The New England economy continued its modest upward trajectory, buoyed by strong growth in economic and health care consulting, toward the end of 2013, the Federal Reserve said this week.
The greater Boston area saw an increase in planned construction in the education, health care and life sciences sectors, though planned multifamily properties continued to dwindle. Boston’s Seaport District maintained a steady, "impressive" leasing pace and some suburban areas saw an uptick in office leasing, the Fed said. However, the vacancy rate in the Financial District remained in the mid-teens, and one contact told the Fed that modest rent increases there are likely only enough to cover rising costs.
According to the Fed, investment sales activity in Connecticut remained strong in December and, while leasing activity held roughly steady, contacts said some large, vacant tracts of office space in greater Hartford may be effectively obsolete and unlettable.
The Fed said New England’s residential real estate markets followed national trends, with October or November single-family home and condominium sales coming in below year-earlier levels in Massachusetts, New Hampshire and Connecticut, while Maine, Rhode Island and Vermont saw year-over-year home sale increases.
The Fed’s regional contacts attributed recent sales declines to lower consumer confidence resulting from the government shutdown, a shift in sales toward earlier quarters spurred by low interest rates at the time and a lack of inventory. Despite the recent decline in unit sales, New England realtors told the Fed that 2013 had been a good year overall and they remain optimistic about sales increases looking forward.
Among other business services, healthcare consulting saw some of the strongest demand, as providers shelled out for help preparing for the Affordable Care Act. Economic consulting remained a strong growth industry.
In the retail sector, contacts told the Fed they saw better-than-expected sales increases, which they attributed to increased consumer confidence. Respondents told the Fed demand is strong for apparel, home furnishings and home improvement. Of the Fed’s 11 manufacturing contacts, none reported falling sales and eight reported increased demand.
