Issue link: https://nebusinessmedia.uberflip.com/i/1439616
Can you give a brief overview of what took place in 2021? Arzt: The Greater Hartford housing market made remarkable gains this year. The statistics from the Greater Hartford Association of Realtors show a 4% gain in closed sales from the beginning of the year, when compared to last year. That number has been steadily increasing over the past couple of years. I believe the reason is still related to the pandemic. We saw the beginning of this trend because people were at home, and they might have reevaluated what their space should look like. For example, some might have discovered they need more space, or less space, or a more secluded environment. Do you expect housing prices in the state to rise again in 2022? Arzt: Housing prices have begun to stabilize, most likely because of the time of year. Homebuying and selling is seasonal so my guess would be that we see a leveling off this winter and by next spring, prices could rise again. Closed sales will only continue to rise if inventory levels also start to pick up. There's no reason to believe that our strong housing market will continue well into the spring and summer of 2022. What are the most important factors that will impact the housing market in 2022? Arzt: Inventory will be the most important issue. We hope to see more sellers who are ready to list their homes. More homes on the market means more options for buyers and could help level off prices. How might interest rates impact the market in 2022? Arzt: We have been so fortunate that interest rates have remained at historic lows for so long. In order for our clients to achieve the dream of homeownership, it's so important that interest rates remain low. vibrant, including design-build and speculative construction. That said, large- tract land acquisition opportunities remain scarce and speculative construction projects typically end up being pre-leased by the time construction commences or is completed. Sales prices of industrial real estate continue to spike, both occupier- driven and investments purchases. This — like the leasing market — is driven by the imbalance of supply and demand. While the demand side of the occupier-driven market remains constant, the pool of investors for investor-driven purchases continues to increase daily as investors from all over the country have increased interest in our markets. Inventory will dictate 2022 housing prices By Greg Bordonaro gbordonaro@hartfordbusiness.com Q&A talks with Bill Arzt, a broker/ owner of CT Hometown Realty LLC and the 2022 president of the Greater Hartford Association of Realtors. Connecticut's housing market is coming off another hot year with housing prices continuing to rise Industry Outlook: Real Estate By Greg Bordonaro gbordonaro@hartfordbusiness.com Q&A talks with Mark Duclos, president of Hartford brokerage firm Sentry Commercial, about the outlook for industrial real estate. How did the industrial real estate market fare in 2021? Duclos: 2021 was another banner year for the industrial real estate market, locally, regionally and nationally. Occupancy rates in the industrial markets are at all-time highs. Some markets nationally effectively have a 0% vacancy. The national average is less than 4% for the first time ever. Locally, the industrial markets continue to function well, albeit it is predominantly a seller's and landlord's market, with buyers and tenants competing for property and space. New industrial construction remains Red hot distribution market to continue as companies rethink logistics, supply chain strategies Mark Duclos Bill Arzt Amazon in 2021 opened a new distribution center in South Windsor, at 240 Ellington Road. HBJ PHOTO | GREG BORDONARO demand for apartment rentals? Nolletti: It is very broad-based, young first-time renters, renters by choice, empty nesters downsizing and an influx of folks moving to Connecticut and embracing the tremendous quality of life we enjoy here. Do you see the multifamily market cooling off anytime soon? Nolletti: I believe the growth we have seen in the last 18 months will stabilize, but I expect the Connecticut multifamily industry to remain strong and growing. The overall fundamentals are very supportive. It is a stable, long-term yield alternative and a hedge against inflation. How important are amenities in new apartment developments? Nolletti: Lifestyle amenities will remain important. Your fitness center, golf simulator, pool, lounge, pet-wash stations, outdoor theater, package lockers, etc., remain a draw for tenants. We are also seeing common workspace for the work-from-home trend as well as wellness centers, enhanced filtration systems and sustainable options centered around more green living. Some of this is driven by the flood of capital and available debt as well as lack of availability and increased pricing in larger metro areas. The volume of land sales, while slowed a bit because of the lack of availability, continues to be above market. Pricing for land sales continues to rise. Concerns remain about construction price increases as well as project delays due to the disruption in supply chains and labor shortages. This will likely remain a concern throughout 2022. What are some key trends to watch in industrial real estate in Connecticut in 2022? Duclos: 1. As previously mentioned: Vacancy rates are at all- time lows and demand for space will likely not contract in 2022. Therefore, without an increase in inventory, pricing will continue to rise at record rates. Thus, new construction (speculative development, new owner-occupied construction and/ or expansion of existing plants) will continue to be an important factor in accommodating companies coming into the state as well as existing companies' needs to expand. However, there is no end in sight relative to increasing construction costs and unreliable timelines. The good news is that the supply chain does appear to be stabilizing. However, the dependence on an improving COVID landscape remains a concern, both for supply and labor. That said, new construction also requires land, which is becoming scarce. 2. The e-commerce boom: It's no surprise that the local, regional and national markets have all enjoyed a boost, predominantly because of the expansion of e-commerce. In the Greater Hartford region we have enjoyed a part of this run since the construction of Amazon's Windsor distribution center in 2014. That's been quite a nice run. That said, the question remains: How much e-commerce distribution build-out is left? Most experts believe we are in the middle innings. That said, concerns about unwieldy construction cost increases, lack of labor in almost every market, revisions in the omnichannel strategy, etc., bring caution to the air. 3. Reshoring, just-in-case inventory, reverse logistics, efficiencies, brick-and-mortar retail, micro-distribution: The evolution of the way products are manufactured and distributed continues to evolve and that will have a major impact on the ever-changing industrial landscape. 4. Jobs, jobs, jobs! For many manufacturers, it's no longer only about location, location, location. It's about talent, talent, talent. If you can't provide the talent then they aren't coming to your state/ region. The pandemic has created an even greater awareness of this as well as a redefinition of what type of talent employers are looking for. Does our region have a sufficient labor pool and does that labor pool have the skill sets needed for today's manufacturers? 21 HARTFORDBUSINESS.COM | JANUARY 3, 2022