Old Real Estate Maxim Still Rules

 When I was in business school, now decades(!) ago, I had a professor whose current work then was focused on how CEOs decide where to locate company headquarters.  His conclusion, after much research, was that the biggest factor in choosing a location was where the CEO him/herself wanted to live.  

While that isn't a shocking result, it is a little surprising that big organizations, with all kinds of considerations for transportation, labor force, infrastructure, taxes, and a myriad of other factors, would in the end have personal preference of one person as the greatest determinant.  We can see evidence of this still, in the recent behaviors of business executives during the pandemic.

Connecticut has been the beneficiary of a move out of New York City, and thousands of people have moved here in the past six months.  Yet we didn't expect that companies themselves would move, and that's turning out to be the case.  And that isn't just in the office arena--manufacturers and other seemingly less mobile property users are also in the mix.

We are getting showing requests and offers from buyers out of state, who are looking to locate where they plan to live.  There are many reasons for their choices, but it points to a brighter future for Connecticut than was predicted while tax policy and weather was causing a rush to warmer climates and distant vistas.  Now, the proximity to major metropolitan areas, combined with family dynamics, is helping us catch us with the economic progress made by other areas over the past two decades.

There are good reasons for this to continue.  Our location between Boston and NYC is obviously key.  Company owners and investors don't necessarily have to live here, but they will have employees and tenants who do.  Many family business owners also want to be where their children and grandchildren are, whether or not those generations are in the company or not.  The current focus on low density and outdoor space work in our favor, and our natural assets have become more important to real estate decisions.

Looking forward, we can see from the residential market that supply may become a limiting factor.  While none of us expected it, this uncertain age has become one of increased real estate activity, and a good time for sellers to consider putting properties on the market.  Who knew that the old research about company location would be so relevant now?

Getting Ready for Spring

As I sit here listening to March roar like a lion, I'm already anticipating, as are so many others, that spring is just around the corner.  Tuesday gave us a taste of warmer weather, and more can't come fast enough to suit most of us.  With the arrival of spring, buyers get a burst of energy, from lighter evenings and fewer travel headaches, as well as from the necessity for moving forward with yearly plans after a winter of hibernation.  If you are a seller, will you be ready?

It's hard to keep a property looking nice with snow, ice, and sand all over. It's also hard to get repairs and maintenance done, especially on the outside of buildings.  However, once spring pops, and buyers appear, you need to be ready to strike while the iron is hot.  You can't assume that the first warm day will be soon enough to think about repairs and improvements.  The paperwork and the marketing materials take a couple of weeks to prepare and execute.  Flyers and mailings take time to sink into buyers' minds.  Even when people decide upon a property, the financing and inspection processes can seem endless. 

It all begins with the seller, and the sooner, the better.  Get ahead of the curve, and be ready for those buyers when they come, even if it seems like "hurry up and wait".  Call your agent today, and be the lucky seller who meets the market head-on. 

A Snow Day Report

I just returned from our national network conference, Leading Real Estate Companies of the World.  We comprise the greatest share of real estate sales in our association of excellent independent companies, exceeding all franchises.  Although the focus of the conference was mostly on residential, a few things were clear in the commercial arena.

First of all, we are all using less space.  I sat next to the manager of a huge company, who told me that they saved 40% of every rent dollar over the past couple of years. Every time they had a lease come up for renewal, or they had a chance to renegotiate, they paid 60% of what they were paying before.  Sometimes that meant that they took 60% of the former square footage; sometimes it meant that they just paid 40% less for the same space.  And we aren't the only industry seeing those trends.  Everyone (except, apparently,  Yahoo) will be using less office space per employee in the future.

We also saw that money was being made through cutting costs, more than from increasing profits.  Margins in our industry are notoriously low, but most of us had very good years.  Most of the people I asked said that they made more than half of their bottom line from saving money, with the balance from an improving market.  Again, we are not alone in this statistic, either.

Finally, it was obvious that Connecticut is lagging in this recovery.  Other markets have switched over to being sellers' markets, with homes getting as many as 50 offers, due to lack of supply.  We haven't seen that yet--our averages across the board are closer to a year.  That puts us in a very different selling climate in residential, and it tells you  that we don't have the jobs here to stimulate housing demand.  We certainly can predict, however, that it will improve here, especially as workers transferred in  sell their houses elsewhere, often for high prices.  Good things come to those who wait.