The Fed’s latest Beige Book report, an informal survey of business leaders in key districts, paints a cautiously optimistic picture for its Boston-area district with many contacts reporting year-over-year increases and an increase in demand for commercial and residential real estate throughout much of the First District. The Fed’s First District includes Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island and Vermont.
According to the report, commercial real estate leasing and sales activity remained status quo or improved in recent weeks. A Hartford contact told the Fed of a modest increase in foot traffic for downtown and suburban space but no significant changes in rents or vacancy rates since the last Beige Book, which came out in April, but values in prime downtown Boston properties continued to rise. The Fed reported that its First District contacts were "mostly optimistic that commercial leasing fundamentals will continue to improve at least slowly in the coming months."
Meanwhile, on the residential side, median sales prices of single-family homes and condos rose year-over-year in March and April throughout most of the First District, the Fed reported. Demand for homes remained strong, though some contacts expressed concern about falling inventory levels, particularly in Massachusetts and the Greater Boston area.
Three-quarters of the Fed’s manufacturing contacts reported higher sales compared with the same period a year ago and said they were "reasonably optimistic" about their outlook in the coming year. Five out of eight contacts are hiring, but the report conceded "only one is hiring in any significant way, and their hiring is outside the U.S.," and six of eight respondents told the Fed they are increasing capital expenditures.
Software and information technology services reported sluggish activity for this period, with two contacts attributing the slowdown to economic uncertainty in the United States and Europe. Tourism revenues in the Greater Boston area increased after a softer performance earlier this year, attributable to a prolonged winter. Through the first quarter, hotel revenues and occupancy rates were both up 2 percent year-over-year, mainly because of strong domestic and foreign business travel, though Boston tourism was also somewhat reduced after the marathon bombings in mid-April.
