Connecticut”™s commercial real estate sector continues to feel the aftershocks of the national recession, according to an inaugural survey by the Connecticut Business & Industry Association and other sponsors.
The survey drew nearly 250 responses from real estate brokers, developers, bankers, appraisers, and economic development officials, with 18 percent of them in Fairfield County. Nearly a third of respondents were in the Hartford area, and 21 percent were in New Haven County.
Respondents indicated Connecticut”™s office market continues to be hampered by a sluggish labor market, with employers reluctant to add new hires against the backdrop of still weak demand. Just 4 percent of those polled characterized current office leasing conditions as “good” or “excellent,” and only 4 percent expected to see improvement soon.
The state”™s industrial real estate market has been impacted by the global economic slowdown in manufacturing and weak growth in U.S. exports, even though Connecticut export activity has posted year-over year gains. Only 7 percent of those surveyed described characterized current conditions as “good” or “excellent,” and just 8 percent expected an imminent improvement.
Real estate investors in Connecticut indicated they have been impacted by risk-averse lending practices, but had a slightly better outlook.
The survey includes an index on present conditions and future expectations, published by Farmington Bank and O”™Connor Davies Munns & Dobbins L.L.P., which will allow the organizations to draw historical comparisons in future quarters.
“Many experts predicted the commercial real estate market (would be) the next shoe to drop,” said John Patrick, CEO of Farmington Bank and the former head of TDBank operations in Connecticut. “Hopefully this analysis can be used as a tool for commercial real estate professionals to understand the market and develop strategies around the weakest segments.”
When asked whether municipal aid helps in bringing in more transactions, sales, or leases to an area, 68 percent of respondents stated that municipal aid clearly had a positive impact on commercial real estate activity. Another 31 percent said municipal incentives have no discernable impact, while 2 percent think such efforts actually created a negative effect.
When queried about what types of incentives would be most helpful, a wide range of responses was received, including lowering property taxes; tax abatements; and lowering permitting costs.
Other survey sponsors include New Haven-based DataCore Partners and the Connecticut Economic Resource Center.
“The baseline measures captured in our inaugural survey show that the state”™s commercial real estate sector has faced an extremely challenging economic environment over the last year,” said Don Klepper-Smith, chief economist at DataCore Partners. “Hopefully, we”™ll see some concrete improvement in coming quarters as local labor markets heal, economic uncertainty abates, and renewed business confidence becomes apparent.”
