Thought
Big News! STR/East Windsor CT
“Big News”. STR Holdings completes purchase in East Windsor CT!
According to the Hartford Business Journal, STR Holdings, an Enfield CT based solar manufacturer, has closed on the long rumored purchased of a new facility in East Windsor CT. STR has purchased the former “Mushroom Factory” at 96 Newberry Road, East Windsor CT for (what we believe to be) $4.9m. 96 Newberry Road is a 275,000 square foot manufacturing plant located at the easterly end of the East Windsor Industrial Park. Since its redevelopment, the property has essentially had two occupants…Ingram Book Group and Casual Corner. The property has been vacant for a couple of years so the sale is wonderful news for the Town of East Windsor and the State of Connecticut.
The solar industry is obviously one of the bright lights (pun intended) in our area. Solar manufacturers continue to experience solid growth and it is imperative that the State of CT retains these companies and doesn’t “lose them” to other parts of the country. Hats off to the State of CT and the Town of East Windsor for all of their efforts to accommodate STR in its expansion! This process (to purchase the property) started in early 2010. A long haul to say the least.
See attached HBJ article: STR Holdings
Keep smiling!
Mark
Manufacturing rebound in the State of CT?
Interesting perspective from a “Futurist” from Haddam CT (see attached Commercial Record article: Futuristic Says CT Manuafacturing Will Rebound). Ken Gronbach, of KGC Direct (http://www.kgcdirect.com/) is predicting the return of manufacturing to Connecticut in the future (although he doesn’t say how many years into the future). The basis of his theory appears to be two-fold. One, the decline of the younger population in countries such as China (conversely, the increase in the younger workforce here in CT). Two, combined with an increase in the younger workforce, the fact that CT already has large industry to feed off of (i.e. smaller manufacturers growing by serving the big manufacturers).
All I can say is I hope Ken is right! However, while I certainly respect the perspective and encourage Ken’s optimistic outlook, I have to wonder if we can count on the first OR second part of his theory holding true.
1) There is a continuing “brain drain” in the CT region. Our young people are leaving the state (not in droves, but leaving nonetheless). Why, because of opportunity. The opportunity to find jobs that is! If there aren’t any jobs…there isn’t a need to stick around. Just the other day I heard a “20 something” (college graduate) say…”I’m moving to DC”. I asked why…she said…”because my friend has a job down there…there aren’t any jobs up here!”.
2) In the coming years (heck, the coming months!) we will likely see further reduction in the workforce of large CT based manufacturers here in the State of Connecticut. While UTC’s Pratt &Whitney division is the easiest example of workforce reduction, there are a number of less visible companies who are doing the same (reducing their workforce here and expanding elsewhere).
Hey, I’m not predicting the imminent demise of the state (or the region), but I continue to be worried about the state’s lack of ability to “turn this ship around” (the “ship” being an economic development effort to make the state more competitive for business).
As they say…if you’re not moving forward, you’re moving backwards. If companies in this region aren’t growing here in the state (but are growing elsewhere), then guess what…we (the state) are moving backwards.
Again…I hope I’m wrong. But I fear that I’m not.
Keep smiling!
Mark
Market Sales and Leases – October 2010
The market seems to be picking up a little bit. Can’t tell in these October sales and lease transactions but likely will in November and December results.
Have a happy and safe holiday season.
Mark
“Big News, Bad News, Same OLD News”
I have started a “Big News, Bad News, Same OLD News” series – Here’s the first installment!
BIG NEWS!
New Haven based Higher One recently signed a long term lease to occupy 140,000 sf of space at Science Park in New Haven CT. Higher One assists colleges in managing payment of financial aid, refunds, invoicing etc to its students. They presently occupy Building 25 at Science Park.
The expansion is being assisted by a $5.5 million grant from the State of CT Department of Economic Development and Community Development, $18.5 million in tax credits, as well as $1.0 million in CDA sales and use tax exemptions.
See attached HBJ article: Higher One
R&D investment down 2% in CT.
Occasionally I receive calls from reporters looking for my input on the industrial real estate markets…here in the state and the region. Most questions are fairly typical. Vacancy rates…reasons for a plant closings…when are we going to get out of this mess…etc etc etc. Last week I received a call from a reporter with a little deeper question. “If state companies are investing 2% less in R&D (according to a recent report), then what long term effects does that have on the market place, short and long term”? Tough answer. The easy answer would be the obvious…the less R&D investment, the less chances of a healthy industrial market. However, on second thought…probably a non-event. While less R&D investment means less creation of new products, the reality is that most companies in CT don’t produce what they invent…at least not in CT…at least not in quantity! So, while less R&D investment isn’t a good thing…when it comes to its effect on warehouse/manufacturing space in CT…not a lot of effect. Elsewhere (i.e. outside of CT)? Bigger effect!
On that topic…take a look at a recent WSJ article on companies keeping their cash. When you hold onto your cash, you can’t do a lot of expanding!
See attached WSJ article: WSJ – Companies Cling to Cash
Keep smiling and Happy Holidays!
Mark
Mr. Malloy, Stop SAVING and PROTECTING jobs and Start CREATING them!
While we are starting to see a bit of a recovery in the commercial real estate markets…New England and, in particular, Connecticut continue to struggle. Why? The cost of doing business continues to increase in the region. That means taxes, labor, benefits and utilities. And while some in the State of CT will want you to believe that the numbers show a different story, the fact remains…when our largest employers expand, they aren’t expanding here. The fact is that our employers are expanding elsewhere (no, not just “China”, here in the states as well), and when they expand elsewhere…they not only take their own employees with them…they leave all of the vendors and companies that rely on them out in the dark as well.
So, while I don’t agree with Mr. Malloy’s political views, I do wish him well as he kicks off his tenure as Governor. And if I might give Mr. Malloy one piece of advice (he’s probably received a ton of it already)…I think it’s pretty simple…If the businesses leave, then we don’t have to worry about ANYTHING else. No need to worry about unions, education, deficits, taxes, etc. Because if this state doesn’t become considerably more business friendly (in cost and attitude), then there won’t be anyone around to pay the taxes, to educate or to support the unions. We’ll all be gone, chasing jobs in other parts of the country…or the world.
It’s about time we create a positive business environment for our employers in this state. With all due respect to Mr. Blumenthal…It’s about time we stop worrying about SAVING and PROTECTING jobs and start building a business environment that CREATES jobs.
See attached related article from The Day, New London: State of CT
Keep smiling.
Mark
Market Sales and Leases – September 2010
While there’s optimism about the market recovery (albeit…slow market recovery), actually completing sales and leases remains a challenge at this point. Evidenced by the attached September 2010 industrial sales and leases report.
September 2010: September Comps
How do they come up with this stuff?!?!
“Hartford’s Realty in the bottom five”. This according to Moody’s (see article below). Who else is in the “bottom five”? Las Vegas, Detroit, Trenton NJ and Phoenix. Hotel occupancy rates, apartment leasing, demand for office space, etc. etc. etc were factors included in the “survey”. I’m not here to tell you the Hartford area is booming…but BOTTOM FIVE? Hate to argue the results of the “survey” but I can tell you a number of other areas that I know of that are worse off. No, I’m not going to list them. If you see them, you’ll know what I mean…you won’t need to do a “survey”.
Hartford Business Journal article: Bottom Five
Keep smiling!
Mark
SIOR National Conference News
Just returned from the SIOR National Conference in San Antonio Texas (www.sior.com). These conferences are usually a good barometer of what the country is seeing in the office and industrial real estate sectors. To say the tone of the last few conferences has been depressing would be a major understatement. (NOTE: SIOR members are some of the most experienced and successful players in the industry). Those venues (while very worthwhile events) were laced with lower attendance (not cheap to go to these conferences), negative attitudes and bleak outlooks. This Fall’s conference was much more upbeat and, while attendees (and speakers) felt the recovery was going to be long and tedious, most felt the worst is over and that things are looking up! Lease rates firming up…positive absorption (finally!) and companies looking at expansion projects again. And while the clear indication is that new job employment is still going to be suppressed (1-1.5 new jobs annually the next few years – not enough to get the employment rate down significantly), companies WILL continue to see record (or near record) earnings and begin new initiatives/projects (i.e. starting to spend their hoards of cash).
We shall see…but the new optimistic (albeit…reserved optimism) sure beats the alternative! And who knows…sometimes optimism creates momentum…and momentum starts the wheel turning again…something we haven’t seen for quite some time!
Keep smiling!
Mark
SunHydro ribbon cutting in Wallingford CT – A look at the future. A look at TODAY.
(10/15/2010) I had the privilege of attending the SunHyrdo ribbon cutting for their brand new hydrogen fueling station (see article below). Interesting stuff! Attendance included Gil Sperling of the US Office of Energy, Congresswoman, Rosa Delauro, Tom Sullivan, owner of SunHyrdro and Proton Energy Systems, as well as Rob Friedland, President and CEO of Proton Energy Systems. And while it is always fun going to ribbon cutting events, I can’t remember the last such event that made me think that” tomorrow/the future” is actually TODAY/HERE.
We all hear about hybrid cars, fuel cell technology, clean energy, green buildings etc. etc. etc. Yet many of us are skeptical of just how much of an impact these efforts/ideas/initiatives will have on our everyday lives…in the near future. Well yesterday we got a first-hand look at how these concepts aren’t just about the future…they are happening TODAY. Yes, hydrogen fueled cars with hydrogen filling stations. We saw examples of public hydrogen filling stations (the East Coast Hyrdogen Highway) and private filling stations (yes, one at your own house). But MOST of all, we saw how a “can do” entrepreneur can take a progressive idea and “make it happen”. Tom Sullivan’s vision turned into reality yesterday. Made possible by vision, know-how and a ‘can-do” (make that a “will do”) attitude.
Hats off to SunHyrdo, Proton Energy and Tom Sullivan. Great to see things happening at SunHydro and Proton Energy! Great to see things happening in Wallingford CT! Great to see that the “future” is TODAY!
See attached HBJ article: SunHydro
Mixed signals in the industrial re markets.
Everyone is seeking input on just where the industrial real estate markets are headed. Frankly, I think we are all trying to believe we are headed on our way back. And while I believe this (markets heading up) is the case, the fact is that for every one of me, there is probably one person that believes the opposite (we’re headed down) and one that believes we’re staying the same (yes, going nowhere, fast!).
I just read this article on CityFeet MarketWatch (CityFeet.com) and, while the article says we are headed up, as you read on, it puts a number of qualifiers on that position. Jim Dieter, Executive VP of Industrial Brokerage at Cushman & Wakefield, a guy who has been around for awhile and knows a thing or two about the national markets, recently released his mid-year comments. I thought you might enjoy his perspective (go to C&W Mid-Year Report).
Keep smiling!
Mark
Market Momentum Changing.
While the quarterly stats might not be showing it, I can tell you that the “daily” stats are. “Market Momentum” is beginning to change out there. And while it will take a while to absorb all of the vacancies of the last 30 months, they (the vacancies) ARE beginning to go away. Evidenced by recent deals…CREC, 50,000 sf + in Hartford CT and Windsor CT, STR’s planned expansion (275,000 sf) to East Windsor CT, GE’s 160,000 sf lease in Stamford CT and CIGNA’s 120,000 sf lease in Windsor CT. A number of companies, while not hiring at a pace we would like to see, ARE expanding (and even hiring a few people here and there).
So while commercial agents might be split on the timing of a full recovery, I think we all agree that “market momentum” is picking up.
Keep smiling!
Mark
Companies changing their approach to space needs.
Just read an interesting article by Sandra Johnson (MetroHartford Alliance) that was published in the New England Real Estate Journal. It illustrates just how companies are examining the way they make real estate decisions in today’s changing world. While this article is based on office decisions, it goes the same with industrial decisions as well. It is time (we are actually well beyond the time) that all companies take a serious look at the future and realize that their successful real estate decisions of the past do not guarantee success in the future.
See attached NEREJ article: NEREJ
Industrial report predicts 2011 industrial recovery
Interesting report by CA based Marcus & Millichap Real Estate Investment Services. Predicts the industrial recovery to be 2011, maybe even 2012. While the report is about the recovery of the industrial investment market (i.e. not the user market), it does show the differing opinions out there re: the recovery. Seems the difference in most opinions is in the area of “absorption”. No one seems to dispute the recovery…just the speed of the recovery (i.e. how quickly will the existing inventory be absorbed).
See attached report: Marcus & Millichap Report
No such thing as a temporary tax increase!
In 2008 the legislature passed a two year extension on the “temporary” increase of the real estate transfer tax. Well once again the legislature is looking for yet ANOTHER extension of that temporary tax! It doesn’t look like a question of “IF”. Instead it looks like a question of “how long”? (One or two years). One of the reasons why? “The local governments are counting on the tax for revenue”. Aren’t we all (looking for more revenue!!)!?!
See attached Hartford Courant article: Real Estate Tax
Hey government and politicians, If you haven’t noticed – it’s all about jobs!
Last week I was asked to participate on a panel of “industrial real estate experts”. The effort was to give our audience a “state of the state” type of overview for the CT and Western MA region. I have been on a number of these panels in the last 30 months and, just like the previous panels, the picture wasn’t pretty! All of us talking about rising vacancy rates, falling sale prices and lease rates, varying opinions of what relief was in sight, how the state needs to become more competitive. While everyone on the panel did a nice job, it was pretty much the same ole stuff.
So here’ the unabridged version of my thoughts…
Government…Politicians…WAKE UP! Experts on panel after panel after panel are talking about the sad state of affairs in this state. Are you listening? The fact is (and BTW, this is the way it’s been for a long time…it’s not just “due to the recession”)…CT is expensive. CT is NOT business friendly (i.e. our ATTITUDE toward business is depressing)! You tell us that you want business expansion and you want new businesses to come to the state, but everything you DO says otherwise!
Politicians…stop telling us that CT needs new jobs and industry…that we need to lower the cost of doing business…that we want to be “business friendly” (“tell me something I don’t know”)! START telling us HOW you are going to do it! Stop “talking the talk” and start “walking the walk”. Because all of us “experts” can tell you about a number of growing companies that are ready to “walk the walk”…right OUT of this state!
My guess is that we will never be the “low cost provider”. Then what are we? Just in the last week we saw a company that was supposed to be an example of what CT is all about…LEAVE THE STATE! Yes, PaperG is headed to California (not exactly a “low cost provider” itself). In fairness we also attracted a company, EpiEP (nice job CT Innovations!), but we can’t afford to trade wins and losses!
Suggestion…At worst, you made this state the most expensive state in the country. At best you’ve spent the last number of years “saving” jobs at companies that are headed out of this state in the not-too-distant future anyway!! That’s what I call throwing good money after bad. Why “good money after bad”? While these are political wins, there aren’t any financial packages you can throw at certain companies that will cure their issues operating in the state LONG TERM (unless you DRASTICALLY reduce the cost of doing business here…LONG TERM)!
So unless you are ready to make us the “low cost provider”, why not stop CHASING the “old economy” and start paying attention to and start CHASING the “new economy”? Why not start thinking “outside the box” rather than thinking the same ole way that got us in this mess in the first place? How are we addressing the mobile workforce? The companies with great technology but less than 10 employees (not just those companies that need working capital)? The medium sized employers that have emerging technologies that are looking to grow right now? Etc. etc. etc.
Please…we are begging for leadership in this state (at a bunch of levels). Would someone please step up! Stop talking about “baseball and apple pie” and start talking specifics! Preferably refreshingly, specific, NEW ideas!
Mark
Moody’s Analytics and CBIA economic outlook
Went to the CBIA/CBT Economic Outlook breakfast this past Monday. Confirmed my “good news/bad news” outlook. Good news being that the economy is on the rebound. Bad news being that the Connecticut economy is behind the curve AND so is real estate (residential and commercial). Take a look at the Moody’s Analytics/Andres Carbacho-Burgos presentation on the CBIA web site. Good stuff!
Moody’s Analytics_Andres Carbacho-Burgos CBIA Presentation
Keep smiling!
Mark
Will the South Windsor CT studios produce jobs?!?
I have been asked a number of times whether I felt that the new film studio proposed for South Windsor CT (Connecticut Studios) will produce jobs for the area OR if it will just be another self-contained development. Well, my answer to all of you (as you know) has been an incredibly insightful “I don’t know”! And while I still can’t speak as an expert on the economic benefits of film studios, this morning I am just a little smarter and a little more knowledgeable on the subject.
“Lost”, that cult-like ABC television series, ends today and there aren’t a lot of people in the Honolulu area that are all too happy about it! By all estimates “Lost” spent approximately $400 m in the Hawaii economy, hired 800 full time employees and over 1,200 suppliers (not to mention one lucky foam guy!) in just six years!
Take a look at the article that ran in this weekend’s Wall Street Journal, “Weekend Journal” edition: Hawaii _Lost_
SIOR Commercial RE Index looks up (a little).
OK, we’ll take what we can get. This is the Q1 2010 SIOR Commercial Real Estate Index. A compilation of over 700 SIOR’s opinions on where the commercial real estate markets are headed. The good news is up! The bad news is, slowly. Very slowly!
See attached SIOR Index to be published in the SIOR Professional Report magazine for May 2010: SIOR Commercial Real Estate Index Article – 2010 1st quarter
Market Transactions and New Avails – April 2010
Q1 2010 turned out as expected…Stabilizing of the market…a few more deals…a slight increase in showing activity. Biggest question right now? Will the “corporate planning” going on today (i.e. company’s looking internally at their options to accommodate increasing sales and production) turn into actual real estate expansion? OR, will they defer to the option of increasing the number of production shifts, wait for 100% utilization of existing plants, etc. etc. etc. Time will tell. What we DO know is, even with the increase in showing and transaction activity, most markets have anywhere between 1-3 years of excess real estate to absorb.
See attached Market Transactions and New Availability Report for April 2010: April Combined Avails & Comps
Keep smiling!
Mark