New Discussion of Business Taxes

Governor Malloy has announced that he's going to meet on the budget and taxes, and that everything is on the table except tax increases.  Even the fact that he's framed it this way should help our business climate.  For too long, people have been pointing to Connecticut as the state that wants to drive corporations and jobs out.  The legislature has often called for business to pay more, even though we are already more expensive than many other states.  Now, finally, maybe thanks to GE threatening (or intending, many posit) to move its headquarters, we're getting somewhere.  Hey guys, we are important to you--you should be nice to us!

New Year, New Start

It's a new year, we have had a lot of good news about our region's economic recovery at last, and our Governor has started a new term. Things are looking up, and doing it while interest rates are still low. What are we still waiting for? Product! We still need well-maintained, well-priced buildings for sale, especially in the 5,000-10,000 sf range. Although some sellers may be holding back in the hope of greater appreciation, there are lots of reasons for selling when the buyers are around. There has been a spate of job recovery in the greater New Haven region, so we know that businesses are expanding. We also know that our rental market is bursting at the seams, and has the lowest vacancy rate in the country still, so there are consumers out there, who would utilize retail and other services. We just need a little push, and the simplest way to get it is to find some sellers either to sell out or to list and move. How about it?

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!

CT's Business Climate

We held our Pearce Annual Meeting today on the campus of Choate Rosemary Hall, and heard from George Jepsen, Connecticut's Attorney General. He received a number of tough questions from the audience, mostly about the business and tax climate in the State. He gave us assurances that Governor Malloy understands what needs to be done to create jobs and attract firms to locate here. He also believes that one of the region's most important resources--Tweed New Haven Airport--has support in Hartford, so that we may see improvement in air service. We discussed the estate tax, which he agrees is driving many wealthy older residents to take up legal residence elsewhere. Attorney General Jepsen spoke about the need for lowering energy costs, and for reducing the amount and complexity of State regulation for businesses. Let's keep our fingers crossed....

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!