Spring always brings with it a renewed sense of hope, but for those who have successfully weathered another fierce New England winter, the seasonal shift in attitude often is particularly acute. For property owners, developers and brokers who have kept hope alive despite a prolonged chill in the commercial real estate market, spring has produced some tangible signs that that the troubled sector may be establishing itself on the long path leading to recovery. To be sure, much like the local weather, the good news has been mild, but it is welcome nevertheless.
Reporting from the National Association of Realtor’s midyear meeting in Washington, D.C., last week, NAR Chief Economist David Lereah said that, bolstered by increased business confidence and sustained economic growth, the outlook for commercial real estate has brightened considerably. Hiring in the manufacturing sector, rising payrolls and increased business spending also factored into Lereah’s assessment.
“Business spending will continue to grow and that will directly feed into a rising demand for commercial real estate space,” said Lereah, who forecast increased space absorption and decreasing vacancy rates as the year progresses.
Locally, the news also is positive, albeit more subdued. Bay State business leaders say that the economy is gaining strength, but a full recovery has yet to arrive. MassInsight and MassDevelopment last week held an economic briefing at which the groups said economic indicators and consumer confidence both are gaining strength. National data showing growth in some high-tech, consulting and engineering fields, as well as the manufacturing sector, promise to translate into regional gains, both in terms of the economy and, ultimately, commercial real estate. UMass economist Alan Clayton-Matthews said that the state’s economy is “slowly gaining momentum,” although he noted the local recovery still lags behind growth being realized nationwide.
The indicators and prognostications are all cautious and restrained, but they are all positive. And that, as much as the advent of spring, is reason for hope. Summer is still somewhere in the distance, but the long winter of discontent in the commercial real estate sector may truly be over.
