Thought
Comprehensive Connecticut Town Data & Demographics Overview
Discover detailed insights on all Connecticut towns with this comprehensive two-page overview developed by CT Data Collaborative and AdvanceCT. A valuable resource for anyone looking to understand the state’s demographics and key data points. Click here to explore!
Maximizing Energy Efficiency: A New Partnership for a Sustainable Future
At Sentry Commercial, we are always looking for innovative ways to support our clients in achieving their energy efficiency and sustainability goals. We are excited to share details about a recently announced partnership between CT Green Bank and OCOsink, which offers a comprehensive approach to managing energy in commercial properties.
This partnership goes beyond just evaluating electricity and solar options. It provides a holistic review of a building’s mechanical systems, process components, and overall energy strategy. The goal is to empower building owners with actionable insights and practical solutions that align with their energy objectives while maintaining focus on their core business activities.
A key aspect of this partnership is the integration of OCOsink’s Energy Program Facilitation (EPF) services with the C-PACE financing program. This combination allows property owners to fund energy improvements with up to 100% financing and favorable terms, making it possible for these projects to be cash-flow positive from the very first year. Additionally, projects utilizing these services can benefit from reduced interest rates, further enhancing the financial returns on energy investments.
We believe this is a significant opportunity for our clients to enhance the sustainability and efficiency of their facilities. It’s a forward-thinking approach that reflects the growing importance of environmental responsibility in the commercial real estate industry.
For more information on how this partnership can benefit your property, please explore the full details here.
Navigating the New Landscape: Connecticut’s Release-Based Cleanup Regulations
As Connecticut continues to evolve its approach to environmental protection, the introduction of the Release-Based Cleanup Regulations (RBCRs) marks a significant shift in how environmental risks are managed across the state. These proposed regulations, which are poised to replace the longstanding Transfer Act, are designed to streamline the remediation process while ensuring that all properties—residential and commercial alike—adhere to rigorous environmental standards.
Why the Shift Matters
The transition to RBCRs reflects a broader trend towards proactive environmental management. By focusing on the discovery and remediation of hazardous material releases rather than on property transfers, these regulations encourage quicker responses to environmental hazards, reducing potential risks to human health and the environment. This approach is more aligned with contemporary practices seen in other states, positioning Connecticut as a leader in environmental stewardship.
Key Features of the RBCRs
- Comprehensive Coverage: Unlike the Transfer Act, which applied only to specific types of properties, the RBCRs extend to all properties in Connecticut, including residential areas. This ensures that all potential environmental risks are addressed promptly, regardless of property type.
- Flexibility in Remediation: The RBCRs introduce new tools, such as risk-based cleanup calculators, allowing for more nuanced assessments tailored to specific site conditions. This flexibility is particularly beneficial for complex projects, enabling more efficient and effective cleanups.
- Stakeholder Engagement: Public participation is a cornerstone of the RBCRs. The regulations are currently open for public comment until October 24, 2024, providing stakeholders with an opportunity to influence the final form of these critical regulations.
What This Means for Property Owners and Developers
For those in the commercial real estate sector, the adoption of the RBCRs will likely change how environmental due diligence is conducted. Rather than being triggered by a transaction, environmental investigations will now be driven by the discovery of contamination. This means that property owners and developers must stay vigilant about the environmental status of their sites, even outside of a sale context.
Additionally, the introduction of the RBCRs could streamline transactions by reducing the regulatory hurdles traditionally associated with the Transfer Act. However, this also places greater responsibility on property owners to manage environmental risks proactively.
Looking Ahead
The formal adoption of the RBCRs is a top priority for Connecticut’s Department of Energy and Environmental Protection (DEEP), and the public comment period is a critical step in finalizing these regulations. At Sentry Commercial, we are committed to helping our clients navigate these changes, ensuring that their projects are compliant and successful in this new regulatory landscape.
We encourage all stakeholders to review the proposed regulations and participate in the public comment process. This is a unique opportunity to shape the future of environmental regulation in Connecticut, and your input is invaluable.
For more information or to discuss how these changes may affect your projects, feel free to reach out to our team. Together, we can ensure that Connecticut remains at the forefront of environmental responsibility and sustainable development.
The Shift in Greater Hartford’s Speculative Warehouse Market: Insights from Mark Duclos
As the commercial real estate landscape evolves, the Greater Hartford market is experiencing a significant shift in speculative warehouse construction. Our President, Mark Duclos. SIOR, CRE, recently shared his expertise on this topic in a Hartford Business Journal article, providing a detailed analysis of the current state of the market and what it means for developers, investors, and tenants alike.
A Changing Market Mark highlighted that the demand for speculative warehouse construction in Greater Hartford has seen a noticeable decline over the past 18 months. “It used to be everywhere you turned there was a big-box requirement sitting out in the marketplace,” Mark noted. This decrease in demand marks a departure from the high levels of speculative building activity that the region witnessed just a few years ago.
Despite this slowdown, Mark emphasized that the fundamentals of the market remain strong, albeit with a more cautious approach from developers. “Nobody is building substantially on spec anymore,” he said, reflecting a broader trend towards more measured and strategic development.
The Current Landscape The article points out that while speculative construction has decreased, the Greater Hartford industrial market still shows robust leasing activity, particularly in smaller spaces. According to a recent report by CBRE, the region saw a healthy 3% increase in rents during the second quarter of the year, driven by sustained demand for quality spaces.
However, the article also notes a growing sense of caution among developers, influenced by rising construction costs, conservative lending practices, and economic uncertainty. These factors are contributing to a more selective approach to new projects, with a focus on securing tenants before breaking ground.
Looking Ahead At Sentry Commercial, we recognize the importance of adapting to these market changes. Our commitment to providing expert guidance remains unwavering as we navigate this evolving landscape. Whether you’re a developer considering your next project or a business seeking the perfect space, our team is here to help you make informed decisions based on the latest market trends.
The Greater Hartford market continues to offer opportunities, but success will require a keen understanding of the current dynamics. As Mark Duclos emphasized, “While the speculative construction landscape has changed, the demand for quality industrial space in Greater Hartford is far from over.”
Join the Conversation We invite you to read the full Hartford Business Journal article here to gain more insights into the current state of the speculative warehouse market in Greater Hartford. Feel free to reach out to our team to discuss how these trends might impact your real estate strategy.
Environmental and Regulatory Update Impacting Commercial Real Estate
EPA Designates PFAS as Hazardous Substances
On April 19, 2024, the U.S. Environmental Protection Agency (EPA) designated two per- and polyfluoroalkyl substances (PFAS)—perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS)—as hazardous substances under the Superfund Law. This reclassification marks a pivotal shift from their prior status as emerging contaminants, carrying significant implications for commercial real estate transactions.
Connecticut’s Transition to a Release-Based Remediation Program
Connecticut is undergoing significant changes in its environmental regulations that will affect commercial real estate. The state is transitioning from the Property Transfer Act to a new release-based remediation program. Key details include:
- Legislative Change: In 2020, the Connecticut General Assembly enacted Public Act 20-9, replacing the Property Transfer Act with a release-based cleanup system. This new approach ties remediation requirements to the discovery of contamination rather than property transfers, simplifying the process.
- Key Features:
- Reporting and Remediation: Both new and historical contaminations must be reported to the Department of Energy and Environmental Protection (DEEP) and remediated under the new rules.
- Environmental Professionals: The introduction of “permitted environmental professionals” (PEPs) will certify release records, complementing existing “licensed environmental professionals.”
- Tiered Remediation: Contaminations will be categorized into tiers, each with specific remediation requirements and oversight fees ranging from $500 to $3,000.
Implementation Timeline
The draft regulations are currently under review, with final adoption expected by the end of 2024 and full implementation anticipated in 2025. This transition aims to reduce transaction delays and costs, fostering redevelopment, particularly in post-industrial areas such as Waterbury and Hartford.
Understanding the EPA’s New PFAS Regulations: What Property Owners and Buyers Need to Know
On April 19, 2024, the United States Environmental Protection Agency (EPA) announced the designation of two per- and polyfluoroalkyl substances (PFAS)—perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS)—as hazardous substances under the Superfund Law. This reclassification marks a significant shift from their previous status as emerging contaminants, with profound implications for commercial real estate transactions.
Key Implications for Property Owners and Buyers:
Expanded Environmental Investigations:
The reclassification will necessitate a broader scope for Phase I and Phase II environmental investigations in commercial real estate transactions.
Impact on Due Diligence:
These regulatory changes could influence price negotiations, property valuations, and future environmental liabilities associated with PFAS remediation efforts.
Increased Risk:
Long-term effects may include ‘reopeners’ at state environmental agencies, heightening the risk for purchasing or redeveloping properties impacted by PFAS.
Lender Considerations:
While Phase I and II reports might not be directly impacted, lenders are likely to re-evaluate their criteria, potentially affecting financing options for clients.
Why This Matters
For property owners, understanding these changes is crucial for managing assets and planning future transactions effectively. Prospective buyers need to be aware of these new regulations to make informed decisions and accurately assess potential risks.
Learn More
For detailed information, please read the full article here.
At Sentry Commercial, we are committed to keeping you informed about critical regulatory changes that may affect your real estate decisions. Should you have any questions or need further assistance, please do not hesitate to contact us.
The “Experts” Don’t Always Know
Remember…the “experts might know more than the average bear” but they don’t know everything. Recent news about Talcott Financial Group moving its Windsor offices to 52,000 square feet in downtown Hartford made me think…wasn’t it just two years ago that everyone (including me) was telling you all it was likely that companies would move OUT of the cities and into the tranquil suburbs (moving closer to its employees and having more elbow room)? Hub & Spoke at the very least. OK, you can’t paint everything with one brush BUT theory number 2 is that companies move INTO the city where their employees have stuff to do and places to go (lunch and after work). (not to mention new offices and cooler space!).
Sometimes the more things change, the more they stay the same.
Keep smiling!
See Hartford Business Journal article Windsor insurer announces plans to relocate to downtown Hartford
One Year Later – Grateful & Thankful
Amazingly, it’s been a year since the pandemic began. I remember closing our offices on March 12th, one day prior to the very apropos Friday the 13th! Just as amazingly, the clock and the calendar simultaneously and equally slowed to a tedious crawl and sped to an unsustainable blur. March 12, 2020 put us on a path of the unknown and required all of us to test our limits, physically and mentally. It required us all to deal with the present and the future, personally and professionally, while navigating the incredible challenges and toll the pandemic was taking on our family, our community, our country and our world.
Today I am taking a moment to reflect on the enormity of the past year. The enormity of the challenges, the losses and the sacrifice. Equally, the enormity of the response to those challenges. The positivity, the dedication, and the American spirit of moving forward, while navigating our daily challenges. As I reflect I want to thank all of our Sentry Commercial family, our clients, our colleagues and our community for the monumental effort you have given over the past year. I am grateful and thankful for all you have done. I know it was, and is, not easy. I equally realize that we have a ways to go to end this pandemic, so I thank you for the same effort and spirit as we navigate out of these challenging times.
We are most definitely headed for better times. Thank you all for providing us that opportunity.
Grateful & Thankful,
Mark
How Strong Is Industrial Real Estate?
Wondering just how strong industrial real estate is nationally? Take a look at this article from Commercial Property Executive Excellent overview by CP Executive and JLL’s Trent Agnew. Quick takeaways:
- Due to capital market sales, $20B less traded in 2020 than 2019.
- 524M square feet leased in Q4 20 alone!
- 5.4% national vacancy rate.
- 327M SF of new construction in 2020.
- Cap rates on investment sales continue to decrease.
- More of the same expected in 2021.
- Class B market continues to be highly sought (in attractive markets).
- More e-commerce expansion.
Additional personal opinion in southern New England for 2021…
- Lack of inventory could squeeze 2021 results.
- e-commerce, while still active, might be less so in 2021 (warehouse slack, alternative solutions).
See full Commercial Property Executive article: Just How Strong Is Industrial Real Estate?
Keep smiling!
Mark
Last Mile Continues to Evolve
Customers have become accustom to curbside pickup. Bricks & Mortar retailers continue to offer it, but admittedly it challenges profit margins. In fact, in Costco’s case, already tight margins might not allow it! (Costco is starting to beta test curbside in a couple of locations in New Mexico – See recent RetailDive.com article Costco is testing curbside pickup). Efficiency then is paramount. Retail behemoth Walmart is starting to utilize robotics in the warehouse section of its stores to maximize efficiencies and margins. See recent Connect Media article, Walmart Bringing Robot-Filled Warehouse to DFW
Listen to the Experts…But Not Too Closely
One thing I have learned in my 34 years in the business? Listen to the experts…but don’t believe everything you hear. Using a black jack term, “the books says…”. The book says there aren’t any office leases being signed. Reality says otherwise, as evidenced by this most recent westfaironline.com article. 220,000 SF office lease signed at The Summit at Danbury
Nuvance Health Signs Summit at Danbury Lease
Keep smiling!
Mark
JLL Survey Results Support Hybrid Office Theory
According to GlobeSt.com a new JLL survey shows support for the hybrid office (working from the traditional office AND the home office). Results include:
- Increase from average of 1.2 days per week at home to 2.4 days per week.
- 72% of employees want some level of work from home. 66% want at least 2 days per week.
- Only 26% want full time work from home.
- 50% want a hybrid approach while 24% want to work exclusively from home.
- 76% want access to the traditional office.
See GlobeSt.com article: Workers Signal They Want a Hybrid Approach
Port Imports At Record Peaks
New import stats out as of 10/10/20 – More and more imports coming into the US due to replenishing of inventories, stocking up for holiday season and overstocking to insure the supply chain. October imports up 6.5% year over year, fourth highest month on record!
See ProgressiveRailroading.com article: NRF: Ports log record peak season imports
Back to Work
If people aren’t coming back to work then why am I progressively parking higher and higher in the parking garage!!?? #backtowork #returntooffice.
CoStar sues CREXi
The battle for, and protection of, CRE property data continues with @CoStar’s most recent suit against @CREXi. Interesting bit of history between CREXi, CoStar and @TenX. CREXi CEO, Michael DeGiorgio, is a former executive at TenX (and of course TenX was recently acquired by CoStar!).
These battles continue to hold the CRE services industry interest and concerns. @Sentry Commercial continues to use CoStar as a part of our Tech Stack. Information and data that, in part, supports our services to our clients and associates.
Never a dull moment!!
@Bisnow article: CoStar Sues CREXi Alleging Massive Copyright Infringement and IP Theft
Balancing the Supply Chain
The supply chain has had many challenges over the last 6 months. Shipping lines almost entirely shut down early in the crisis causing huge disruptions to supplies around the world. Shipping company solvency was at risk. Interestingly enough, shipping companies have actually re-tooled the way they approach their business and are making money! See the @WSJ article explaining just how! (Hint: profitability v volume).
Construction Costs Decline in Q2 2020
The effect of the COVID crisis has had varying effects on the real estate industry. Some surprising. This would be one of them! Turner Construction Co. cost index shows that construction costs for Q2 2020 actually declined! One would’ve thought the opposite (with costs of materials increasing and PPE/social distancing/sanitation precautions) but it appears competition has created an aggressive price war. However, July shows signs that trend might change. See GlobeSt.com article below:
Broker Confidence Rises in New SIOR Survey
This article is from Connect Media and has been republished with permission from Connect Media. View the article here.
June 5, 2020
Confidence in experiencing favorable market conditions six months from now is up slightly in SIOR’s second monthly survey of members, rising from 6.04 for the April survey to 6.22 in May. However, the organization’s office brokers have less confidence than their industrial counterparts, according to SIOR’s May 2020 Sentiment Survey.
Focusing on current conditions, the newly-released survey results charted significant changes in the overall status of current transactions. There was just over a 5% increase in transactions progressing on schedule and a 3% decrease in the number of transactions on hold by clients.
“There has been a lot of speculation and discussion about what might be or could be taking shape, but this is the first time the best brokers in the business have weighed in to share what’s really happening and the confidence our professionals have for the industry several months from now,” said SIOR president Mark Duclos.
US Manufacturers Reshoring
More US manufacturers than ever are considering reshoring. Unreliable supply chains, as evidenced by the recent crisis, is the latest reason but that is only one of the many reasons. Companies have been reshoring for years but look for that trend to accelerate. According to this recent article by Thomas.net, more than two thirds of US manufacturers surveyed are considering bringing parts of their supply chain back to the US and closer to their factories. This will likely provide a major boost to the industrial real estate markets in North America.
See attached Bisnow article: Reshoring Likely to Boost Industrial CRE
CoreNet Releases Corporate CRE Pros Survey for Returning Employees
We are all now in the phase of re-emerging from isolation and, with it, understanding the “new norm”. Sentry Commercial is here to help you. This was just released by CoreNet Global. It is a survey of corporate real estate professionals at large global corporations. This is a great reference (early in the game) for all who have offices (That includes you industrial companies – You have offices too!!).
Let us know if you have any questions. We will continue to keep you posted on this ever-evolving situation.
https://blog.corenetglobal.org/blog/employees-will-return-in-waves-not-all-at-once-social-distancing-and-other-measures-will-continue-at-the-office/2/