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Commercial Real Estate 2007

Home sales were off 14% last quarter. A spokesman for the National Association of Realtors stated that he thought that was the bottom of the Real Estate Market correction. On February 7, 2007 the most hotly watched Real Estate Investment Trust buyouts came to a conclusion, when Vornado withdrew its bid to buy Equity Office Properties Trust and the Blackstone Group, a private equity group bought Equity Office, the largest office landlord in the U.S. for more than $39 Billion. A sell off of Equity's properties is expected to follow shortly.

What do these stats mean to Connecticut's real estate market? And the commercial market in particular? Connecticut is more affected by Governor Rell's increase in the income tax, the loss, of Anthem and Bayer more directly than either a stalling housing market and "Class A" Office Landlord buyouts. The loss of Bayer will reverberate throughout the state. For the last several years, Connecticut has been trying to position itself as the next hot spot for bio-tech, scientific research and hi-tech development. We've been trying to rebuild our disseminated manufacturing base with science. But, we haven't caught fire like Route 128 outside Boston. Pfizer has been a boon to Groton, but CT still ranks 50 out of 50 states in new job creation. Our best hope may lie in the 2008 election and pro stem-cell research legislation which could rocket UCONN and the state to the head of the class.

The commercial real estate market in Connecticut will thrive this year, primarily due to redevelopment of commercial properties and older industrial sites into housing and a continued influx of big box retailers into our small towns, like the projects slated for Branford and Guilford. Entrepreneurs will drive smaller office and industrial leasing, taking units in the 3,000-5,000 square foot ranges. We will continue to enjoy a diversity of businesses, service businesses and small manufacturers.

But, Connecticut as a whole, needs to drive business here. We have the leading port of call on the Atlantic Seaboard in New Haven. We need to build and ship, not just receive oil in New Haven. With a strong Creative Class, which was all the rage in 2002, Connecticut is poised to expand its business base smartly. Maybe we should ask our Governor and Legislators to hold a special screening of "The Secret" and teach the state about the laws of attraction. Until then, we'll continue to see people moving into new apartments in downtown New Haven, new retail developments on the shoreline, a scramble to fill the Bayer space, Quinnipiac University absorb vacant Anthem space in North Haven and entrepreneurs drive our economy and real estate market.

February 17, 2007

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