Skytree Investments News Articles

Despite sector’s woes, some landlords say there’s demand for small office space

Wed, 14 Jun 2023 17:00:00 GMT

Realty investors Ryan Deasy and Michael Doherty in March paid $1.5 million for a 9,554-square-foot Farmington building with 30 micro offices sharing a common kitchen, bathroom and conference room.

At the time, 10 were vacant. Two months later, the offices — ranging in size from 150 to 600 square feet — were completely filled.

The investors — principals of Farmington-based Skytree Investments — have seen solid demand for small offices at several other properties, Deasy said.

Since launching the company in late 2021, Skytree has built a $7.5 million portfolio of six office buildings, some with ground-floor retail. Located in Farmington, Middletown, Simsbury, Winsted and New London, each building incorporates some form of small office/coworking space.

“It’s hot,” Deasy said. “People are coming left and right to fill those spots. Generally, it’s people looking to get out of their house, to get away from kids in the background. Some people have clients and it’s not appropriate to have meetings in their home office. Others are working virtually and want a real address other stuff can come to.”

As big companies retreat from massive suburban office complexes, and owners of Class A, center-city office towers fret about growing vacancies, some small office landlords and coworking space providers say they’re seeing strong demand.

They credit this to pandemic-related, work-habit shifts — mainly a wider embrace of remote and hybrid work.

“Generally speaking, we were all allowed to work from home” during the pandemic, Deasy said. “There are 50 percent of people who love working from home and will never go back. The rest either have employers who want them back, or who have no home office. I think we are going to find ourselves surprised at how interested people are in these spaces. I think the days of companies renting out (large office space footprints) are over.”

Southington-based Advise Realty Services represents a Rhode Island investor who in May paid $4.1 million for two midsize office buildings in Southington’s town center. The same buyer last year paid $2.3 million for two midsize office buildings along the Silas Deane Highway in Wethersfield.

Advise Realty founder Vinny Valentino said the buyer’s plan is to offer small offices with shared conference rooms and common areas.

“A lot of people are getting out of the trend of wanting to work from home and want to work in an office,” Valentino said. “Maybe they aren’t renting 4,000 square feet. Maybe some of their executives can work out of a smaller office.”

Figuring things out

Tom York, a principal of East Hartford-based real estate brokerage and advisory firm Goman+York, said the shift in work patterns will probably continue to turn up demand for coworking and small office spaces.

But that dynamic could quickly shift, depending on the economy’s strength and employer demands. Many executives want to reel more staff into the office for longer periods, he said.

“I think it’s going to be a decade before we figure this out,” York said of post-pandemic work patterns. “There’s no analog to this. People are trying things out. It’s still a huge, open question. A lot of C-level folks don’t feel productivity is where they wanted it to be. A lot of C-level folks are saying this is not sustainable, what we are doing.”

Chris Ostop, managing director of advisory and brokerage firm JLL Connecticut, said he doesn’t see coworking space being a major disruptor to the state’s broader office market.

Coworking has always shown up in small pockets in Connecticut, he noted.

Employers are increasingly adamant about employees returning to the office, and an increasing number of “career-driven” professionals are flocking back on their own initiative, he said.

Sure, many companies are downsizing office footprints, but that’s not going to fuel a surge in coworking, Ostop predicts.

“Every tenant who has a big office and is downsizing, it’s not like they are going to zero,” Ostop said. “People are looking for smaller spaces, but the Reguses … and WeWorks of the world, it doesn’t make sense after like eight people. The math gets squirrely. You are not going to do WeWork for 25 employees. Just go get an office, so you can build it out and have a culture.”

Coworking prospects

At the close of the first quarter, coworking giant Regus counted 12 Connecticut locations among 3,375 globally run by its parent company, International Working Group. IWG operates the Regus and Spaces coworking brands.

The company said it signed deals for 170 new coworking locations in the first quarter of this year, up from 51 in the year-ago period. It also reported record quarterly revenues that were up 25% from a year earlier.

In its first quarter earnings report, IWG said it was seeing “higher demand for hybrid working solutions globally with companies reducing their real estate costs and responding to the needs of their employees,” but that “macroeconomic headwinds,” including inflation and higher interest rates, could negatively impact future office-space demand.

On a far smaller stage, West Hartford Coworking offers 10 desks and seven offices capable of hosting one or two people, all with shared amenities, from a leased 4,100-square-foot space on New Park Avenue.

At present, only two desks are available, said Annisa Teich, managing director of Bromleigh Ventures, parent company of West Hartford Coworking.

Even so, she is wary of a possible shift, either in working habits or the economy. She believes the small business advisory services and special events offered at West Hartford CoWorking will help shield it from any downswing.

“I think if we were just offering space, we might be in a little bit of trouble,” Teich said. “We offer space and community programming. We have small business services on-site. That certainly bolsters another kind of community that keeps us alive.”

Teich said she’s confident enough that Bromleigh is opening a second location, WindsorWorx, this July. She’s leasing 3,800 square feet on the first floor of a converted 15,990-square-foot light industrial building at 41 Mechanic St., in Windsor.

The building is in a section of Windsor that officials are trying to turn into a more vibrant town center.

It’s a short walk from a passenger rail and bus station. Nearby, developer Greg Vaca is transforming a shopping center into a mix of retail and 106 apartments.

“If Greg Vaca was not coming in with that complex, I might not have been as excited about Windsor,” Teich said. “Seeing brand-new development come in at this stage is really encouraging. Other areas where you are seeing apartments go up with one-bedrooms, they are typically for younger folks. They are going to be more familiar with this (coworking) model. They are more likely to have some hip, sexy job that will be remote.”

Developer Randy Salvatore, who has built multifamily projects in Stamford, New Haven and Hartford, said coworking space is a popular feature in the 270-unit mixed-use apartment building he recently completed next to Hartford’s Dunkin’ Park baseball stadium.

There is also coworking space, including a conference room, built into a 228-unit apartment development Salvatore’s RMS Cos. has nearly completed on Broad Street in Stamford. Coworking will also be incorporated into a 204-unit apartment building planned in Norwalk, Salvatore said.

“We need to provide places for people to do that if they don’t want to sit up alone in their apartment doing it,” Salvatore said. “Anything designed after the pandemic will have more (coworking space) because we have seen the demand for it, and the necessity.”

Source: https://www.hartfordbusiness.com/article/despite-sectors-woes-some-landlords-say-theres-demand-for-small-office-space

Podcast: A Deep Dive into Building Your Off-Market Deal Pipeline and How to Find the Right Partner with Michael Doherty and Ryan Deasy

Sun, 07 May 2023 11:54:27 GMT

The full podcast can be found here: https://multifamilypodcastnetwork.com/episode/72-a-deep-dive-into-building-your-off-market-deal-pipeline-and-how-to-find-the-right-partner-with-michael-doherty-and-ryan-deasy-4/

Here's a transcript of the podcast, thanks to the host Axel @ Multifamily Wealth Podcast

Welcome back to the Multifamily Wealth Podcast! This week we have a unique episode where we feature two guests, Mike Doherty and Ryan Deasy, investors and partners based in Connecticut. In this episode we talk about a multitude of topics, starting with how to find a great business partner, along with how to work with partners effectively. We discuss how to tell if a partnership is right for you and how to get the most out of business partnerships. A lot of investors know that scaling is easier when working with someone else, but oftentimes don’t know how to find the right partner. We dive into how their partnership is structured and how they have made it successful for both parties. Additionally, we discuss off-market deals as it relates to prospecting, marketing, and the overall strategy they currently use to find deals. Ryan and Mike share details regarding the tools they use in their business, the processes they have put in place, and the metrics that they track. To top it all off, Mike shares some of the creative financing options they use to purchase multifamily, and provides an example of a recent deal they bought. This will be an informative episode for those listeners looking to find partners, buy off-market deals, and utilize creative financing on your deals.

Show Notes:

3:21 Mike and Ryan share their backgrounds, how they got into real estate, and where they are currently at in their business.

9:15 We briefly discuss house hacking, as well as how a new investor should get started in their real estate investing career.

11:35 We discuss how Mike and Ryan initially became partners, and how the partnership was structured.

15:19 Mike and Ryan share their tips for finding the right partner, and how to make sure it is a successful venture.

19:34 Ryan discusses their current marketing plan and how they build their lead funnel to get connected with sellers.

24:53 Ryan shares the KPI’s they track for their prospecting/marketing and explains how they track them effectively.

27:37 Mike shares how he talks and follows up with possible sellers, and the system they use to make the process efficient.

31:44 Mike and Ryan share the creative financing options they are using to close deals in today’s market.

40:41 We discuss the structure of mixed use deals such as a building with a mix of residential and commercial units.

43:46 Mike and Ryan share a piece of advice they would give themselves before starting their real estate investing careers.

45:46 Mike and Ryan share their most significant real estate related failure and what they learned from it.

49:13 Mike and Ryan share one skill/trait that they attribute their success to.

50:41 Mike and Ryan share their short term goals for their business over the next 6-12 months.

Podcast: THIS LANDLORD MAKES TWICE THE MONEY RENTING BY THE ROOM WITH RYAN DEASY

Sat, 06 May 2023 11:54:15 GMT

On this episode of the Rental Income Podcast, Ryan talks about how he makes 2X the rent by renting his properties by the room.

We also talk about how he self-manages his rentals from 1,500 miles away.

We talk about how he shows properties when he can’t personally be there, how he deals with repairs, how he matches tenants to make sure that everyone in his rentals will get along.

Listen to the Podcast over at: https://rentalincomepodcast.com/this-landlord-makes-twice-the-money-renting-by-the-room-with-ryan-deasy-episode-212/

Two New Britain apartment buildings sell for $1M

Wed, 19 Apr 2023 17:53:59 GMT

Two multifamily buildings in New Britain have been sold for more than $1 million.

The deal recorded March 3 includes a six-unit apartment building at 666 East St., and a five-unit mixed-use property at 1480 Corbin Ave.

Both properties were sold by East Corbin Tropco LLC to New York-based affiliates of 666 East LLC and 1480 Corbin LLC and Myer Kahan of Tom’s River, N.J. for $1.06 million.

The East Street property has six, two-bedroom apartments totaling 5,445 square feet in a three-story walk-up built in 1924. The property had been updated in recent years with renovations completed to the residential units, common areas, mechanicals, driveway, and the addition of coin-op laundry in the basement.

The three-story Corbin Avenue property, built in 1925, has four, two-bedroom units and one retail space, totaling 7,320 square feet. The property was also heavily upgraded the past few years with renovations to the garages, mechanicals and apartments.

Mike Doherty and Ryan Deasy of Skytree Investments represented the seller, and Matt Cawley of National Multifamily procured the buyer.

Originally posted on: https://www.hartfordbusiness.com/article/two-new-britain-apartment-buildings-sell-for-1m

Two aspiring realty investors met online in 2021; they just paid $3.7M for 2 central CT commercial buildings

Wed, 19 Apr 2023 17:52:39 GMT

Farmington-based Skytree Investments recently paid $2.22 million for a roughly 40,000-square-foot, mixed-use commercial building in downtown Middletown and another $1.48 million for a 9,554-square-foot office building along Route 6 in Farmington.

With these purchases, the nearly two-year-old real estate investment firm now owns a $7.5 million portfolio of six office and mixed-use properties in Farmington, Middletown, Simsbury, Winsted and New London, said Ryan Deasy, 36, who is partnered in Skytree with Michael Doherty, 30.

The pair met in an online commercial real estate forum and then launched Skytree in 2021.

Deasy said he and Doherty used a limited liability company to buy a 9,554-square-foot office on just under 2 acres at 1789 New Britain Ave., in Farmington for $1.48 million in a transaction that closed March 31. The deed has not yet been logged in city land records.

The Farmington property’s prior owner, JPF Realty LLC, bought it for $1.3 million in 2016, according to town assessing records. The two-story, vinyl-sided office was built in 2001 and has a residential look to its exterior.

It is surrounded by trees and is divided into more than two-dozen offices leased out as coworking space. The largest office is about 1,500 square feet and comes with a private bathroom and two-car, heated garage.

“It will have to be someone unique who wants to pay for that,” Deasy said. "It will most likely be a CEO-type individual who favors a place for his car, a private bathroom and room for one or two in-office assistants or secretaries."

Deasy and Doherty used East Corbin Holdings LLC to buy a roughly 40,000-square-foot office building at 423 Main St. (also known as 425 Main St.) in Middletown in a sale logged on March 27. The 78-year-old brick building sits on just under a quarter of an acre in the downtown.

The seller, 425 Main LLC, paid $1.15 million for the Middletown building in 2020. Its principals include Joseph Dattilo, of Higganum, as well as Lend More LLC and KD 425 LLC.

Lend More LLC’s principals include Dattilo and John Phelan, of Westbrook. The pair are also principals of a limited liability company that owns the Water’s Edge Resort & Spa in Westbrook.

KD 425’s principals include Jason Kushner, of Glastonbury; Zachary Kushner, of Longmeadow, Massachusetts; and Rocco Gondek of Old Saybrook. The three are officers in Middletown-based real estate firm Kushner Development.

Deasy said he and Doherty sold a six-unit apartment building and another with five units in New Britain and invested the proceeds in the downtown Middletown property through a 1031 exchange. The Middletown property has a “lot more income potential and potential to build equity,” he said.

“We love New Britain, and I was kind of sad to sell those to be honest, but it’s kind of like the next step for us, going from a five-unit and a six-unit to a 40,000-square-foot commercial building,” Deasy said.

Deasy said the sellers had replaced the roof and performed mechanical upgrades to the building, leaving Skytree with little to do other than cosmetic upgrades to the vacant portions, which account for just over half the building.

The building currently hosts the Fujiya Ramen restaurant in one of its first-floor retail spaces. Another restaurant, Salad Bar, has signed a 10-year lease for a second retail space on the first floor, Deasy said.

The plan, Deasy said, is to fully lease out the building over the coming year, then refinance. He expects to hold onto the building long-term, taking advantage of the city’s ongoing and ambitious effort to transform hundreds of acres of abandoned and underused industrial spaces into park, restaurant, retail and multifamily development nestled into a large bend of the Connecticut River.

“Middletown is going through a whole riverfront development, so we want to be in front of that,” Deasy said.

Originally posted on: https://www.hartfordbusiness.com/article/two-aspiring-realty-investors-met-online-in-2021-they-just-paid-37m-for-2-central-ct