New Colt Gateway apartments in Hartford take twist on rental conversions. Here’s why and what it might cost to live there.

Two apartment conversions in Hartford’s Coltsville district will add to the hundreds of new rentals created in the neighborhood in the last decade, but the redevelopment also is pointing to the need for new alternatives for an abundance of office space in the pandemic’s aftermath.

The developer of the former Colt gun manufacturing complex near downtown — Colt Gateway — is creating apartments in former commercial space that will be below existing office space. One is a lower floor in the East Armory, the most recognizable structure in the complex, topped with the blue, onion-shaped dome.

The conversion upends the traditional approach of housing occupying upper floors above storefronts or offices. The $6.7 million in projects at Colt also come as employers in Hartford downsize their office leases with a dramatic shift to working at home, either full- or part-time.

In downtown alone, major corporate employers plan to shed hundreds of thousands of square feet of office space, a trend unfolding in cities across the country, including major metros such as New York and Boston.

“With what’s going on with commercial space, flexibility is going to be the name of the game,” Larry Dooley, owner of CG Management Co. and co-developer of the former manufacturing complex, said. “When you start to think about it, the lines really started to blur here between residential and commercial with working from home.”

Dooley said more residential conversion at Colt may be on the way. The complex is split roughly 50-50 between housing and office, but that could change if current weak commercial leasing trends persist.

“I used to get people walking in all the time, sometimes looking for bigger space, smaller space, its really come down to just about nothing,” Dooley said.

Colt also is watching closely the leases of its current commercial tenants. One of the largest and longest running, Insurity, a software company, now leases 75,000 square feet “and they basically have not been here since March of ‘20, so it is concerning.”

“I think they are going to take a reduced amount of space, so we have to be creative at Colt here to make sure we can keep paying all the bills,” Dooley said.

‘Creative and Aggressive’

The new Colt projects are a modest start at that creativity, adding 45 rentals at two locations in the complex near downtown. The first of the new apartments are expected to be available by late spring, Dooley said.

Hartford Mayor Luke Bronin said there little doubt there has been a structural and likely long-term change to the commercial real estate market.

“That means we have to be creative and aggressive about using our space as effectively as possible,” Bronin said. “And where residential conversions can be done effectively and economically, they make a lot of sense.”

Bronin said it can be challenging to convert commercial space to housing, however.

“Floor plans, the mechanicals can make those conversions difficult,” Bronin said. “But where it makes sense, it’s an opportunity to advance one of our top strategic priorities, which is creating more housing opportunities and more residential density while, at the same time, taking some of the slack out of the commercial real estate market.”

The loss of workers coming into the city five-days-a-week is a concern for local restaurants and businesses that have depended on those workers for their livelihoods. Not all downtown employers are downsizing, however. Hartford HealthCare is investing $14 million in its new corporate headquarters at 100 Pearl St., where it plans to bring up to 700 employees.

At Colt, where construction is already underway, plans for the second floor of the East Armory call for all but one of the rentals to be one-bedroom units. The average size would be 638 square feet, with estimated monthly rents ranging from $1,350 to $1,606.

Commercial tenants on the floors above include JCJ Architecture and the local offices of U.S. Sen. Chris Murphy.

The street-level floor of a second building, at the corner of Huyshope Avenue and Sequassen Street, is being converted for live-work apartments that are larger than the ones in the East Armory.

Named after its shape, the second location on the Colt campus — the 2-story, “L-Shape” Building will have 11 studios, 3 one-bedrooms and 2 two-bedroom apartments. In addition, there will be a collaboration room, meeting rooms and smaller offices for Zoom calls.

“People are always asking for small spaces,” Dooley said. “You could be a small law office, any kind of office that would be applicable to being inside an apartment, something quiet. So I think the idea of having an apartment on the first floor, it could be very cool.”

The average size of the units is expected to be 909 square feet, with estimated monthly rents ranging from $1,350 to $2,160.

Commercial tenants on the upper floor include Tecton Architects and Maier Design Group.

Financing for the two conversions includes $2 million from a line of credit from Liberty Bank, and an expected $1.5 million in low-cost, taxpayer-backed loans from the quasi-public Capital Region Development Authority. The remainder will come from an equity investment from CG Management and its partner, the tax credit investment arm of oil giant Chevron.

The loan was approved by a CRDA committee Friday and is expected to clear the full board of directors later this month. The State Bond Commission would still need to sign off.

Rental demand strong

Demand for rentals at other conversions in the former manufacturing complex — the South Armory, the North Armory and the “U-Shape” Building remain strong.

On Tuesday, Dooley said five apartments were posted and within an hour, 7 applications were received.

“It’s still very competitive,” Dooley said. “Our [apartments] are still very desired.”

The apartment conversions at Colt are part of a much broader housing push in the city that has added more than 3,000 rentals in and around downtown in the last decade. Almost all secured some financing — either a loan or equity investment — through CRDA.

As of Thursday, there were just two apartments available at Colt out of a total of 205, according to the leasing office at Colt.

Rents are about 9% higher than they were a year ago, Dooley said. Increases for leases that are renewing are rising about 2% to 3%.

Dooley said he sought the loan from CRDA partly because construction costs had risen 18% in the past year alone, compared to what it cost to convert the U-Shape Building to rentals just a year ago.

The increase was tied to inflation, rising costs of building materials, supply-chain disruptions, plus steadily increasing interest rates, Dooley said.

Here is a look at the three existing apartment buildings in the historic Colt factory complex, the chances of landing an apartment there and what you might pay:

1. South Armory

Address: 140 Huyshope Ave.

Built: 1916 to manufacture machine guns; Apartments opened in 2015.

Number of apartments: 129

Current occupancy: 99%

Rents: Studios: $1,195 to $1,795; One bedrooms: $1,645 to $1,985; Two-bedrooms: $1,975 to $3,250

2. North Armory

Address: 100 Huyshope Ave.

Built: 1916 to manufacture gun barrels; apartments opened in 2020.

Number of apartments: 48

Occupancy: 98%

Rents: Studios: $1,325; One bedrooms: $1,700 to $1,975; Two bedrooms: $2,200 to $2,350

3. “U-Shape” Building

Address: 17 Van Dyke Ave.

Built: 1942 for the Colt company offices; Opened as apartments in 2021.

Number of apartments: 28

Occupancy: 100%

Rents: Studios: $1,372; One bedrooms: $1,405 to $1,895; Two bedrooms: $2,095

SOURCE: CG Management

Kenneth R. Gosselin can be reached at kgosselin@courant.com.