Connecticut Commercial Real Estate Conditions Post Gains in First Quarter Survey
Farmington Bank/ODMD Commercial Real Estate Index Shows Economic Recovery Strengthening
** Results to be presented at Annual Commercial and Industrial Real Estate Outlook on Friday, March 9 from 8:30 a.m. to noon at the Sheraton Stamford Hotel **
The latest survey of Connecticut commercial real estate conditions shows that overall activity continues to improve in early 2012. Modest job gains are being realized, while both business and consumer confidence measures are seeing increases consistent with a mild economic recovery. In fact, current commercial real estate readings are the strongest to date since data was first collected in late 2010.
“The current consensus is that economic recovery is continuing to strengthen. Importantly, the primary generators of consumer wealth – stocks, jobs, and housing – have all displayed varying signs of improvement,” said Alissa DeJonge, director of research at CERC.
According to the latest CT COMpREhensive survey results, the Farmington Bank/ODMD Commercial Real Estate Index rose to a level of 19.7 in the first quarter, up modestly from the reading of 13.1 in the fourth quarter, besting the prior high reading of 16.0 one year ago. Meanwhile, the Current Conditions Index was 17.8 in the first quarter, the best reading in seven quarters of data thus far, also besting the figure of 13.7 in the fourth quarter. The Future Expectations Index component also improved, rising to an index level of 21.6, up from 12.6 in the fourth quarter.
“Current conditions within the Connecticut investment market are now improving according to the latest data,” reflected Bruce Blasnik, Partner at ODMD.
“The environment for investment appears to be more favorable as the overall economy improves and profit margins remain healthy,” said Don Klepper-Smith, chief economist and director of research at DataCore Partners.
The Connecticut job recovery rate, defined as jobs gained back expressed as a percentage of jobs lost, now stands at 28.6% as of October, higher than the national recovery rate of 25.9%.
“Job growth has become more tangible this past year, while housing prices are starting to firm in many parts of Connecticut,” added John Patrick, President & CEO of Farmington Bank.
“On the other hand, many area employers seem to be adopting a ‘wait and see’ approach to permanent future hires,” stated Peter Gioia, vice president and economist at CBIA.
Other findings include:
The latest survey was conducted during the January-February timeframe and polled real estate professionals in all eight Connecticut counties, asking for opinions and perspective regarding local real estate conditions in both the residential and commercial markets. There were a total of 104 respondents who participated in the most recent survey, and included real estate brokers, real estate developers, bankers, appraisers, and economic development officials from around the state.
- Respondents were more optimistic with respect to the near-term outlook for the Connecticut economy over the next three months relative to last quarter’s readings.
- The environment for Connecticut Investment Market appears to be more favorable as the overall economy improves and profit margins remain healthy. As was the case last quarter, investment real estate once again saw the most favorable readings on “present situation” and “future expectations.” About 31% of the respondents polled characterized current investment real estate conditions as “good” or “excellent,” while 47% stated that conditions were “fair.”
- Fundamentals surrounding the Connecticut Office Market continued to be affected by near-term activity in the local labor markets. Only 10% of respondents polled characterized current conditions as “good” or “excellent,” while 52% stated that conditions were “fair.”
- The state’s Industrial Market has been buoyed by healthy export growth, which rose a mild 1.4% in 2011. Only 13% of respondents polled characterized current conditions in the state’s Industrial Market as “good” or “excellent,” while 56% stated that conditions were “fair.”
- Connecticut’s Retail environment was bolstered by a slightly better than expected holiday shopping season, and has seen further improvement thus far in 2012. Only 18% of the respondents polled characterized current retail market conditions as “good” or “excellent,” while 57% stated that conditions were “fair.”
- The health of Connecticut’s Residential Market has clearly been impacted by conditions within the local labor markets, as well as record-low interest rates. About 9% of the respondents polled characterized current residential real estate conditions as “good” or “excellent,” while 53% stated that conditions were “fair.”
Read the executive summary of this quarter’s CT COMpREhensive and Farmington Bank/ODMD Index.
About the Farmington Bank/ODMD Commercial Real Estate Index
The Farmington Bank/ODMD Commercial Real Estate Index is a diffusion index measuring the health of Connecticut’s commercial real estate market, assessing conditions within four key commercial real estate sectors: office, industrial, retail, and investment. The index is sponsored by both Farmington Bank of Farmington, and O’Connor Davies Munns & Dobbins LLP of Stamford.
CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie C. Raymond (860.244.1957; email@example.com) or visit cbia.com/newsroom.
The Connecticut Economic Resource Center, Inc. is a nonprofit corporation and public-private partnership that provides objective research, marketing and economic development resources consistent with making Connecticut a more competitive business environment. For more information, visit CERC.com and connect to CERC on FaceBook, LinkedIn and Twitter (@cercinc).
About DataCore Partners, LLC
DataCore Partners, LLC is a New Haven-based research firm headed by chief economist and director of research Don Klepper-Smith.
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