Thought
Fed says industrial property sector lags.
Interesting piece in the Hartford Business Journal yesterday (see below). A report stating that the Fed believes the Hartford Industrial market lags other property sectors. Well, that’s saying something! You mean to tell me that the industrial sector lags the retail sector? Maybe that’s what the numbers say but I can’t imagine that this is the “real story”. Yes, we’ve seen a bunch of industrial product come on the market in the last 24 months. But much of that inflow has subsided in the last 60-90 days and, in fact, we are seeing more and more substantial activity (corporate planning, showings and, to a lesser level, deals). We’re not dancing in the streets just yet but we are clearly seeing a light at the end of the tunnel (and no, it’s not a train!).
Hartford Business Journal Article: Hartford Industrial
Market Sales & Leases – February 2010
Transaction activity remains a bit groggy at this point. The good news is that it appears that showing activity is picking up a bit. The real good news is that corporate facilities planning/analysis is active. Might mean good things to come!
See attached February 2010 Market Sales & Leases Report: Market Sales & Leases – February 2010
Keep smiling!
Mark
New assessments are on their way!
It’s that time of year! New assessments are on their way. And yes, towns are looking for revenue! Not every assessment is created equally, so it is wise to take a look at your new assessment and make sure it checks out! Even if you are a tenant! Actually, ESPECIALLY if you are a tenant. Many tenants don’t even look at the new assessment even though many times THEY pay for it!
Take a look at the upcoming assessment schedules in CT and MA (RI to follow).
Sentry Commercial updates its website with new features!
We have updated our website at Sentry Commercial. Not only its look…but its features too! It’s our attempt to develop a website that helps YOU…not just one that tells YOU about US! Market News and Sale/Lease data to keep YOU up to speed with the ever changing Southern New England marketplace. We want the site to be YOUR source for the office and industrial real estate world in Southern New England.
Take a look at www.sentrycommercial.com and let us know what you think. Have any ideas on other features that we can add to help YOU!?! Then drop us a comment. We’ll see what we can do!
Keep smiling!
Mark
Bringing Manufacturing Back Home
We hear a lot about manufacturing jobs leaving the U.S. in droves. And while this might be the case, this article from Area Development magazine (www.areadevelopment .com) offers a compelling case for jobs coming back to the U.S.! Diminishing appeal in China (no longer those 30-50% savings), long supply chains etc. etc. etc. Take a look at the attached article: Bringing Manufacturing Home
Keep smiling!
Mark
CoStar predicts strengthening of the industrial markets.
CoStar Group, in its Year End 2009 Industrial Review, predicts the end of negatve absorption in the industrial sector. Couldn’t agree more with the prediction (per my previous blog post) just worried about how long it will take to absorb what’s on the market. That said, this is good news!
Take a look:
http://www.costar.com/News/Article.aspx?id=3C0803868E6B292E543549E07D5083C4
Keep smiling!
Mark
It’s a New Year!
We are four weeks into 2010 and you have probably been asked “How was 2009″ and “What does 2010 look like” a whole bunch of times already. I know I have. And while I have a pretty good answer on the 2009 question (usually starts with…”wasn’t as bad as I thought it was going to be”), I am still struggling with the 2010 question.
Four to six weeks ago I was pretty convinced that the industrial real estate market (the “user/tenant/buyer” side of it) was going to experience a significant rebound this year. I am beginning to think that I should drop the word “significant” from that statement. I do believe that there is more clarity out there than this time in 2009 (of course that isn’t saying much) and that will mean an improved 2010. However, while 2009 was spent saving and stablizing the patient, it is becoming clearer that the patient will recover this year but that the stabilization period might have a little bit more time left.
While NEW transaction volume in 2010 should be significantly higher than 2009 (again, this isn’t saying much), landlords will continue to struggle trying to lease their buildings and maintaining acceptable net effective lease rates. This will hold especially true in the larger industrial market where the availability of large industrial buildings grew significantly in the last 24 months. While commercial real estate brokerage companies are reporting vacancy rates in the 14-15% range, the actual percentage of vacant industrial buildings in the region is significantly higher. Why? Because vacancy rates don’t include corporate owned/user real estate. And the increase in the availability of large buildings in the last 24 months did not come from overbuilding (i.e. developers), but instead from the corporate real estate world. Bottom line? While there will be more requirements in the marketplace in 2010 there are many, many more buildings for those out there looking to look at! That will cause continued downward pressure on rents for some time to come.
On the sale side…while the credit crunch appears to be loosening, buyers still need more cash to get credit! Yes, equity is the name of the game and what use to be a 75% loan to value has become (over the last 12-18 months) a 60-65% LTV proposition. From the user side…this means that companies need to use valuable cash (cash they need for operating capital) to fund their real estate. Not something that a lot of companies have the luxury of doing. And while there is a government push to FORCE banks to free up additional credit…I’m not quite sure that this will mean much. Yes, there’s more debt out there for buyers to access, but the question is…at what terms!?! In spite of this, I believe the small to medium sized building market will continue to be reasonably active. In fact, I believe that this market might in fact show value appreciation in 2010. That said, the large building sale market will remain challenged. Yes, there will be transactions, however there will be continued pressure on pricing due to the availability of product.
The good news? There appears to be less corporate product coming to the market. Less plant closings. Less downsizing (although, as I write this I realize that EB just laid off 430 workers). There also appears to be more companies out looking again with “real” requirements (versus looking to leverage their landlords on renewals). Growth appears to be in the MINDS of companies out there (albeit slow and gradual)…now we just need to take that from the MIND to ACTION! The economy grew at a 5.7% clip last quarter (even though much of that came from depleted inventories)…seems to me that this is a real look into the second half of 2010.
Where will the ongoing pressure come from?…
Government! Has anyone heard SO MUCH talk about state and federal government and its effect on business than they have the last 12 months? Yes, that’s troubling. It is potentially polarizing. Government needs to get its act together in order to fuel REAL business growth.
Excess plant capacity. Just how much excess plant capacity is there (in terms of floor space AND people) before companies need more space? ?
Outsourcing/Contract Workers/Mobile Work Force! Might be a short term response to the previously mentioned government worries, but I don’t think so. The SAM’s layoff (and outsourcing to a third party) is just a continuation of a growing trend. Less workers, less space. 3PL’s are (and will continue to be) a significant player in today’s landscape. The growing mobile workforce will also continue to play havoc on corporate real estate’s space needs.
Yes, It’s a New Year! The crystal ball continues to work overtime for everyone! And while the ball is much less fuzzy this year (i.e. more “CLARITY”), I’m not sure that it is providing us with the answers that we are all want to hear.
Keep smiling!
Mark
SIOR Q4 Index
Hi everyone! Here’s the latest SIOR Real Estate Index for Q4 2009. While the market continues to be difficult, most SIOR’s believe that it will improve in 2010. Interestingly enough, the Northeast appears to be the “best” market in the country. OK, everything is relative!! Please call me with any questions at 860 983 5630.
Click the link below for the SIOR Real Estate Index:
SIOR 4th Quarter Market Survey
Keep smiling!
Mark
SIOR Q3 Index
Hi everyone! Here’s the latest SIOR Real Estate Index for Q3 2009. Not too many surprises! Please call me with any questions.
Click the link below for the SIOR Real Estate Index:
SIOR COMMERCIAL REAL ESTATE INDEX THIRD QUARTER 2009 RESULTS
Keep smiling!
Mark
Happy Holidays
I’m sure that 2009 was a difficult year for many. As I tell everyone that asks me…Sentry Commercial was able to piece together a reasonably good year…but there won’t be any “partying in the streets”! I wanted to take this moment to thank all of our clients, partners, colleagues, family and friends for your business. your trust, your friendship and your support throughout 2009. I hope that all of you have a safe and happy holiday week and wish you and your families the very best in 2010.
Happy New Year!
Mark
Market Sales and Leases – October and November 2009
More of the same in October and November of 2009 everyone! No real changes in the direction of the Southern New England commercial markets. While we are seeing continued SIGNS of improvement (increased showing activity) , nothing to really show for it. Mood starting to shift from75/25 in favor of positive change in 2010 to 50/50. More discussion of the infamous “double dip”! Frankly, I am optimistic for 2010. Still hold the same opinion I had in mid-year…slow Q1 2010, increased production in Q2.
Click the link below for the October and November 2009 market activity report:
Market Sale & Leases – 10_09 – 11_09
Happy Holidays!
Mark
Kelo vs New London CT all over again.
Kelo vs New London CT was a landmark case. With the closing of the Pfizer facility (at least, in part, the reason for the property taking that caused Kelo vs NL), kind of made me wonder if it was all worth it. Well, I am sure that the folks in NY and Forest CityRatner Co’s think it was. Not sure if you caught the news but see attached. Kelo vs NL all over again!
From the WSJ:
Keep smiling!
Mark
New Feature – Sentry Commercial website
In our attempt to provide timely and useful information, Sentry Commercial has added a “Sales/Lease Data” link to our website (www.sentrycommercial.com). You can now go to our website and search for the MOST RECENT sale and lease information available in the industry. Take a look.
Have questions? Give us a call.
Need advice? Give us a call.
Keep smiling!
Mark
Market Sales and Leases for September 2009
Industrial deal volume in Southern New England for September of 2009 remained low, relative to historical activity levels. Small to medium size activity remains the strongest…but “strongest” is a relative term. That said, most brokers are saying that November is starting bring more inquiries and more “foot traffic” to client properties. Hopefully that translates to stronger deal volumes in early 2010.
However, there is a substantial backlog in available properties. Over 70 industrial properties over 100,000 square feet available in CT. Over 15 available in Western MA. So while activity levels might pick up…expect bidding wars by landlords to attract those deals.
Click the link below for the September 2009 market activity report:
September 2009 – Market Sales and Leases
Happy Thanksgiving!
Keep smiling!
Mark
Toronto SIOR – National Conference
In Toronto the last few days for the Fall SIOR International Conference. Chance to catch up with industrial brokers from throughout the world. Lots of conversation. Much of it…”How’s business”? You can probably guess their responses! BUT, it is clear that, while business hasn’t been all that great this year, an ever growing number of brokers are seeing things pick up. So, while it has been a tough 10 months this year, it does appear that most are feeling good about mid 2010.
Locally, we’re starting to see similar signs as well. While vacancy rates are still high, foot traffic in these buildings is starting to pick up. Next step…we’ll see if the prospective companies are buyers or just shopppers! Time will tell!
Keep smiling!
Mark
Bad news is GOOD news.
Interesting article everyone! While news and opinions still vary, we are starting to see this opinion more and more. Enjoy!
http://seekingalpha.com/article/153491-commercial-real-estate-record-declines-may-be-good-news
Chris Duclos finishes the Hartford Marathon!
OK, he may not have been the fastest, but Chris (my son) finished his first marathon (Hartford Marathon). Way to go Chris!!
http://coolrunning.com/results/09/ct/Oct10_INGHar_set1.shtml
Market Sales and Leases for 8/09.
Deal volume sank to lows not seen since the early 90′s. The absence of any real volume, combined with the closing (and consolidation) of facilities, continues to push vacancy rates higher.
Hoping for better news as the Fall arrives!
Click the link below for the August 2009 market activity report.
August 2009 – Market Sales and Leases.pdf
Keep smiling!
Mark
Market Sales and Leases for 7/09
Leases continue to dominate the market. Sales are few and far between. Small transactions continue to far outpace large transactions (which remain almost non-existent).
Click the link below for the July 2009 market activity report.
July 2007 – Market Sales _ Leases.pdf
Keep smiling!
Mark
The beat goes on!!
It was an interesting week this past week. Post Labor Day always brings a flurry of meetings. Decision makers getting back from extended vacations, people becoming a bit more focused, boards meeting after the summer break. So, you can imagine the number of opinions discussed in this short period. Ranging from the Pats and Giants to the Sox and the Yankees to where the economy is going from here. So I won’t bore you with the Sox and the Yankees (Go Yanks!) or the Pats and the Giants (go Giants!). Let’s keep it to business.
First, I am HEARING more and more (not necessarily the majority but more and more) clients and prospects talking about the stabilizing of the ship. 2, 3 and 4 months of decent to even good business. A few talking about hiring a worker here and there and, believe it or not, even a couple talking about expanding (I know it’s been a while…yes, expansion means that you take MORE space…not less). Yes, consecutive good months bring consecutive good quarters. Consecutive good quarters bring expansion!
Second, I am SEEING better economic numbers. OK, you can argue the “W” recovery theory but there is plenty of evidence that the strength in the manufacturing numbers aren’t solely based on “cash for clunker” type programs. You can only drive inventories so low…you need to make something at some point. And yes, things are starting to be made once again. And yes, houses are starting to sell once again. That means the Lowes and Home Depot’s of the world will inevitably get busier…which means those companies that supply those companies will pick up as well. And that is a LOT of companies!
Third, I am SEEING more activity out there. And yes, while I still believe companies are making a lot of little decisions and no big decisions, we are at least seeing companies out there with expansion ideas. Will most of these companies ultimately renew and stay where they are? Yes. But there are fewer and fewer companies out there saying that we need LESS space. Thus the possibility that they might need more AND actually relocate! Still small to medium sized companies…but expansion nonetheless.
Unfortunately I am also HEARING the same ole’ negative talk amongst my colleagues and peers. How’s business? It stinks! Where do you think we are headed? No where good!
I can tell you this. The economic numbers are starting to turn people. And while we still have issues to deal with (CMBS markets, unemployment etc.), if history repeats itself, the economic recovery will be as strong as ever. The depressions in 1893-94, 07-08, 20-21 and 29-33 were all followed with economic surges. And I am sure that back in those times everyone also thought the sky was falling. I see no reason to believe that history won’t repeat itself.
Do I believe this recovery will be different. Yes. I am not convinced that the real growth is going to come from the typical sources. I believe that small and medium size companies, including new companies, will drive this recovery. IF it comes from large companies it will mostly come from large companies in new ventures.
Do I believe that we still have structural issues with inventory (too much large space on the market with no real large prospects to fill them). Yes. Do we have issues with credit? Well, kind of. Remember those small to medium size companies that are growing and expanding? They ARE! And there’s money (real estate loans) out there to get (banks are lending). One problem. Appraisals! The appraisers think the sky is falling too. And reduced appraisals on user driven loans are making it difficult for our healthy companies to expand. Reduced appraisals mean more equity needed for deals. More equity that growing companies (who need their equity to grow) can’t use for real estate. Thus killing the deal…thus killing the expansion.
So while there are admittedly hurdles to jump, there is opportunity coming around the corner. Not sure if that “corner” is Q1/Q2 2010 or sometime a little later, but I believe that it is not that far off. So let’s stop reading the numbers and worrying about the train coming around the corner. Because I believe that the train coming the other way that so many of us are worried about is NOT a train at all. It is actually the sun…ready to shine on those that decide to move ahead.
Remember…There are people who MAKE things happen. There are people who WATCH things happen. And there are people who wonder WHAT happened. Let’s make things happen!
Keep smiling!
Mark