Real estate economist, brokers upbeat about economy
Updated 12:17 pm, Monday, March 12, 2012
Experts have called the state of the economy a "jobless recovery," but after learning Friday that the nation added 227,000 jobs in February, Kenneth McCarthy, senior economist and senior managing director, research, at Cushman & Wakefield Inc., said he is optimistic that a sustained rebound is under way.
"It's the third month in a row that we've added more than 200,000 jobs," McCarthy told more than 100 people at an annual conference for commercial and industrial real estate professionals working in Fairfield and Westchester counties. "Businesses are picking up spending. We're going back to the '90s level."
Consumer spending is improving, and there is pent-up demand for large purchases, he said at the Friday event, which was held at the Stamford Sheraton and hosted by the Connecticut Business & Industry Association, the Stamford Chamber of Commerce and the Connecticut Economic Resource Center.
"The average age of a car on the road is 10.8 years. That's higher than it ever has been," McCarthy said, adding that car owners are starting to replace them. "Car sales are at 15 million a year, up from 9 million during the recession."
Jobless claims are down to 350,000 a week, he said, below the watermark 400,000 level indicating a foundering economy.
Those figures should translate into an upturn in the commercial real estate market, McCarthy said, but he cautioned that businesses still have questions about the direction of the country.
"There's still a lot of uncertainty about what the government is going to do, and who's going to win the (presidential and congressional) election," he said. "We're still down 5 million jobs from our peak."
But companies seem to be starting to hire as they see demand for products and services picking up.
"For us in real estate, there's nothing more important than jobs. It means growth," McCarthy said. "During the recession, Fairfield County lost 7 percent of its jobs, and there has been little recovery."
Office vacancy rates in lower Fairfield County remain high -- in the 19 to 25 percent range, he said, but rents are starting to increase. The county has an office vacancy rate of about 20 percent, a far cry from 12 percent in the early 2000s.
"We do think the market will improve but slowly. The vacancy rate should be in the mid-teens in 2013."
Retail rental rates were dramatically affected by the recession, with upscale shopping districts such as Greenwich Avenue in Greenwich seeing prices fall from above $100 per square foot to the $60 range, said audience member Kerry Wood, chief operating officer of HK Group in Westport.
"From here on out, rental rates will stabilize and go up by the end of the year," she said, adding that in the office sector it remains a tenant's market. "It's a great time to go out and get a good deal."
"For the first time in three years, companies are taking more space," he said.
The arrival of NBC Sports headquarters this year on Blachley Road in Stamford will dramatically improve the city's economy, as will the development of Building and Land Technology's Harbor Point office/retail/residential project, he said.
"If you look at the progress there, it's dizzying," Fagan said. "It's a daring plan, and it's going to be great for Stamford."
Ron Czebiniak, an independent real estate broker and appraiser in Stamford, and a member of the audience, echoed Fagan's comments.
"They are filling new (apartment) spaces there faster than they can build them," he said. "I think it all bodes well."
He said more goods and services providers will be looking for space in Stamford to cater to the needs of the 9,000 or so people who will eventually live at Harbor Point.