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As Seen on Maintenance is Paramount

Maintaining property is always important, but in a commercial real estate market where demand is on the wane, maintenance could be your great value proposition or differentiator. In 2019, we're at the apex of a 10-year real estate cycle. In cliché terms, it's time to sell high because the talking heads, columnists and bloggers predict lower demand across many property types and market areas. Their reasons differ, but every real estate prognosticator I know agrees that this is going to be a slow-down year for commercial real estate. With less demand, buyers and tenants have more options and can be far choosier about space. Whether acting as a seller or a landlord, your goal is to put the prospects’ mind at ease about the building. If you want to be in a position to talk closing dates or furniture placement, don’t let your prospective buyers or tenants talk about a stray dog or the building rat — or the worst word in CRE, "tired."

Residential real estate is all about "the 'gram." Instagram listings require professional photos and staging. Professional photos and staging require a fresh coat of paint, a broken door knob repair, sanded hardwood. But, in commercial real estate, especially industrial real estate which is not highly photogenic, maintenance is in the staging.

Maintenance is not a glossy term, except in relation to your bottom line. Lease rates or sale prices are affected by maintenance (and lack thereof). Before calling a broker, before even driving by, prospective tenants and buyers are going to research your building and they’re most likely to do it via street maps or Google Earth photos. When a 2-year-old satellite photo causes the not-so-casual online browser to say, “Yeesh. Is that parking lot blacktop or gravel?” they are likely to keep scrolling.

Maintenance is key. Before bringing a property to market, whether for lease or for sale, it's essential to have those seemingly small things that you barely notice when you walk through it cleaned up. Think light bulbs, added motion sensors, a coat of primer on the walls, removal of the sofa and television that somebody tossed next to the dumpster around back. Bring people in with a clean, tidy-looking property. Be sure you pay attention to the little big things:

Windows: Nothing shouts neglect like cloudy windows. While a window replacement isn’t an inexpensive fix, tenants or buyers passing on the building due to broken window seals costs more in unpaid carrying costs for the space.

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March 22, 2019

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Decrypting the Jargon

Net Lease or Triple Net Lease: Refers to the Tenant's financial share of the operating expenses of the real estate. Lease Rates are often quoted on a dollar per square foot basis. Leases can be plus utilities; Net, Net, Net or a combination of the two. Generally Nets are made up of real estate taxes, insurance on the property and C.A.M.

Gross Lease: Leases can also be quoted at gross rates, meaning that all utilities are included and the only cost in addition to the square footage rate will be janitorial services within the Tenant space. However, some leases include janitorial fees as well. Class A office buildings are most often the sites where lease rates are quoted on a gross basis.

C.A.M.: Common Area Maintenance charges, or C.A.M. charges encompass everything from landscaping/snowplowing to parking lights, to janitorial services in common areas (entrances and hallways, elevators)

1031 Exchange: Tax deferred exchange, a 1031 allows certain capital gains to be reinvested within a specific time period so that the gains taxes are deferred. Proceeds from the sale of real estate must be handled by a 1031 exchange specialist, and potential reinvestment sites must be identified and closed within specific time constraints: usually 45-90 days to identify potential properties to purchase and 180 days to close on one or all of them. Recommendations and guidance about 1031 exchanges are best provided by a competent accountant who works in this field regularly.

Phase I (Environmental) Survey: Environmental surveys are typically required by conventional lenders in Connecticut, when the purchase of a piece of Commercial or Industrial Real Estate is being financed. These reports are needed to comply with the Connecticut Property Transfer Act, relating to Commercial/Industrial properties. Environmental Engineering firms who conduct these surveys, can be found in every county in Connecticut, however, we often recommend firms that we've found to be helpful and ethical with their past work. Briefly, a Phase I survey is the starting point for research into a property's Previous Uses and Environmental history. It begins with a physical inspection, walking the property to look for signs of contamination, such as surface stains and the like. Research continues with the search of all DEP records relating to the property and the history of all previous owners and uses, as well as a report on existing land conditions.

Cap Rate (Capitalization Rate) - The percentage used to determine the value of income through capitalization. Capitalization, specifically, determines the present value of a building by taking the annual net income and discounting by using the rate of return acceptable to Buyers of similar properties. Example: Net income of a property is $100,000. per year. Using a 10% Cap Rate, the property would be worth: $1,000,000.

Contingency - A condition that must be met before a contract is legally binding. If a zoning change is necessary in order that a Prospective Buyer can operate a business, or make certain improvements, a contract will be written contingent upon Zoning Approval.

Due Diligence - Generally refers to the homework that the Buyer and Seller do during the period after a contract is signed, but before the closing of the transaction. This homework can include items such as zoning work, environmental surveys, physical inspections and the like.

Letter of Intent - An informal method of stating a Prospective Tenant's or Buyer's interest in a property. It is neither binding, nor a legal document in the contractual sense, but demonstrates a prospect's good faith interest. In the case of a Lease, a Proposal to Lease may be used in place of a Letter of Intent.

Right of First Refusal - A right usually given by an owner to a lessee, which gives the lessee the first chance to buy the property, should the owner decide to sell. The Owner must have a valid offer (in writing) which the lessee can match or refuse to match, in which case the sale will go through with the original offeror. In multi-tenant buildings, a right of first refusal can also apply to spaces for lease, whereby a lessee will have the right to expand into future available spaces in the building or pass it up.

Tenant Improvements - Also known as "Build-Out", these are improvements such as walls, additional plumbing, built-ins, HVAC changes, structural changes and so forth, that meet the needs of the Tenants. These improvements can be paid for by the Tenant, the Landlord, or both parties.

Real Estate Professionals in the Commercial/Industrial Field don't sell houses; we work solely in the business field. We'll guide you through Phase I evaluations, discuss your power needs, load limits for floors, Tenant or Buyer build out plans, the impact of brownfield properties and whether you need a vanilla box for your retail shop, or a cottage. As Commercial/Industrial Agents, we work in the spaces that house your business.


October 25, 2016

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Wrapping up 2013 with End of the Year Real Estate Notes, New Year Prognostications to follow...

Commercial Real Estate Markets are Heating Up Nationally. There are several driving factors:

**Before We Talk New Haven Commercial Real Estate, make a couple stops outside Connecticut Real Estate.***

*The Washington D.C. Real Estate Market is dominated by Multi-Family Apartment Investment and Construction. You can See Cranes all over Tysons. They're fueled by Federal Government Hiring in huge numbers, which will likely continue through 2014. The growing Government is also fueling office space demand and Absorption of Vacant Space in The D.C. area.

*Energy is driving the Economies of Texas, and Farther West to South Dakota where "Fracking" (Hydraulic Fracturing for National Gas) has created cities.

*Industrial Vacancy is Shrinking. Driven By Logistics Needs. The CCIM Institute reports Highest Absorbtion (Lowest Vacancy) since 2007.
Logistics Demand is driven by Distribution of Products from Central Points. Ie: Filling On-Line Sales Orders and not just by Amazon and Zappos.

New Haven Commercial Real Estate Markets are heating up too throughout the county.
*While none of the aforementioned Good Omens are feeding our Leasing and Sales Markets,
Activity is rising in the Connecticut Commercial Real Estate Sector.

Residential Sales heated up throughout Connecticut in the second and third quarters with rising prices, if not rising sales volume (number of homes sold). But, home sales have been leveling since October.

Connecticut's Economic Indicators are not pointing skyward, the state is still losing population and we rank in the bottom of job creation, public transportation and infrastructure for logistics practices. The CT aerospace sector remains strong which is feeding the businesses which support it as do the biotech markets spurred on by Yale's incubators and Jackson Labs. The state is attempting to foster more technology based businesses through grants, but the main feeder for leasing and sales to business in Connecticut, is the quality of life that Connecticut affords and local entrepreneurs making the commitment to thrive.

What Will Happen in 2014?

The Commercial Real Estate Industry will finally experience disruptive changes that are challenging and exciting in other Markets. The Internet of Everything will not only change your refrigerator at home but your leasing, building operations and employee practices which will change The Real Estate Industry. Big Data will change brokerage in ways the old guard has yet to imagine. Increased transparency in all Information, not just Target Shoppers Credit Card Info will mean that lease prices and terms building to building will become more available to tenants and that's only the beginning. More on that next time.

Enjoy the Holidays, Take a Deep Breath and remember that the guiding principles of this season should be about love, peace, human connection, and potential in the coming months.

December 20, 2013

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BioTech Leasing - Commercial Real Estates Most Specialized Product

BioTech Leasing is a specialized business. Equipment, building systems like HVAC and Back Up power are just the start. Tenants specialize in wet labs or chem labs, every research discipline has different requirements of a building. Renting a lab is far different than needing a warehouse within 20 miles of New Haven or a Class "A" office. BioTech in New Haven County is not as dense as the 128 Corridor outside MIT but it is thriving and the most unique piece of Commercial Real Estate in Connecticut right now, is a Branford BioTech Lab taking tenants from 500 square feet to 20,000 s.f. with flexible initial terms, less than a year initial commitments. Parish Tech Lab in Branford provides the most flexible lease on the market today.

Equipment is included in the pricing. We are marketing a fully equipped lab with Walk-In Hoods, Reach-in Hoods, animal husbandry facilities, and Biology facilities. It's a Hybrid Community Lab, Open Source Space and State of the Art Biotech facility for the right companies.

Currently about a dozen scientists represent 4 companies at 23 Business Park Drive, Branford, CT. We are looking for more tenants with great incentives in terms of free use of equipment, benches, systems and more.

To take a slide share tour of the property, please click the link

or go to

November 25, 2013

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After a While, Real Estate Terms just sound like Jargon

November 21, 2013

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Wallingford Manufacturer Inks Export Deal With China

Image via WikipediaGood news blared from the speakers of my clock radio, touting the importance of getting out on the street and selling your business, or in the words of John F. Herbst Jr., President of Wallingford's I2S, LLC, go to where the fish are. If customers or clients are no longer in your town, state or region, find them.

Herbst found his clients in China and with a little government help from the U.S. Commerce department (more good news, those groups do work for us), landed contracts for $23M in product manufactured in CT and exported to China where I2S will build two steel mills. Fifteen new jobs will be created in Connecticut. An interesting aside is that fifteen jobs represent 40,000 hours in manpower. from the BizJournals group published a story about a Kauffman Foundation for entrepreneurship study that stated "Start-Ups" are hiring fewer people in part due to technological advancements. Looking at the amount of man hours that go into a single job, one starts to understand how much work one needs to have in their log to create a job. With so many start-ups being technology companies, the good news for one Connecticut manufacturer starts to explain why making actual products is so important to the jobs picture in the U.S.

Related articles
Wallingford Market Update for May 2011 (
U.S. trade deficit swells (
New Firms are Generating and Holding onto Substantially Fewer Jobs in the U.S.; Kauffman Foundation Study Finds that U.S. Jobs Problem Pre-dates Great Recession (
Oil imports drove May trade deficit to $50.2B (

July 12, 2011

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Will Union Workers ratify Dan Malloys Connecticut savings plan. Ask SEBAC

Connecticut union members, all 45,000 of them, from university professors to the police force to social workers to snow plow drivers have a state savings agreement to ratify with Connecticut and Dan Malloy.

SEBAC (State Employees Bargaining Agent Coalition ) had posted a summary of the agreement on their website and reaction is strong. Wage increase freezes and no furlough days are some of the hot button topics.

But, the most astonishing piece of this agreement, to me anyway, is a step toward healthy preventative medicine. Employees must sign a commitment to have annual check-ups and take lifestyle and medical steps to improve their health. If they dont there will be a fine, and not a small one: $100 a month for those who refuse the commitment. Whether a watchdog will be checking all the check-ups is another thing. A new job as overseer doesn't seem to fit the idea of cost-savings that the administration is touting. But, the idea behind preventative health is sound, even if all the implementation bugs haven't been thought through.

The Governor was looking for $2 Billion in savings. This agreement as it is summarized today offers $1.6 Billion in savings from union workers. The private sector can expect the Governor to come back at them to make up the $400 Million difference. Although additional cost cutting measures have been discussed, don't lose sight of the fact that Governor Malloy, is increasing government spending 2% over the next two years, not cutting it. While it may seem to private sector professionals that the union member's resistance to this agreement is a point of view most heralded down the rabbit hole, the governor who is asking us all to sacrifice, public and private isn't tightening the belt of state government too tightly.

For details of the agreement, union spokesman Larry Dorman's comments, the details of no layoffs for four years, and end to longevity payments and the rest, click the link to hit up SEBAC.

May 17, 2011

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Tax Hikes. Job Creation? I dont see it....

Last night the new budget was passed. The government tells us there are massive cuts in a budget that will increase by $40.1M over the next two years. I answer the standard government line with the standard citizen line. Show me one home in America that can cut its budget and increase spending every year. Arguing against the government's shell games and Ponzi schemes is always a loser. Connecticut will lose even more this time because our children won't come back to work in CT to pay the ever-increasing tax burden. Companies will shutter their doors or flee. The ranks of private sector employees will shrink again. Our anemic economy will buckle under this blow.

This tax hike, the largest in the state's history will cut everyone. Across the board taxes that penalize us for purchasing essentials like food are regressive, hitting lower-income individuals with a greater percentage of the burden.

The State of CT has consistently been ranked between 48th and 50th best state to do business in the country over the last four years. For the last TWENTY years, we have come in dead last, 50th, the state with the least ability in the nation to create new business and expansions. On the bright side, we do rank # 4 in taxed states. How many people in CT realize that not all U.S. citizens work until May 2nd to keep their first dollar of income. Never mind the dollar, their first dime, first penny. Residents of Connecticut work more than 1/3 of the year before we can keep any of our income. Somehow the fact that New York works its resident till May 26th actually makes us feel better.

It's ironic that Connecticut's nickname is the Constitution State. The idea of a Constitution was born of taxation. Taxation without representation: how many of us felt represented in this tax hike?

Not me as a person, nor as a small business owner. The increased gas tax, taxes on my business equipment, additional sales taxes on services, these might just put my 26-year-old, second generation, company out of business. Yet, Malloy claims that this regressive tax hike is going to create jobs. Where? The government? What happens two years from now when more local businesses, small retailers who for the first time ever tax a baby onesie, close? Where will those government jobs be then? When the companies have been driven out, how will anyone keep their jobs? If there is some other way that Malloy intended to create jobs through these hikes, I'd like to know.

Dannel Malloy drove the specter of Osama Bin Laden, Al Qaeda, and The World Trade Center Deaths off the front pages of CT's papers quickly and decisively. The Connecticut State Legislature: Economic Terrorist. Do the Legislators realize that they have family businesses, entrepreneurs and all those companies who have been asking themselves, is it time to move our headquarters south or offshore in their crosshairs?

We hunted Osama for ten years because he destroyed thousands of American lives in the towers, yet we elected Malloy. We voted for Malloy to go to Hartford and destroy our livelihoods. The good news is that we can't be lower than 50th so taxing the struggling economy of the 50th best state in the union to do business won't be to change our stats.

Some of my favorite new taxes, in no particular order are: 10% increase in the cost of a ticket for concerts and sporting events. Those sporting and concert venues that had been touted as economic drivers in their region, The Arena at Harbor Yard, The Mohegan Arena, and the rest, they'll take multiple hits: First from a drop in ticket sales, then from a drop in acts who play the venue because the seats are always empty. Malloy saved us from a $.03/gallon gas tax increase, but Diesel fuel? That's a different matter.

Hopefully, Connecticut residents don't know that an increase in the cost of diesel will translate into increased costs for products on shelves. Nor will it occur to them that those few companies left manufacturing in Connecticut will become less competitive as Diesel driven distributed goods exported to other states and Canada rise in price due to transportation. Look for Metro-North fees to increase along with the Diesel Fuel Tax.

Now that Malloy has taken away that under $50 apparel and shoe tax exemption, maybe you can save a little money by making your own clothes. Nope. Fabric and yarn will be taxed now too.

Don't forget our state's health. Non-prescription medicine will also be taxed for the first time.

Don't park in the crosswalk, speed or renew your driver's license cause all those fees rise too. Of course, if you don't renew your license you'll get one of those nice new high-priced tickets, so you might want to do that.

The guys on Capitol Hill are glowing with achievement right now. They are slapping each other on the back proud of their ability to make the sacrifice equal. Yet, three Democrats in the Senate voted against this budget. Be sure to remember the July 1st not only when you find yourself paying taxes on items that were never taxed before, but when you are paying that 6.35% sales tax.

Tax hikes are pedaled to people by saying they only even the playing field. The rich and big companies are the only ones who take the biggest hits and they barely feel it. With the exception of GE and a few others, Connecticut isn't made up of big companies. We're a state of entrepreneurs employing less than 50 people, less than 25 and by the end of the year; I expect we'll have fewer of those companies because this tax increase could very well be a death knell for a hundred companies, including my own.

Of course, this whole budget does depend on unions making a $2B concession. If they don't and layoffs begin, does anyone expect that these tax hikes will go down?

May 4, 2011

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CoStar Bought LoopNet for $860M

I tried the CoStar Kool-Aid but it didn't do it for me. CoStar works well in primary trophy markets like D.C. where they are now based and Chicago. But in the backwaters of New Haven County Connecticut, much of their data is out of date.

LoopNet is less about research and more about marketing, so it was one of the better resources for my company to produce accurate information about market availability if not vacancy rates and absorption rates.

As it is planned now, LoopNet and CoStar will still function as they have traditionally when they were independent companies with CoStar providing information about leasing and sales and LoopNet providing marketing information to the masses. The combination of the two entities will reach 15% of the total Commercial Real Estate world of Broker Professionals, Landlords, Tenants, Lawyers, Property Managers and the rest of us who move the Commercial Real Estate market. The commercial real estate market is one of the largest asset classes in the United States with over $11 trillion in value.

CoStar has acquired ten other real estate information companies, but LoopNet is the feather in its cap. As a user, I don't expect big changes yet, just a lot more sales calls and ultimately, more fees.

The details, facts and figures of the transaction are detailed here on

April 29, 2011

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Real Estate Bounding Back in 2011?

The promised year was 2012. Investors, Brokers, anyone thinking about or involved in the commercial real estate market were told for the past two years that we should expect the market to remain in the doldrums through the first part of 2012. But, activity has beat the estimate. The Commercial Real Estate Market nationally is buzzing again.

Investment in Industrial real estate began on the west coast industrial hubs at the end of 2010. In the Northeast, Industrial real estate in the form of clear-span flex space remained desirable and hot throughout the second half of 2010. The trend continues in 2011 and beyond.

Connecticut's private sector is largely made up of small companies that employ less than 250 people. For smaller companies based in a state where casual dress rules the day, non-traditional office space that is easily adaptable from a cube farm to a lab to a distribution area rules the day when tenants or buyers are looking for new space.

In the Boston area, Investor-Developers are picking up Retail Centers that hold promise for physical and construction expansion in future years. The office market remains in a holding pattern but Lab space is being absorbed more rapidly than expected last year.

In Connecticut and New Haven County in particular, leasing activity has picked up since our tough winter. Business activity throughout the state slowed, while roofs were shoveled and roads were cleared. New Construction for uses other than educational facilities and medical facilities is still far below the levels those that herald growth in the market, but Privately owned companies who hesitated to purchase properties for their operations last year have their eyes open again.

Last fall, Washington D.C. was the hot office market. The government expanded into vacancies and took space while other offices throughout the country gave up space. But, NYC rents are back on the rise and vacancy is dropping.

The Drake Hotel property, one of the most valuable pieces of city real estate, according to The Wall Street Journal, is on the brink of redevelopment. The owners can exploit a number of potential uses on the site. Hotel properties in Manhattan didn't suffer the way those in Vegas, Miami, Los Angeles and other cities did in large part due to the devalued dollar and European tourists. The apartment market has bounced back nationally too. Real Estate headlines for the past two months have touted the strength of the apartment market.

So, the news is good almost across the board. The apartment market has come bounding back. The Industrial market, especially in cities with good port access and solid distribution access (rail and road infrastructure) keeps the 2010 roll going and investors are putting their money back into real estate across the country. Warehouses are moving product. D.C. grew 43,700 new jobs in the last 12 months filling empty apartments. Lab space outside Boston, especially in East Cambridge is filling. Over the last ten years a quarter million square feet a year, on average has been leased up.

But the news is not all sunshine and unicorns. Chicago's industrial market continues to endure a dearth of transactions and a lot of empty space. And perhaps, more importantly, the larger economic indicators nationally remain in flux.

The banking industry remains under fire with some headlines claiming that smaller banks, mutual and community banks the sweethearts of the recession years are in danger of failing, whether those dire predictions are fulfilled remains to be seen, as is the future of Bank of America's bottom line. The refinancing of commercial mortgages, had the pundits screaming at this time last year as the second falling shoe in the real estate market, seem to be all but forgotten, whether they stall the recovery that even USA Today is now touting also remains to be seen. Employment figures, the rising price of oil, and re-employment of Americans, especially in Connecticut along with rising tax burdens will play a role in the resurgence of the market.

Overall, this bolstering of the market and its positive trajectory may continue strong and healthy, but it's more likely that there will be bumps in the road as the market finds its steady normal.

*****on another note, it seems that USA Today and I had the same idea today. Here's their take........

April 22, 2011

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Pundits and Predictions...contradiction abounds

Pink Magazine a business women's publication wrote in the May issue that investing in REITs (Real Estate Investment Trusts) is a great idea for women without the time to buy property and watch it themselves. Did the writer of that article read ANYTHING about REITs before writing that? Not to mention that a small commercial property is not time intensive. A trusted broker or manager will handle the leasing, trusted subcontractors, plumbers, construction, electricians will handle the repairs that are not the tenants' responsibility.

REITs can be a great investment but when a leading REIT like Prologis starts shedding assets, it's a different world. Part of the argument that Pink Magazine made for investing in a REIT is that it's a time saver, but it's still a stock, without an understanding of the REIT's holdings, the market trends for their property type and the economies and vacancy rates in the markets where the REITs have holdings, an investor is still flying blind. Now is not the time for a real estate novice to invest in a REIT, not without having solid knowledge of market trends and demand.

On the residential front, pundits believe that we are hovering near the bottom of the market. Fewer homes are on the market this spring selling season than there were last year. Less inventory is a traditional sign that the bottom is here. Nationally, homes have declined in value 14% and in some areas, such as Portland Oregon and New Orleans values have actually risen two to three percent.

In Connecticut, Gold Coast Towns like Greenwich, New Canaan and Darien as well as waterfront homes have seen larger declines in value than middle class suburban towns. Outside Hartford, Avon and Glastonbury have also seen declines in value around 15% compared to 11% in towns like Guilford, Madison and Branford.

Foreclosures remain the wild card in the housing market. Currently, banks own about 765,000 homes nationally. Some predict that the number will rise to more than a million over the next ten months. Bankers don't want to be in the real estate business so that number may cause another dip in home values but what will actually happen remains to be seen.

In the commercial markets throughout Connecticut, retail and office properties are still in the most volatile position while light industrial properties and leasing is brisk.

May 14, 2009

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