Where's the Product?

We have one broker who has five needs that he can't fill, because what his clients want to buy or lease is not available in our market.  In residential real estate, that would constitute a seller's market, since demand exceeds supply.  And this is despite horrible press for our State and its fiscal condition and business policies.  It does appear that businesses who are staying in Connecticut are short of space. 

Can anyone help us out?  We need land, leased or sold, on which to build pre-engineered buildings with 5-10,000 sf increments.  Check and see whether you have any available, and call us!

Busy, Busy, Busy

Although we can't yet see it in sales results, many of us are busier than we've been in years.  One agent recently told me that he has more going on than he's had in 20 years!  What does this tell us?  It says that people know that it's a good time to buy (true), that rates are low (very true!), and that the economic climate is improving (true).  Businesses are busy, but they are still not pulling the trigger on space.  Maybe they are too busy to do the work, or they aren't confident that sales will improve and stay better.  Whatever the reason, we are in the part of the cycle that reminds me of my old days of rowing college crew--the stroke has to raise the stroke by putting his/her oar in the water first and doubling down until everyone else catches up.  That's where the market is--we are doing the work, and the results haven't appeared yet.  But it appears that they will, meaning that those who rented or bought sooner will do better than those who waited.  Where will you be?

Finally, Some New Development in New Haven

For too many years now, there has been little to no commercial development in New Haven.  Development goes in cycles everywhere, because, when there is a downturn in the market, there is no financing (or even appetite) for new projects.  In addition, there is often leftover space from buildings that have already been constructed or converted.  New Haven, as in all Connecticut cities, also has almost no clean land on which to build. 

All these factors mean that we haven't seen much that's new--outside of residential rental--in quite some time.  Just now, there are several things in the approval, preconstruction, or construction phase.  The biggest is a new proposed mixed-use project on the old Coliseum site, which replaces the prior proposal, scuttled when the market turned down.  Route 34 has more than one medical or biotech building in the works, and there is a big office building going up on College Street.

Other firms from out of the area are looking here as well, because of our housing, entertainment, and educational opportunities, particularly for younger workers, who choose city living more often than not. New Haven is more affordable than Fairfield County, New York, or Boston, but can be easily reached by train.  More residential projects are in the planning phase also, since there is a theory that we could provide housing for commuters.  For example, 360 State Street, which filled up faster than anyone predicted, sends 85% of its residents to work by foot, bicycle, or train.  Since that's a trend of the future--easy commutability--it's not a bad bet to think it will continue.  Those who flock here for dining, nightlife, and the arts may increasingly choose to live here, especially as young professionals or empty nesters.

This is all good news for New Haven, and for the real estate industry, and it's about time.  We're ready!

It's Never Too Soon to Think about Next Year's Tax Bill

By mid-December, lawyers and accountants, as well as their clients, will be frantically trying to lower 2013 tax bills, by spending down profits, acquiring extra depreciation, or putting new equipment in place by year end.  We're all busy at this time of year, but it's worth starting a month ahead of then, to evaluate your space needs going forward.  If  you have an outstanding offer on space you don't use, have you factored in the benefits of taking an offer this calendar year, before dismissing it?  If you have expansion needs, can the costs of fitting up space be put partially or fully into this tax period?

It's hard to juggle long-term decisions with short-term crises and issues, but there could be a big payoff later, for thinking about April in the chill of November.  You'll thank me later, if this prompts you to act now and save next spring!

More Good News about Commercial Real Estate Activity

We just looked at our booked sales through May and compared them to last year's numbers.  We are 325% over last year at this time!  Even taking out our biggest sale leaves us way up from 2011.  It's unusual for commercial sales to rebound with or before residential, but that does seem to be happening.

There will still be time to buy or lease before prices really start to rise, but that time is clearly coming, since very little was added in the way of new space in the past decade.  So, if you have space needs, fill them now, or don't complain when you can't do it, or do it at the same price, next year!

Lots of Start-Ups

It makes sense, if you think about it, for the decline of large firm employment to lead to more people starting their own businesses.  Either they were forced to retire early, or they took a buyout, or they just could see the handwriting on the wall.  For any of those reasons, and often with the help of severance checks, unemployment, or retirement benefits, more and more ex-employees are becoming entrepreneurs.  They are pursuing long-term dreams, or filling needs that large firms have abandoned.

Of course, they need different types of space.  That's partially why we are still seeing too much office space on the market, and why flex space, especially in small increments, in greater demand.  Over time, if these new firms prosper, it may lead to new uses for the office space, or for building of more manufacturing and distribution facilities.  Let's hope so!

It's Getting Better!

We've all been looking at each other in the commercial group lately, and remarking on how busy we are.  What a change!  It certainly means that people are out looking for space, particularly in sectors that are seeing more current activity, like restaurants and luxury goods. 

What does that mean for sellers and buyers?  If you are a seller, you are probably wondering whether you should hang on and wait for prices to rise.  If you do, you will be competing with a lot of other people who've been waiting for the same thing, so you had better compare favorably.  That means, if your property wouldn't sell if a better one like it were on the market, it would make more sense to list now, when there is less competition. 

If you are a buyer, you are still in a buyer's market, so this is a great time.  Don't wait too long, or prices will start to go up, and you will end up paying more. 

Bottom line:  I think we've passed the bottom.