Connecticut Shifting into High Gear?

A new report from the Connecticut Center for Economic Analysis is predicting an 8.1% increase in CT's economy this year.  That is so high that experts are backing away from endorsing the exact number, but even a growth rate of quite a bit lower would outstrip the national rate of about 3%.  It's about time!  We've been lagging behind the rest of the country--event the December housing figures show us with a decline in 2014 home sales vs. the year before, against the grain of almost every other state--and we were (almost) bound to catch up sometime.

The only big fly in the ointment is the State government's position on business issues.  That encompasses our tendency to borrow against the future, and to underfund pension obligations, both of which make our economy more precarious.  However, the Governor's latest budget proposal shows encouraging signs of trying to correct these problems, and we in the private sector are certainly rooting for both the executive and legislative branches concentrating on improving our rankings as a place to do business. 

Leaving that potential worry aside, it does seem that early indications show pent-up demand on the residential side, frequently a precursor to commercial growth.  Also, we know that there is pent-up demand on the commercial side--it's just being held in check by caution and uncertainty.  This latest prediction should give a big boost to those who've been waiting on the sidelines to act.  This is your year!

Slow and Steady Wins the Race?

We've now written quite a bit about the lagging state of Connecticut's economy, including its current status as dead last among the fifty states in economic growth in 2012.  However, it is important to point out that we're having a good year at Pearce Commercial, following a very good year last year.  By not being in a major metropolitan market, we may have escaped the worst of the price reductions; on the other hand, since we didn't fall as fast or as far, we are not experiencing the same rapid upturn. Those stories about the hot NYC market don't extend to greater New Haven and Hartford.  Office space is still moving slowly.  Could that be a good thing?

Everyone knows that real estate is cyclical.  Everyone knows that what goes up must come down.  By flattening that line, we may be protecting ourselves.  Meteoric rises are what produces bubbles.  That's what we don't want to see.  If our real estate market can grow slowly and steadily, so much the better.

It's not all rosy. Commercial real estate financing isn't easy.  Companies that downsized aren't rushing to lease more space; in fact, it's the reduction in overhead that is most likely producing a good deal of the increased profits in corporate America these days.  Perhaps most annoyingly, people still seem reluctant to pull the trigger.  They look and look, but stall for long periods of time, sometimes not ever making the offer.

  But there are investors out there, as well as some users, and most of them seem to realize that mortgage rates have nowhere to go but up, and that values are headed that way as well.  We don't have big backlogs of empty buildings and overbuilt space.  In short, we seem to have most of the attributes of a balanced market.  And that's a good thing.