Selecting Sites

We met with some out-of-state site selectors last week--people who are hired by corporations to help them locate facilities in various parts of the country or world--and, as always, learned some interesting tidbits.  Some we suspected, or even knew, but others were surprising.

We knew that other areas of the country are organized for attracting businesses in very different ways.  For example, there are either county governments, or the metro areas are bigger, and encompass what here would be ten or twenty different towns.  Although we were aware of that, it still struck us, as we gave these people a tour of our region, how easy it would be for them to come, go through a wrong portal, and narrow their search way too soon, down to even a single town.  It doesn't even mean that there is competitiveness in the economic development process (although there can be), but that the person responsible in one town might have absolutely no knowledge of what's available in another town.  It turns out that, the more sites you can get onto a list of available, appropriate properties, the more likely you are to be in the semifinal or final round of the search choices.

It also matters how large those sites are.  While we have many empty sites, often they need remediation, rezoning, or more (see my earlier blog piece on the new Pearce Consulting Services, designed to help with those issues).  So not all of a site may be usable, plus we are at somewhat of a disadvantage in that we are just a smaller state, with less land overall.  The site selection process is meant to start with the widest net, and narrow as slowly as possible.

Finally, some areas have finely tuned machines for attracting businesses to locate there.  We knew that, but it is always striking how rich those deals can be in other places, and how quickly they can transpire.  This is what the CBIA 20x2017 is aimed at--getting us higher in those rankings, so that we are perceived as business friendly.  Even individual tax rates, including, in Connecticut, the estate tax, are major deterrents for top decision-makers (if you are in the CT Legislature, I hope you are reading this!).

We hope, and think, that we at Pearce did a great job in promoting our region to these visitors.  A little more institutional help would be much appreciated!

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!

New Business Areas for the Future

I recently read the Greater New Haven economic development plan for the upcoming year, and was interested to see that a couple of new areas of focus have been identified for our region. One is agribusiness and processed foods, on the theory that caring about what you eat and where it comes from is a trend that seems likely to continue. Since I have a son doing rooftop farming in NYC, I've become very aware of the boom in local food of all types. The second, also driven by consumers and trends, is "green" business of any kind.  That dovetails with another report I've read in the past week, saying that green certification and proximity to mass transit are the two amenities that renters are most likely to value, and be willing to pay for.  It was a little surprising to see that washer/dryers and gyms were way down the list, but, again, this is a trend for the future.

What does this mean for commercial real estate?  First of all, energy conservation in buildings matters more than ever.  Secondly, ease of commuting may not mean what it used to mean.  Now it's commuting by bicycle, by foot, or by public transportation, which is entirely different from suburban office buildings with free parking and easy commutes.  And thirdly, as I've found in my own family, what's old is new again.  Farming, which goes back almost to the dawn of civilization, is new again!