Written by Gregory Seay
Connecticut landlords and other realty professionals feel better about the near term prospects for the residential-property market than they do the commercial-space sector, a new survey shows.
According to the Connecticut Economic Resource Center (CERC), its latest SiteFinder semi-annual online survey of Connecticut commercial real estate conditions indicates that respondents are generally positive about markets, except for the office market and overall economy.
The 72 respondents included brokers (65 percent) and economic development professionals (22 percent) from Connecticut and out-of-state. Almost one-third of respondents (32 percent) were from New Haven County.
Respondents generally rated local market conditions as satisfactory, with a majority saying the industrial, investment, and residential markets in their respective geographic areas were "excellent" or "good" (53 percent, 50 percent, and 62 percent, respectively).
Respondents were more pessimistic about their local office markets, with one-quarter rating it as "poor" and 56 percent rating it as "fair."
At the state level, residential was the only market for which a majority (51 percent) said it was "excellent" or "good." One-quarter (25 percent) said the office market was "poor," and one-third (30 percent) said the overall economy was "poor."
Respondents are also seeing tangible improvement in the real estate markets in the state. Over half of respondents (57 percent) reported seeing an increase in buyer interest or inquiries compared to this time last year.
Nearly half (48 percent) also reported an increase in the number of deals. There was an increase of those reporting increased number of deals (from 38 percent) and buyer interest or inquiries (from 48 percent) from the first quarter of 2016.
"As the need for large office space continues to decline, the demand for modern industrial manufacturing and distribution space continues to increase,'' said CERC Real Estate Program Manager Erron Smith. "End-users have communicated that they are willing to pay a little more, if it translates into occupying a space that can satisfy their operational needs."
More than half of respondents thought sale prices for industrial, retail, investment, and residential properties would increase in the state in the next three months (63 percent, 51 percent, 61 percent, and 57 percent, respectively). Most expected this gain to be less than 5 percent, but more than 10 percent of respondents thought there would be a gain of at least 5 percent in sale prices for residential.
"There was a similar pattern for lease prices, with expected gains in sale prices for industrial, retail, investment and residential, and a loss for office," said Alissa DeJonge, CERC's research vice president.
Nonprofit CERC is a public-private partnership that provides economic development services. Its SiteFinder Real Estate Survey measures the health of Connecticut's commercial real estate market.