think part of that is because the towns that make up most of that big triangle traditionally had not encouraged nor allowed multi-family development of any size,” said Newton Brainard, a Lyme resident, and vice president of Simon Konover Company, in a telephone interview with CT Examiner on January 15. 

With 280 new apartments at The Sound at Gateway Commons fully-occupied, and an additional 120 “luxury” apartments and townhouses slated for an adjacent parcel, Simon Konover Company, the developer of Costco in East Lyme, has identified what Brainard describes as a growing need for multi-family rentals along the shoreline in southeastern Connecticut.

“[We thought] a relatively dense, highly-amenitized, luxury multi-family product — which you see all over the country and in other parts of Connecticut — would do well there. And it has.”

According to Brainard, area towns have not kept up with the demand for new, “amenitized” rentals marketed to downsizing 55-and-older empty nesters and millenials from 23 to 40 years old. 

“We felt there was a need down along the shoreline and a demand that wasn’t being met,” he said. “[We thought] a relatively dense, highly-amenitized, luxury multi-family product — which you see all over the country and in other parts of Connecticut — would do well there. And it has,” he said. 

Phases I and II

Phase I of the overall project was completed in 2015 — studio, one-, two- and three-bedroom apartments, ranging in price from $1,475 to $2,375 per month. The complex has 10 buildings containing 28 units each, designed “garden-style” with a shared entryway and common hallways and stairwells. Residents can rent detached garages for an extra fee. 

Phase II, which includes the construction of the 165,000-square-foot Costco, is nearly finished and includes a new housing complex called The Cove, consisting of 60 townhouses and 60 “manor homes,” totalling 120 units, as well as a dedicated clubhouse and pool.

The 1,700-square-foot townhouses will be similar to two-story condos, with three bedrooms and two-and-a-half baths. Each unit will have its own front door and private attached garage.

“It’s more like homeowner residential living, but it will be a rental. It’s more intimate and less dense,” Brainard said. “This is going to be more private in that there’s no common space and no sharing of hallways or doors, everyone has their own front door.” 

The “manor homes,” clustered in five 12-unit buildings, will be apartments, but each will have its own front door and an attached garage with interior access. 

“We call these manor homes because the aesthetic of the architecture is supposed to make it look like one big sprawling, 18,000-square-foot home,” Brainard said. 

Rents haven’t been finalized, but Brainard said they’ll be higher than the Phase I apartments given that  they are six years newer and have attached garages among other “amenities.” Some units at The Cove will be ready for rental this summer.

Market trends

According to Brainard, the decision to build three-bedroom townhouses targets a national trend of people who would like to downsize, but want more privacy than apartment living. 

“[This is] more like single-family living in a condo-type building that has your own front door and your own garage and no one living above and below you, I think that’s going to be very attractive to a certain demographic,” he said. 

Brainard said that people coming to work in the area often want to take a year to figure out if they’re going to stay with their company and where they’d like to live in the area, often buying a home when they’re ready.

“If you look at the communities that have been coming out of the ground over the last five or seven years in southeastern Connecticut, there are very, very few three-bedroom options because most communities get worried about three-bedroom apartments,” he said. “The traditional worry is you’re going to bring 14 kids and put them all in school.”

But with shrinking local populations, schools have excess capacity, Brainard said.

‘Even if more children show up, which typically they do not, but if they did, the schools have the capacity for them so it’s less of an issue than 30 or 40 years ago when Connecticut was growing leaps and bounds,” he said. “We’re not growing, we’re contracting. There are capacity issues that school systems around the state are facing and so they’re more willing to take children than they used to be.” 

Phase III?

Brainard said there was no “Phase III” planned yet, but according to the town’s master plan, the development district has been approved for 425,000 square feet of commercial space, including the 165,000-square-foot Costco, leaving 260,000 square feet of potential further development.

Part of the land that could be developed is occupied by the East Lyme Driving Range, which Simon Konover company does not own or control. 

“Retail is a difficult business these days. It’s going to be difficult for whoever chooses to build the next phase of commercial, to make a go of it,” Brainard said. 

The additional infrastructure on Route 161, that would make the traffic workable for more retail tenants, is  complicated and expensive, according to Brainard, but much depends on securing funding from the State Department of Transportation.

Earlier at a May 23 meeting at East Lyme Middle School, CTDOT presented plans for a $142.1 million infrastrastructure project at the I-95 interchange with Route 161 at Exit 74, which included widening I-95 to add auxiliary northbound and southbound lanes, widening a section of Route 161, replacing the I-95 bridge over Route 161 and reconfiguring the exit and entrance ramps to the highway. 

Residential and retail flip

The 2008 recession and its effect on the retail climate completely changed the way the project unfolded, Brainard said. 

“This whole project was predicated on the whole commercial side going first because that’s where the demand was.That fundamentally changed due to the recession and the first thing to really come back is the residential side and that’s what we concentrated on,” he said. 

The demand for residential rentals has also grown because of more stringent lending requirements and student debt, said Brainard, and towns in the region haven’t built multi-family housing since the 1960s and 1970s, instead focusing on single-family houses. 

“This whole project was predicated on the whole commercial side going first because that’s where the demand was.That fundamentally changed due to the recession and the first thing to really come back is the residential side and that’s what we concentrated on.”

“There wasn’t a lot [of rental housing] that was built in the decades since then and a lot of it was because towns would not allow it. They were very singularly focused on the fact that single family residential is the only thing they will ever allow, and I think it has really hurt growth in Connecticut because not everybody wanted to live that way and our stock of older apartments were older, so there’s an awakening that progressive towns — like East Lyme, like Old Saybrook — realize that not everybody wants to live in a subdivision in their town,” he said. 

According to Brainard, employers like to have high-end residential rentals to offer prospective employees, and rental housing helps towns grow, he said. 

(Image courtesy of Simon Konover Company)

“There are 500 or more people living in Phase I. Most of them would not be living in the town of East Lyme otherwise, and that’s a lot of new people in town that are providing a tax base, taxing their cars and going to the Flanders Fish market and going to the dry cleaners. It’s a big boon to have a population increase in our shoreline towns that are all facing population decreases,” he said. 

Brainard said rentals will provide part of the solution, but the population needs a range of housing.

“Part of it is you just can’t have one type of living. Not everybody wants to live next door to me in my single-family home, you need diversity in housing and that includes affordable housing.”

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