We expect 2009 to continue to be a tough year for commercial/investment real estate, but multifamily is certainly the preferred product type for institutional and private investors delivering stable, solid returns, particularly in the supply-constrained New England markets. Transaction velocity was actually fairly strong through EOY 2008 although cap rates and IRR have increased by 100 to 150-plus basis points from a year ago, and currently we are pricing properties using cash-on-cash returns based on true, twelve month trailing operating data. Fortunately, the greatest demand from institutional investors is for well-constructed Class “B+” to “A” properties in the region. While we don’t have the problem of shadow inventory that we do in Florida, Arizona and other markets, we have noticed an increase in vacancy for Class A and B properties in the region. Occupancy in a number of properties we analyze for our monthly same-store rent comp survey has dipped, but we’re still ahead of most other national markets. We are generally seeing an increase in vacancy in New Haven, Fairfield, Middlesex, New London and Hartford County properties from 100 to 400 basis points but we expect strengthening later this year. After 30-plus years in this business, my honest opinion …
Connecticut
What area is your expertise? Connecticut — Fairfield County. What trends do you see presently in office development in your area? Slow to moderate growth in office demand. An adequate supply of product is available but not many “lookers.” Who are the active office developers in your area? Very little new development. Mostly local developers without national recognition e.g. Building and Land Technology of Norwalk and The Davis Company, also of Norwalk. Please name one or two significant office developments in your area. What impact will these projects have on the market? Blackrock Realty’s new railroad station project is underway in Fairfield that will become Fairfield Metro Center office park. The 100 Fairfield Metro Center building will encompass the first phase of the development and contain 200,000 square feet of Class A office space. A pavilion building on-site will add another 70,000 square feet to the overall development. Phase I is scheduled for completion in 2009. Where is the majority of development taking place? Why is this area doing well? Lower Fairfield County. It’s located along the commuter route to New York City. What area do you expect to be the next big development market? Why? The 33-acre Wilton Corporate …
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