Still Hovering in the Old Economy--Betting on the New Economy

Just when we think that the market is recovering, we get news, or statistics, that makes us wonder.  The last two months of almost constant snow have really put a crimp in real estate sales, although it is certainly possible that the market will recover with a vengeance in the spring.  Right now, we still see a lot of hovering, meaning that people are looking at space, sometimes even making offers, but not actually going through with many of the transactions. This is particularly true in the case of office space.

The exceptions seem to be new ventures, often for successful entrepreneurs who have other businesses or locations.  They know how to make a profit with what they do, and they have a formula to expand that will work.  Restaurants fall into this category.

The other type of new ventures are businesses in fields that have arisen due to market demand or governmental regulation, just like the old testing stations when the State enacted emissions testing.  Now it has more to do with regulated industries, or with niches within categories, such as food-related trends or technology start ups.  New ideas lead to new companies, and they often do things that didn't exist when we were growing up, as I often say about the jobs our children have.  Let's hope that they proliferate enough to make up for the downsizing in the office sector, and that they are successful beyond their wildest dreams!

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!

DECD Tries New Initiatives

Last week in Guilford, I heard our new Commissioner of Economic and Community Development, Catherine Smith, give a presentation on what her agency is doing to attract jobs and improve the economy in our state.  There were some things we already knew about, some things that we wish would go away, but some surprising new programs.  From a commercial real estate point of view, the best was a new incentive for entrepreneurs, where the State would subsidize their rent.  We have so much space available, and, as I discussed in my last blog, much of it would be perfect for start-up businesses.  The details, along with the details of some of the other job creation measures, are on the DECD website, although she did say that streamlining the website was one of her priorities.  It's not easy to navigate.  However, if you do, you may find something that changes your mind about the old phrase "I'm from the government, and I'm here to help you"!