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.

Where Are All the Cranes?

I've been in Washington, D.C. and Boston recently, and both are hard to recognize from days past.  There are cranes everywhere, and new neighborhoods are springing up, while the old ones are either gentrifying, or just increasing in price.  It's amazing to see, in the case of Boston, what a difference 100 miles can make!

Both of those cities have been enjoying boom times, and Boston has been an outlier on the upper end of the growth curve in New England for some time.  It has been successful in recruiting biotech companies with high-paying jobs, despite high housing prices, in part because it has reached critical mass in that field.  Two-career families can both find employment, and there are lots of research universities around to feed the fire.

Could New Haven become a mini-Boston?  In some ways, it already is.  Cultural opportunities and the percentage of academics in the population surely rival Boston.  Proximity to NYC is important, and we have that.  What do we still need?  More business and job growth--when Boston, in what's long been called Taxachusetts, seems better from a tax point of view, you know you're in trouble.  Better transportation--investment in roads and railroads, plus expansion of Tweed's airline service.  And, of course, a more positive reputation--are you listening in Hartford?