Monday, December 4, 2017

Last Chance for 2017 Tax Moves

Many people would be surprised to hear how often we end up putting together transactions that save taxes for buyers and sellers in the last month of the year.  We have written contracts on Christmas Eve (once on the roof of a car), that holiday weekend, and even the week between Christmas and New Year's, with a closing that took place that same week!  Although everyone has the best of intentions not to procrastinate, things happen that are beyond one's control.  Often, it's a transaction that doesn't go through at the last minute, leaving a seller or buyer with no choice but to find another buyer or seller with no time to spare.

We certainly can't promise that every interested party will be able to complete a sale by the end of this month.  However, if you can pay cash, or take money back as a seller, and you are motivated, with a good support team to push through to a year-end closing, you just might make it happen.  Often such situations become infused with urgency at every turn, and can even overtake ones that started sooner.

So, if you have dreams of completing a transaction by December 31st, we're here to help!

Friday, November 17, 2017

Don't Forget Not-for-Profit Sector

Sometimes, when we bemoan the condition of business expansions (few) in Connecticut these days, we overlook the fact that we have a robust non-profit sector.  This is especially true in Greater New Haven, where more than half of our largest employers are not-for-profits.  That means that there is more demand, perhaps, for real estate than we might initially think. 

Although we think of not-for-profits as not having much money, in some cases that isn't true.  Many work on essential services, and are funded by governmental sources.  Although that can be problematic these days, in some ways it isn't any different than having a for-profit business depend upon clients that may or may not purchase their goods and services within a particular time frame.  And cash flow issues are not limited to the not-for-profit world.  

In addition to the health of their organizations, not-for-profits are often more flexible about the types of space they can use, and what they can make work.  If the price is right, they may not require the same fit-up as other businesses, since their clients would not expect, and might even not enjoy, seeing fancy offices for a charitable or governmental agency.   

Even cash flow can often be worked out, if landlords or sellers are willing to take money over time, or wait for a federal or State grant to be funded.  Once it is, you might be able to, as they say, take it to the bank.  Even donated funds are now usually documented with signed pledges, and those usually come in on an annual basis.  

So don't count out a whole sector of our economy.  It's out there, and it occupies space. 

Friday, November 3, 2017

New Haven Industrial Real Estate--No Supply, No Demand

Perhaps we have discovered a new dynamic in the real estate market panoply--no supply and no demand.  Or, they are more likely related in a pretty simple way.  Weak demand over the past number of years for industrial property in Connecticut has led to a lack of new construction in this sector.  Many companies have left for warmer (weather-wise and tax-wise) climates, leaving a new supply of older buildings in their wake.  Fewer companies than in other places are expanding into more industrial space, so there isn't much demand to take up the supply that exists.  Therefore, rates are low, even though people looking can't find what they want and need.

That sounds awful, but it represents an opportunity.  Buildings can be converted, or constructed, and profitably, since there are buyers and tenants out there that cannot find what they want.  Sellers and landlords can continue to accept low rates of return, or they can repurpose those buildings to different types of uses (residential or flex spaces).

There is little enough around so that what is here should move, and, arguably, prices should be rising.  In order to make that happen, new players may have to enter the arena, and up everyone's game.  Let's hope for all our sakes that this occurs.  In the meantime, we would advise potential sellers to be undeterred by low rental rates, since people are looking for what's not there, and anything new could be just the ticket for a thus far unsatisfied user.

Tuesday, October 17, 2017

Real Estate in Tokyo

It's always fun on a vacation to see what real estate is like in other places.  I recently vacationed in Japan, and got a chance to see various cities there.  The most interesting, from a real estate point of view, was to see how the 36 million people in Greater Tokyo live and work.  They have lots of very tall buildings, obviously, and they have a lot of diversity in their architecture. They even have one building that is designed to look like a beer stein, with a square lower part, and an upper part that juts out and is the color of foam!

 Another interesting point is that almost all of their hotels are at the tops of buildings, so that the lobbies are on upper floors, with offices beneath.  From a commercial real estate point of view, one would assume that the higher room rates for good views would have been outweighed by the higher rents that could be charged in leases to firms in the buildings.

The main takeaway from Tokyo is just how many people there are, yet how clean and orderly it is.  There are no public trashcans visible, and they have the highest number of vending machines in the world, per person (there are even machines on the tops of mountains and in the woods!), but there is no litter.  And the Ginza district looks like Times Square, but with bigger buildings and more upscale.

There is one intersection that has 2000 people cross every time the light changes; even so, it lacks the chaos and physical contact that crossing a NYC street entails.  People line up for everything, and wait politely for their turn. The main subway station covers at least one city block, but looks more like (and functions more like) a mall.  Departments stores have food halls and restaurants, some of which only serve one thing--and they are still crowded.

So now I am home, enjoying the peace and quiet of our little state, but happy to have seen the vastness of another vista.

Monday, October 2, 2017

Amazon and Connecticut--A Good Match?

Plenty of pundits have already weighed in on the issue, but I feel compelled to comment on the Amazon search for a second headquarters, because the question emphasizes both the benefits and deficits of Connecticut.  Everyplace in the country is competing, so we should strut our stuff as well.

They want a place with access to a skilled workforce.  We have that in abundance.  Our higher education system is good, and our proportion of highly educated workers is above most other locations.  We also have lots of people looking for good jobs, or leaving the state because they can't find them.

Amazon is a distribution company at heart.  Its real mission is to get you what you want, when you want it. That's different from manufacturing, or even from most retail businesses.  Rather than having a unique product, they have a unique delivery and distribution system, because they both store and consign items.  They ship from other places and other companies, even from other distributors, and they do so on a timeline that's very hard to beat.  Where is Connecticut located?  Right between the Northeastern hubs of NYC and Boston.  Our future is, as some have said, in distribution.  We are too high-cost to manufacture some things, and too small to have the population to use all the goods ourselves.  But we can ship in every direction.  And we have excess real estate at reasonable prices.

So why aren't we on the short list?  Probably we never made the long list, and that would be because we have a reputation for being a tough place to do business.  Not just expensive, since both Boston and NYC can beat us on that front, but unfriendly and anti-business.  We are almost alone in our own quadrant there, although Vermont is probably nearby. 

It certainly doesn't help that Hartford is poised to file for bankruptcy, we have no state budget, and we have union contracts that are far more generous that the states around us, or anywhere.  If you were outside the State, reading the papers, would you consider us?  I certainly hope so, for the reasons above.  And I hope even more that the Legislature and the Governor's cabinet do everything they can to address the issues in this paragraph.