Commercial real estate activity was “lackluster” in Connecticut during the fourth quarter of 2012, according to a Dec. 21 survey.
The McGladrey Commercial Real Estate Index blamed the overall economy for the slowdown in activity and reported that Hurricane Sandy would likely not have a long-term effect on the state’s commercial real estate industry.
The survey, which was conducted by the Connecticut Business & Industry Association (CBIA), the nonprofit Connecticut Economic Resource Center Inc. (CERC) and New Haven-based DataCore Partners L.L.C. and sponsored by McGladrey L.L.P., was based on responses from 85 real estate brokers, developers, bankers, appraisers and economic development officials from across the state.
“Connecticut’s commercial real estate sector is hanging in there against a backdrop of consumer fundamentals that leave much to be desired,” said Peter Gioia, vice president and economist of CBIA, in a statement. “Clearly, this continues to be a challenging environment for commercial real estate in Connecticut given the combination of only modest job improvement and continued economic uncertainty created by the fiscal cliff.”
The index saw a fourth quarter reading of 14.8, which was unchanged from the third quarter and was slightly above a fourth quarter 2011 reading of 13.7.
However, the future expectations index dropped to 14.9 from 17.7 in the third quarter.
Of those who responded to the survey, 14 percent said they thought the state’s economy was either “excellent” or “good,” while 61 percent said it was “fair” and 25 percent said it was “poor.”
With fourth-quarter 2012 U.S. gross domestic product (GDP) growth expected to be a dismal 1 percent, employers are apt to stay put rather than to hire and expand to larger facilities, according to the McGladrey report.
“Specifically, labor demand remains lackluster relative to prior economic recoveries as many area employers seem to be adopting a ‘wait and see’ approach,” the report states.
Seven percent of those surveyed said they expect to see improvement within the state’s office market over the next three months.
Among those surveyed, 43 percent said sales transactions would increase over the next three months, while 52 percent said that sales would likely be “poor” over that span.
A majority of those surveyed also said they expected both sales and lease prices to drop over the next three months. About 49 percent said they expect sales prices to drop between zero and 5 percent, while seven percent of those polled said they expect sales prices to drop by more than 5 percent.
Fifty-seven percent of those surveyed said they expect lease prices to drop over the next three months.
Additional reporting by Tarice L.S. Gray.