While New England was buried in snow this winter, business contacts – especially those hawking winter necessities – remained unusually upbeat, according to the Federal Reserve’s latest Beige Book report.
Retailers generally reported store sales ranging from flat to up 18 percent on a year-over-year basis, with the most frequent increases between 3.5 and 5.5 percent. The firm that told the Fed of an 18 percent year-over-year increase attributed at least three-quarters of that to strong demand for things like rock salt and snow shovels.
The Fed also noted, "Footwear, outerwear, activewear and winter sporting goods are selling particularly well."
However, the harsh winter also put a short-term damper on retail activity and business productivity in the commercial real estate sector, but has not significantly affected leasing or sales activity, contacts told the Fed. One contact reported that some office landlords in downtown Hartford had increased their asking rents for the first time in years, though the Fed expressed some uncertainty in its report as to whether tenants would be willing to pay those higher rents.
Commercial property sales activity in Connecticut remained solid, though construction activity was minimal, the Fed said.
Foreign investors drove much of the demand for commercial properties in Boston, the Fed wrote in its report. Office rents are growing and vacancy rates are dropping in desirable neighborhoods, while build-to-suit construction continued at a modest pace, the Fed said.
Closed sales of single-family homes increased year-over-year in every New England state at the end of 2014, and condo sales increased in every state but Massachusetts, the Fed said. Median sales prices for single-family homes increased in every New England state but Connecticut, and condo prices rose in Massachusetts and fell in Connecticut.
Connecticut contacts told the Fed they were optimistic, but expressed lingering concerns about shadow inventory and distressed sales, while Massachusetts contacts expressed concerns about lack of inventory.
In the long run, real estate agents were optimistic, though they did express concerns about the possible impacts of the exceptionally harsh winter. According to the Fed, pending and closed sales were down in January, in both Massachusetts and Connecticut, and a Massachusetts contact expected the weather to exacerbate the supply-and-demand dynamic and put upward pressure on prices.
