Thought
Colt Manufacturing reorgs and expanding in CT
There’s been a lot of not-so-good news in our region lately but there seems to be more good too. The cynic (I am one of them) says, over the years, too little good and too much bad. That said, lately, seems to be more good than bad.
Latest good news? Colt Manufacturing is growing again! Good for Colt…good for the region!
See related Patch article: West Hartford Manufacturing Co to Expand
SIOR CT/WMASS releases Year End 2016 Market Survey
The Connecticut and Western Massachusetts Chapter of SIOR has released its Year-End 2016 Market Survey. Chapter members continue to be optimistic about this coming year’s industrial market. The full market survey is attached but here are some highlights:
1) 50% believe industrial lease rates will increase in 2017.
2) 82% believe vacancy rates will decrease.
3) 54% predict increasing industrial sale prices.
4) Surprisingly only 30% believe new development will increase.
See attached report, including the latest UCONN scholarship recipients!
Strong Industrial Outlook In 2017
Recent article from CoStar shows strong industrial real estate outlook in 2017 (warehouse/DC) – Lots of factors – Low interest rates, e-commerce and strong consumer spending – Report is consistent with our region – CT and Western MA had strong year in 2016 and we expect strong demand for quality space in 2017 – Issue won’t be on the demand side rather the product/inventory side – Lack of speculative construction leaving the region short on Class A supply – Recent increase in Class A rents should provide developers with reasonable return (in spite of cost of construction) – Problem is, even if developers break ground today, the product coming on line will be too late for anticipated demand.
CoStar article: E-Commerce Driving Distribution Property Growth
The Uber Effect (On CRE)
Lately lots of conversation and presentations on how Uber will transform the landscape of commercial real estate development. Less cars means less or smaller parking lots/parking garages. Less parking means less land needed for development. Less land means lower costs.
Interested to learn more? This article (below) in the WSJ is a good start.
Henkel leases 135,000 SF in Stamford CT
Good news again in CT! Henkel announces they have leased 135,000 SF at 200 Elm Street, Stamford CT for their new North American HQ!
Stamford Patch news link: Henkel Announces Stamford HQ Location
UCONN Downtown Campus Update
We don’t usually post much about downtown happenings but thought you might be interested in the latest UCONN video loop on the progress of their downtown campus.
Compliments of UCONN on YouTube: UCONN Downtown campus update
International Property Measurement Standards
Spent a week in London a couple of weeks ago, same week as the Brexit vote. What a week! I was in meetings and presentations for about 3 of those days. One presentation that caught my attention was from the International Property Measurement Standards Coalition. Seems this group has got together to try and solve the age old issue of just how you measure a building!
Right now there are too many ways to measure a building and NONE are any longer the “gold standard”. And yes, the lack of ability to agree on the size of a building does have an effect on its value!
So IPMSC has decided to tackle this task and it looks like they are making progress! Nothing final yet but I will keep you posted on how it goes. In the meantime, see link below for more info on the project.
International Property Measurement Standard: https://ipmsc.org/
Keep smiling!
Mark
CT SIOR members industrial survey
The CT/Western MA chapter of SIOR (Society of Industrial and Office Realtors) recently released its 2015 year-end Market Survey and the results show a positive year in 2015 with the industrial sector showing strong growth. The survey also suggests a mixed opinion as it relates to 2016. Most members forecast a flat to decreasing year in 2016 (compared to 2015).
The survey also highlighted a number of recent member transactions, demonstrating the strength of 2015.
MA playbook to snag GE from CT
Interesting article in yesterday’s Springfield Republican – Lots of reasons why a company makes a decision to move from one state to another – Money and resources are a couple of them – In this case it appears both came in to play – Up to $125M from the State of MA and $25M from the City of Boston – The article below talks about all of the resources – People, access to international cities, real estate… etc, etc, etc.
Of course a culture in CT state government of tapping on our businesses again and again to fix our budget problems doesn’t help either. Just saying.
See Springfield Republican Article: GE move to Boston
Tough couple of weeks for CT
At the risk of stating the obvious, the State of Connecticut has had a rough couple of weeks… OK, maybe a rough couple of months (years?). I had the opportunity to listen to Ben Barnes, Secretary of the State of CT OPM, the other day. In the midst of the announcement of the closing of the Bristol-Meyers Squibb facility in Wallingford (200 jobs lost, 500 relocating to a “new location” in CT), it appeared that Mr. Barnes thought things (including the budget process) were going pretty well.
Going pretty well? UTC selling Sikorsky (not to mention closing Bridgeport and laying off 1,400)…GE selling GE Capital… Colt Defense declaring bankruptcy…GE, Travelers and Aetna threatening to leave the state…IBM joining them?…Hartford Healthcare laying off 335…Need I go on (I could…for a while!)?
We can describe CT’s economic environment a lot of ways…going well is not one of them. Yes, CT has a lot going for it. Thank goodness for our location, our people and our companies. But if our leaders just want to continue to reach to companies and the wealthy for funding their initiatives then, eventually (appearing to be sooner rather than later) there will be no one to reach out to.
What did Margaret Thatcher say…”The problem with socialism is that you eventually run out of other people’s money.”
Keep smiling!
Mark
SIOR’s predict strong year
The CT and Western MA chapter of SIOR recently released its semi-annual survey that predicts the strength (or lack thereof) of the industrial markets in Connecticut and Western Massachusetts.
By all accounts…things are looking up! One third of the members indicated an improving market throughout 2014 and 62% predict continued improvement in 2015. 65% predict a decrease in vacancy levels. That said, only 35% predict an increase in pricing and only 29% believe development will increase in 2015.
IF there isn’t an uptick in development and there IS an uptick in leasing activity, it’s hard to believe that pricing won’t follow. In fact, I would make the argument that pricing has increased in most markets. Maybe not to the point that creates new, speculative construction (constructions costs are too high for present rent levels), but certainly to a point that landlords are starting to feel better about their cash flow.
See attached: CT/Western MA SIOR Market Study
Keep smiling!
Mark
Manufacturing returning to the US
Interesting article in GlobeSt.com this morning. The ongoing subject of Reshoring. While we might not be seeing it as much here in the northeast, we are seeing it big time throughout the country.
Couple of interesting facts:
In 1970 25% of all US workers were engaged in manufacturing. Today…just 8%. HOWEVER…the US STILL produces 21% of all manufactured goods in the world.
What took 1,000 people to produce in 1960…now takes just 184 people today!
Keep smiling!
Mark
Sales and Leases added to SenComm website
Sentry Commercial has added industrial sales and lease data to its website…for FREE! Go to our Sales & Lease Data section and find detailed sales data as well as leasing activity data for the Connecticut and Western Massachusetts region.
Coming soon…Property Data. Not just Availabilities (that info is already live on the site) but data on industrial properties in the region.
Keep smiling!
Mark
Industrial Property Data Available to Public
Sentry Commercial continues to be committed to
being THE EXPERT and THE RESOURCE in the industrial real
estate community in Southern New England. As a part of that effort, we are
pleased to announce the release of our new website.
And while the new website LOOKS different, the real news is that it IS
DIFFERENT.
TWO major differences:
1) Properties Section – We now offer to the public ALL
available industrial properties over 10,000 SF (no, not just our
exclusives). Yes, that is FREE access to the public. Much of that access
includes brochures, floor plans and site plans (and if we don’t have it – ask
us for it!).
2) Market News – Not just Sentry Commercial transactions/news but ALL
notable news in the marketplace (in the case of transactions this includes
tenant/buyer, landlord/seller and the broker information (if represented by a
broker).
Take a look and let me know what you think! I look forward to your
comments!!
Keep smiling!
Mark
Gene Marconi moves to BHH
Berkshire Hathaway HomeServices’ gain is the commercial real estate communities’ loss. News is that Gene, longtime General Counsel for the Connecticut Association of Realtors, has recently accepted a job at BHH. Congratulations Gene! Selfishly, sorry to see you go! You were an invaluable resource for all us commercial practitioners and you will be very tough to replace. Thanks for all of your years of service to our community, all of your advice and for keeping us all informed on the latest and greatest regs that allowed us to practice at the highest standards in the industry! Good luck at BHH!
Keep smiling!
Mark
Its Not the Snow
Lower industrial output numbers – It’s because of the snow.
Lower new jobs numbers – It’s because of the snow.
Lower retail sales – It’s because of the snow.
Lower housing sales – It’s because of the snow.
Slower corporate decision making – It’s because of the snow.
There are a lot of reasons why CT’s economy isn’t booming and I can tell you this….IT’S NOT BECAUSE OF THE SNOW!!
Keep smiling!
Mark
Slower industrial absorption predicted for 2014
Good and bad news here. Yes, industrial absorption will likely be less this year, which is due to the absorption of a lot of pretty good space in late 2013! So the theory is this…Yes, there are more serious tenants and buyers out looking for space in the industrial sector, the reality is that they are going to have a difficult time finding the space they need because most (not all) of the remaining available space has at least some functional obsolescence.
Yes, I am quoted in the article but my comments to the reporter (while accurate) were whittled down. Yes, I agree that there is less competitive space on the market. Yes, I believe there are more real tenants and buyers out there as well. But no, the Amazon (Windsor), FedEx (South Windsor), Dollar Tree (Windsor) etc. developments are not examples of the drying up of product in the market. The reality is this market has ALWAYS had a dearth of high bay, large box alternatives for these type of large users. The reality is the large box warehousers have ALWAYS had to build to suit for their needs. The real news is that we are more and more becoming an attractive location for these type requirements.
See attached Hartford Business Journal article (well done): Choosey tenants slow backfill of empty industrial space
Keep smiling!
Mark
Hartford study shows 9.9% industrial vacancy
Commercial real estate information provider, CoStar Group, Inc., has recently released its latest Greater Hartford Industrial statistics. The numbers show a 9.9% vacancy rate in the Hartford industrial sector. While a few of the reported transactions (Waterbury and Chicopee) fall well outside of what the region calls “Greater Hartford” the fact remains that the 9.9% rate is a marked improvement over the last 12 months. Positive absorption remains limited but at least it’s positive. And believe it or, we are actually beginning to see product shortages in some areas of the market.
So yes, the market is looking up!
See attached report: CoStar Hartford Industrial
Keep smiling!
Mark
Property Assessed Clean Energy (PACE)
One of the best kept secrets in the commercial real estate industry is the Property Assessed Clean Energy program (PACE or C-PACE). What is it? This is a program that is available in 9 states (including Connecticut) with an additional 12 states in the development phase (including the rest of New England (http://pacenow.org/pace-programs/)). The PACE program offers landlord and commercial property owners financing for energy projects including solar, reflective roofing, lighting, window and HVAC upgrades. Borrowers pay the loan back via special assessments on their property taxes. It’s a great way to upgrade your property!
For more information see below:
Keep smiling!
Mark
Manufacturers Ignoring Washington…thankfully!
Just the mention of the word “Washington” sends shivers down all of our spines. How can one city polarize so many people and cause so much angst in our lives? Well, apparently the good news is that US manufacturers aren’t paying all that much attention to Washington and they are going about their business. We are seeing it on the streets and we are seeing it in recent indexes.
The Institute of Supply Management just came out with its September number that indexes US Factory expansion and it is up from August. The 56.4 result suggests that the expansion will continue into the foreseeable future. Couple this with recent reports from numerous economists predicting an extended industrial expansion starting sometime in 2014 (they argue exactly when it’ll start in 2014) and things are looking up!
Pitfalls? The job numbers are tepid, at best. Manufacturers have added only 15,000 jobs since July. Yes, the jobless expansion!
See attached Wall Street Journal article: US Factory Expansion