Despite News of a Recession, Inflation, Food Shortages, Gas Hikes and an end to the United States? National Spending Spree of the last 10 years, Disney is Booming! Its stock has risen 3% and the parks are full. Affordable hotels and an influx of European travelers aren?t the only reason that the parks continued to thrive in the first quarter of 2008. Americans are still traveling but staying home.

There is a lesson to be learned from Disney. In 1991, the last major real estate recession year, 55% of Disney?s hotel rooms were considered premium priced. This time around 75% of the rooms are moderately priced. Disney re-adapted its business plan to better suit its clientele. Adaptability is the key in uncertain economic times.

Uncertain is also the word. The Stock market despite all the bad news climbed over 13,000 yesterday as UBS scaled back its plans to be one of the world?s largest investment banks, Robert Verrone announced that he?d leave Wachovia within the week and oil prices continued to rise.

There is flux in every sector of the market. Every time one of the Presidential Candidates promises to cut the gas tax, the Pigou Club is in an uproar, touting an increase in gas taxes to ultimately cut down on demand and lower oil prices. Legg Mason has reportedly ?stumbled? with a $255 million loss. They will raise more capital by selling $1 billion in mandatory convertible securities.

With every sector of the financial markets in flux, consumers, which include Real Estate Investors, are whirling too. REIT?s are still reporting strong and improved returns, especially REITS that own self storage units. Apartment REITs remain almost as strong. Shopping Center REITs and Mall REITs are still holding their own. So, the lesson for the local investor, following the REIT market is to invest in self storage. Apartment rentals are likely to stay strong and be a good investment as long as the job market in CT doesn?t dwindle completely.

As one real estate pundit pontificated, the Profit in Real Estate is made on the Buy. If you?ve been building a rainy day investment nest egg, now is the time to buy. Buy smart. Buy where national trends are pointing.



May 7, 2008

The New York Times reports today that several retail chains are tightening their belts and may be heading to bankruptcy courts. The trend should come as no surprise to many economy watchers. Midsize chains are being hit the hardest. While economic difficulties for the furniture store Levitz, a chain that has been wobbly in the New England region for three or four years, may come as no surprise; a new sofa becomes less a priority than fuel delivery, the fall of Sharper Image an upscale gadget store may be a little more daunting.

Foot Locker, Ann Taylor and Zales are taking some of their stores dark in order to keep cash flowing. In the case of Ann Taylor, founded in New Haven in 1954, 117 of its 869 stores nationwide will be shuttered. Zales, the diamond specialist is shuttering 100 stores, however with more than 1400 stores nationwide and 700 additional mall kiosks, this news may not be as dire as the Times predicts. But, it is a growing indication that non-essential spending is on the decline across the country.

Like the rest of the country, retailers are consumers. They buy product in advance of the season on credit and pay back when the merchandise leaves the shelves. If it?s not taking off, retailers are left sitting in expanding debt.

The International Council of Shopping Centers which tracks retail data, predicts a 25% increase in store closings this year over last as chains try to recapture losses. Chains like Linens n? Things a large specialty store, and the Office Supply Chains are likely to be hit. In a recession economy big box niche stores are going to feel the bite as consumers decide that manila folders are as useful as hot pink, the printer will last another year, bath towels can be washed, interior decorators homes will scale back on knick knacks for the home, paint and new window treatments.

With new shopping centers well into construction in Orange, Milford and a large center on the books in Guilford, shoreline towns may see centers erected that are still 30% dark. Very often large retail center developers like D.D.R. (Developers Diversified Realty Corp), who are scheduled to break ground on a large retail center in Guilford pending final town approvals, infill large retail centers with local merchants. They may find it difficult to find local shop owners willing to jump to national market rents in this economy.

Ripple effects from the closing of retail outlets will likely pervade many sectors of the real estate market. Class ?C? office spaces may see rising vacancy rates as call centers scale back. Distribution centers, particularly in the Midwest may see a rise in vacancy and overseas manufacturing of consumer goods is likely to take a hit. Connecticut?s commercial market remains strong as we saw the bulk of our distribution and call center users leave the state in the early nineties. Recessionary economies can also be good news for service contractors, such as auto repair; plumbers and electricians as consumers endeavor to repair instead of replace.


April 15, 2008

According to The Wall Street Journal there is a rebirth of railroad building taking place across the country. Since 2000, railroads have spent $10 Billion to expand tracks, improve infrastructure, from buying locomotives to building freight yards.

Much of this movement may well be driven by Asia, where many of our consumer goods are now produced. The surge in railroad use coincides with a major surge in the importing of consumer goods from Asia in 2003. The railroad is a major mover of product in Asia.

According to Kenneth Kamar, an economist who follows the railroad industry for the Consulting firm Global Insight, railroad stocks have for the most part escaped the beating that other stocks have taken. None other than Warren Buffet is buying up shares of Burlington Northern Santa Fe Railroad, one of the two largest handlers of frieght in the United States. He owns at least 18% of the company now. Investor money followed the railroads investing in themselves and the aforementioned upgrades. Union Pacific the other largest freight handler reported an earnings increase in the fourth quarter of 2007.

But, in Connecticut, the rail system has been systematically dismantled since the seventies. Since the eighties, rail as a mover of goods and raw materials through the state has virtually disappeared. Rail sidings which used to be integral to a quality industrial building are barely a consideration these days. The moves in rail improvements that are happening in the south and midwest isn't happening here in Connecticut. The proposed commuter rail line between New Haven and Springfield aside. We are not seeing any major improvements to rail lines for the movement of consumer goods or raw materials. These are two more indicators that the manufacturing businesses that moved out of state in the eighties and nineties aren't planning to charge back any time soon. though manufacturers in other parts of the country claim that the rail improvements aren't meant for raw materials. They are meant for consumer goods and increased freight fees are driving up the cost of manufacturing rather than reducing it, even though it costs about a third in fuel to move product by rail versus long haul trucking. Since Connecticut still sees most of its goods moving by truck, we are not likely to see our markets, New Haven, Hartford, Tolland or Litchfield Counties emerge as major distribution hubs for New England.


March 10, 2008

It's official. According to the media outlets the residential real estate market has fallen apart.

It's true, HSBC Holdings, one of the largest players in the subprime market and New Century Financial are halting loans to subprime borrowers and according to Wharton Real Estate professor Susan Wachter, this may cause residential sales to drop off this year by one percent (1%).

Subprime borrowers are those borrowers who can't get a prime mortgage or conventional bank mortgage. They tend to have lower credit ratings or little cash to put down. But, other mortgagees were caught in the subprime shakeup, borrowers who jumped on the A.R.M. (adjustable rate mortgage) bandwagon. They refinanced or bought property at lower teaser rates expecting that their property values would increase before their mortgage rates jumped in year two or three of the A.R.M. Everyone was banking on the real estate boom and overvaluation of property to continue. Sadly it didn't and the subprime mortgage market is caught in the fray.

This means that in the near future, saavy investors will probably see a spate of foreclosure sales on homes. They won't be able to buy and flip as they had in the past but here on the Connecticut shoreline, the rental market is always strong. The commercial real estate market remains strong. What really remains to be seen with this shake up and foreclosure sales is, will the skyrocketing energy prices in both Connecticut and across the nation affect the housing market?

While the subprime market shakes out, and investors find themselves able to buy single family homes at market discounts, will they be able to resell them or are rising energy costs and taxes in the Nutmeg State going to keep the buyers away?
- Kristin


March 22, 2007

Here on the East Coast, we often say all trends begin in California. What would fashion be without the surfer look, Haight Ashbury???s quintessential peasant top and of course, Jeans, made indespensible first by the gold rush and then by James Dean in Rebel without a cause?

In real estate California practically invented the mall, only to rip the roof off and transform it over the last decade thus birthing the lifestyle center. Spas becoming wellness centers began out west, raw food. So, what is California telling us about real estate trends? Private tennis clubs are the next hot property. Courts cover a lot of valuable land. Redevelopment will most certainly maximize value.

Similarly in Connecticut Commercial Real Estate, our former Industrial Warehouses and Mills are becoming luxury condos. But that trend is homegrown. In New York City, Dumbo formerly home to cardboard box warehouses is home to up and coming residential developments. Back in California, both Residential and Commercial Realtors and Real Estate agents are leaving the business. We will see that on the East Coast and New Haven shortly, as the market becomes tighter, interest rates rise and transactions continue to become more difficult to close. It???s not a business for the faint of heart.


March 6, 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

We in Commercial Real Estate love our acronyms.

naiop - the National Association of Industrial & Office Properties is a trade association for developers, owners, investors, asset managers and other professionals in industrial, office and mixed-use commercial real estate. Their research foundation conducts research assessing the trends, economic viability and needs of the built environment.


IREM -Institute of Real Estate Management is an association of Property managers acting nationally to look at trends and issues in property management, serving both Commercial and Residential Real Estate.

BOMA the Building Owners and Management Association is, perhaps, best known for standardizing the way in which buildings are measured, but they continue to publish some of the most widely quoted statistics and information about portfolio, asset and property management perspectives, trends, and information.

N.A.R is the National Association of Realtors. Realtors are Real Estate agents who have chosen to adhere to a higher practice of ethical standards. Real Estate agents can also choose not to be Realtors who cooperate freely with each other to bring real estate transactions to a close successfully for their clients.

U.L.I. is the Urban Land Institute who are based in Washington DC and is a nonprofit education and research institute that focuses on smart land use. They provide information on urban planning, growth and environmental impact of development.

LEED will become more and more visible in the coming years. The Leadership in Energy and Environmental Designation connotes buildings that have met national benchmarks for Green or Environmentally-friendly design and construction.

Networks and education programs such as C.C.I.M. certified Commercial Investment Members or S.I.O.R. the society of industrial and office Realtors only scratch the surface of national designations that real estate agents and brokers, Realtors or non-Realtors can achieve.



January 24, 2007

The New Haven Coliseum is set to implode on the 20th of January 2007. The escalators that we stomped on and slapped, when we were teenagers leaving concerts, hockey games, or monster truck rallies, have been dismantled and taken away. The Coliseum is on every-one's mind. The New Haven Register asked promoters and music writers to weigh in on their favorite coliseum events, and we all feel a little melancholy. When the New Haven Arena was demolished our Parents and Grandparents probably felt the same mixed emotions about progress that we are feeling today. But, we cross our fingers and hope that Gateway College and Long Wharf Theater really make the move downtown, so we don't look at an empty corner where our childish follies used to live.

2007 holds big dreams for New Haven and its county. Apartments, lofts and condos in downtown New Haven remain the big news and Medical Offices on the shoreline are the busiest sector of the Commercial and Industrial Real Estate Market. The city of West Haven and the entire State of Connecticut will be scrambling to find a way to move tenants to the Bayer Facility. Replacing those tax dollars and a thousand jobs will be difficult in Connecticut, a state that loses the national race for job creation. In North Haven, the Anthem/Blue Cross property is at the forefront of the Economic Development Commission's collective psyche. Several parties have expressed interest, but the question is, will they move in and will they contribute to the town coffers?
In Madison, the question still centers on Griswold Airport and Leyland Development. Though zoning approved over 55 housing on the site, lawsuits continue to delay groundbreaking. Guilford sees the same with "The Rockpile" and the planned DDR Lifestyle center that has a couple dozen upscale retailers lining up on paper to take occupancy of retail space at the foot of exit 57. Circling back to New Haven, it will be all about parking and traffic. An arts magnet school has been dropped dowtown, on one of the busiest corners of the arts district, while Condos are slated to take the place of BBQ and parking lots. Moving downtown is a continuing trend, great for the Elm City and a vibrant culture, but it leaves us wondering. Where's everyone going to park?



January 15, 2007

I sat down with the Chairman of the Economic Development Commission for North Haven recently. We discussed the changing economy of North Haven. In the past several years, North Haven has seen major employers leave town, beginning with Pratt & Whitney and most recently, the downsizing of Anthem Blue Cross & Blue Shield, which at one time employed 2,000 people. The closing of the Bayer facility in West Haven will ripple through the economies of many surrounding towns and may impact the economy housing and job market throughout the shoreline.

But, as I learned recently from a newsletter that my favorite bookstore sends to me, small business is still the life blood of local economies.

Roxanne Coady of R.J. Julia Booksellers in Madison, shared the following facts with her customers via electronic newsletter.

??¢ Shopping locally provides more than three times as much money for the local economy as shopping national chain stores. A recent study shows that for every $100 spent at a chain, only $13 remains in the community, whereas for every $100 spent at a local independent store, $45 remains. For every $100 spent at an online retailer, it is unlikely that a nickel makes it back to our community.
??¢ Local stores and businesses employ significantly more local services than big box stores or Internet retailers. R.J. Julia, for example, uses a local professional for every service we can??¡our printer, designer, accountant and lawyer, among others, are all local. And are you surprised to learn that R.J. Julia currently employs more than 50 local staff people?

So, shop locally, not just during the holiday season, but as often as possible. In season farm stands provide us with the opportunity to eat fresh native vegetables, local attorneys know the ins and outs of the cities and towns that they work in. They work with Planning and Zoning Commissions, and are neighbors. In this day and age of global economies, we are still a state of 117 towns and cities, each with its own economics rises and falls. - Kristin


December 8, 2006

Every national media outlet from MSN???s homepage to The New York Times, Wall Street Journal and Cable Money Managing shows have been talking about a bursting housing bubble for the past two months. In the fine print, they often mention that the bubble is bursting in very specific locations like Las Vegas, Florida and Arizona, where growth outpaced the rest of the country for years. Location, location, location, it???s the real estate mantra as clich?© as the poor suckers working on the Glengarry Glen Ross leads in that dingy desperate office. Clich?© though it may be, it???s true, as true in a slowing market as a hot one. This means that, the market is slowing, but the bubble isn???t bursting, the market is correcting itself. Homeowners who bought their shoreline homes three years ago may not be able to paint and replace carpet and flip the house for a twenty percent profit, but that doesn???t mean houses aren???t appreciating, they just aren???t skyrocketing.

Does this affect the commercial real estate market in Branford? The easy answer is that the Commercial real estate market follows the residential market across the board, in all trends, good and bad. But, Branford is uniquely situated among shoreline towns. It is an easy commute to New Haven even in the face of proposed Quinnipiac Bridge construction. The infrastructure of the town, like public sewers, supports small businesses and corporate headquarters as well bioscience endeavors and retail opportunities. Similarly, as in residential real estate markets across the country, Branford is a desired address and, as such, holds its home values. So, C-Level executives will continue to look to bring business closer to their homes and quality of life.

Branford???s retail market is undergoing major changes. Much of them have been delayed by road work, but as I-95 changes around New Haven and Route 1 is finally widened after more than five years in the planning stages at the DOT, the face of retail at exit 53 and the landscape around Walmart and Starbucks will change dramatically with the arrival of national retailers and more. Should the proposed Hilton Garden Hotel and New Shoreline YMCA break ground, there will be more reasons for distributors, warehouse users and manufacturers to locate and remain in Branford. Today, there are at least two major grocers looking for land in town. As national retail outlets, they create buzz and test market, proving that we can support more national retail chains. Each town in New Haven county may experience a different commercial market over the next 18 months, but Branford is poised to grow. ??´ Kristin


October 12, 2006

Investors, Developers and other believers have been snapping up commercial real estate in New Haven's central business district for several years now. Vacancy is down, construction is on the rise. Office buildings revamped into upscale housing complexes are successful. Restaurants and Retail shops continue to spring up around town, particularly in the Chapel Street, downtown green area, and the boom appears to continue downtown.

Drift a little farther away from the New Haven Green,the New Haven Arts District, The Yale Rep. and Woolsey Hall and the question of the Commercial Real Estate Market becomes cloudier.

According to the latest statistics, crime in New Haven, shooting crimes are down 11% from last quarter, but watching the news or talking to emergency room doctors at Saint Raphael's and Yale New Haven Hospital,one wonders. Where will this trend go? Will shooting crimes continue to drop? Will people continue to feel nervous when a group of kids on bicycles rides by? Will these same fears continue to be a flashpoint for discussions of race and accusations of racism?

New Haven's commercial real estate market is tied to the desirability of the city. Today it is booming. Tomorrow, the Winchester (U.S. Repeating Arms) plant will be on the market. Who will snap it up? A redeveloper looking to extend upscale residential units into areas of the city beyond walking distance of the funky State Street district or, though not far from Yale and the hospitals, outside the traditional Yale walking routes? Will the city redevelop it? Will the New Haven Preservation Trust acquire and maintain it because it's an example of historic architecture and town planning? How are the soils on the site impacted from a hundred years of manufacturing? Will it be the Elm City's next Brooks Drugs outpost or long hoped for Whole Foods?

The Commercial Real Estate Market in New Haven is on the edge of change, watch the next six months unfold: whether the market continues to boom or slows hinges on I-95 roadwork, manufacturers returning to our city and state, crime, the ups and downs of the residential real estate market, perception, promised construction of Gateway and Long Wharf downtown beginning, and of course the ever dwindling parking availability downtown. As parking lots are razed to make way for high schools and more condos, demand will outpace supply to the point where one will wonder, can downtown New Haven boom if people from the suburbs can't move downtown and park their cars, eat or shop downtown unless they take their Segway from the Shoreline or Woodbridge down to Chapel Street. - Kristin


October 3, 2006

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