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August 29, 2024

Survey of CT, western Mass. brokers reflects stable industrial market, negative office outlook

Michael Puffer Silverman Group held a July 18 groundbreaking for a 260,240-square-foot warehouse in Windsor Locks.
By Michael Puffer

A recent survey of leading area office and industrial brokers reflects a largely stable outlook for the industrial real estate market, but continued concern about the office market.

The Connecticut and Western Massachusetts chapter of the Society of Industrial and Office Realtors, on Wednesday, released its semiannual report of member sentiment. The survey generally draws around 15 to 20 responses, according to the organization.

The prevailing sentiment is that overall market conditions remain positive, with the industrial sector continuing to be more active than the office sector, according to a SIOR summary. The office sector is expected to continue to underperform, with a mix of opinions as to whether it has stabilized or will continue to decline.

Half of the respondents indicated a belief the first half of this year saw stable market conditions, while 33% indicated a decline and 17% perceived improving conditions. About two-thirds expect no change in market conditions for the rest of this year, with the remainder evenly split as to whether conditions will improve or decline.

Fifty-five percent of SIOR respondents expect no change in industrial lease rates through the close of 2024, with another 27% expecting increases and 18% predicting declines in industrial lease rates.

A greater percentage of respondents, 67%, expected no change in lease rates for the office sector, with 33% expecting declines and nobody predicting increasing office rents.

Sixty-four percent of respondents expect no change in industrial vacancy rates, with 27% expecting decreases and 9% expecting an increase. Sixty-four percent also predict stable sales pricing, with the remainder evenly split as to whether prices will rise or fall.

Respondents were predictably more pessimistic about the office market, with 56% expecting higher vacancies, 33% expecting no change and only 11% predicting improving conditions. Seventy-percent predicted office real estate prices will continue to decline and 30% predicted prices will hold stable.

Wednesday’s SIOR report touts “strong fundamentals” for the industrial sector locally and nationwide -- conditions that are expected to continue through 2024. But the report also cites interest rates and financing opportunities as concerns for the commercial real estate market. 


 

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