Federal Reserve Chairwoman Janet L. Yellen told Congress Tuesday that the Fed still sees a need for its stimulus campaign while warning that the end is approaching. She said it is still concerned that despite the overall economic improvement, too many Americans continue to be unemployed or underemployed and wage growth is sluggish. She also noted that the Fed will not act until it “is reasonably confident that inflation will move back over the medium term toward our 2% objective.” Based on her remarks, it looks like the earliest interest rate hike would not be until the Fed holds its scheduled meeting at the end of July — if then.
This is the first of a two-part series on the Hartford-Springfield market. Today, multifamily and other investment properties in the Hartford, CT, market are trading more actively for the first time since the end of the recession. Part of this uptick is attributable to the higher returns that investors are seeing in secondary and tertiary markets. In fact, capitalization rates for multifamily properties in Hartford are typically 250 to 300 basis points above those for similar properties in other Connecticut cities, and up to 500 basis points above Boston and New York multifamily. While the cash returns for Hartford investors are higher than most, there is also renewed economic activity that should result in greater demand and rent growth for Hartford multifamily and commercial assets.
With Bill de Blasio taking over as the mayor of New York City after three-term pro development Mayor Michael Bloomberg, real estate industry professionals were generally puzzled about what direction the new mayor would take toward development in Manhattan as well as in the outer boroughs, like Brooklyn and the Bronx.
The CRE market continues to see brighter days. The volume of overall commercial real estate investment rose 14% last year as compared to 2012, but activity in the office building sector increased even more – by 17% — to more than $104 billion, according to the CoStar Group. Although this didn’t reach 2007’s peak office investment levels, it still demonstrates the return of strong investor interest in office property.
Today, a good location, well-maintained units, attractive common areas and the right amenities are no longer enough to keep occupancy rates high and the property value of an apartment building up. Instead, success in commercial real estate investing can often hinge on smart property management, which can ensure that a seemingly profitable investment doesn’t instead turn into a negative cash-flow mistake.
In 2013, large established markets such as Boston, Chicago, Los Angeles, New York City, San Francisco and Washington remained the focus of many real estate investors.
In our previous blog, we took an early look back at 2013 to review the Connecticut commercial real estate market. The net was that despite concerns about unemployment, budget deficits and various financial crises, the New England economy continued on a path of slow growth recovery.
One year ago, serious concerns surrounding unemployment, budget deficits and various financial crises combined to make many believe the United States was poised to fall back into economic recession in 2012. Fortunately, this did not occur and the New England economy continued on a path of slow growth recovery.
Lead paint remediation in Massachusetts. Soil contamination in Connecticut. Asbestos in New York. Environmental issues are a common occurrence throughout our pipeline of multifamily and mixed-use transactions. Among all of the factors that investment real estate buyers and sellers need to be aware of, environmental concerns have become increasingly important since the 1980s after judicial decisions related to the liability of property owners to effect property site cleanup. Environmental issues with land or buildings can greatly reduce their value, make them difficult to finance and, if a contaminated property is purchased, the buyer may be responsible for the cost of clean-up even if the buyer did not cause or contribute to the problem.
While improving fundamentals continue to drive a strong recovery in Connecticut’s multifamily sector, most asset classes have not fully recovered from the recent recession in terms of rents and occupancy. Investors in retail, office and industrial properties continue to look for job growth as a leading indicator to a rebound in asset values.