Sales, leases for 200,000 sf or more are evaporating
November 20, 2008
The sinking economy is claiming another victim: big real estate deals.
According to the region’s major brokers, leases and acquisitions of commercial properties exceeding 200,000 square feet are in a free fall as companies take a wait-and-see approach to leasing and acquiring new space.
“It’s all relative in our world, but a lot people feel that the world is coming to an end and they have to be careful,” said Mark Duclos, managing director for Sentry Commercial in Hartford. “There is definitely a market slowdown. It’s been slower than what we’ve been used to in the last five or six years.”
Duclos compared the current market conditions to those of the late 1990s and described them as “way off” from 2005 and 2006.
There are few exceptions. Take last week’s announcement of the 425,000-square-foot lease of the former Advo facility on West Service Road in Hartford to Metal Management Aerospace Inc. and the 308,000-square-foot lease signed by Raymour & Flanagan for a Manchester warehouse in September.
But that is an exception as opposed to the rule, Duclos said.
Adam Winstanley, principal of Winstanley Enterprises, said that there is “no question” that other larger deals are becoming more infrequent due to financing concerns.
“There are still larger deals getting done, but there are simply less of them,” he said.
Sentry Commercial’s Duclos agrees. “It’s just the sentiment out there that companies are comfortable with where they’re at right now and not ready to expand,” he said.
Some Optimism, Concerns
Colliers Dow & Condon Hartford president Nicholas Morizio is concerned about the next few years. “It looks bleaker for 2009 and even 2010,” Morizio said. “It’s not from a lack of trying because spaces are available, but the problems with financing are slowing things down.”
Large deals can take several months to come together, he explained. “The deals we’re working on now would be happening in 2009, and those aren’t happening,” he said. “I hope it changes soon for everybody, but I think the common opinion is that it’s going to take a while.”
Jeffrey Livingston, managing director for CB Richard Ellis in Hartford, also is worried about future revenues.
“We’ve been concerned about our fourth quarter results because I don’t think things are going to turn around overnight,” he said. “But a lot of people in the area suffered through the late 1980’s and early 1990’s so they were much more cautious in terms of building and development, so that’s helped.”
One ray of light for Livingston has been the relative health of Hartford’s major corporations during the initial surge of negative economic news. Overall, Livingston feels the region is well positioned to weather the current financial storm.
“There have not been any large layoffs in the area and hopefully there won’t be,” he said. “Most businesses are pretty solid.