The headquarters of the Federal Reserve Bank of Boston. Photo Courtesy of Fox-orian / CC BY-SA 3.0
A “larger number” of industrial real estate acquisition and leasing deals are falling through in New England, according to Federal Reserve officials.
The comments come in the latest edition of The Beige Book, the Fed’s eight-times-a-year summary of market conditions in different parts of the country based on anecdotes from business contacts and analysts interviewed by staff at the central bank’s regional banks.
The rocky market for industrial real estate deals coincides with “historically low” vacancy rates and “high” rents in the Federal Reserve Bank of Boston’s territory, which covers all of New England except for Connecticut’s Fairfield County.
Other observations of the regional commercial real estate market include:
- Retail real estate “remains a ‘tenant’s market.'”
- “Across property types, lessors boosted their renovation budgets to retain existing tenants, and rising borrowing costs deterred new construction.”
- “Contacts were uniformly pessimistic about the outlook for commercial real estate” due to rising interest rates and recession fears.
- “Contacts expected property valuations to fall in the coming months, possibly steeply,” with the office outlook “particularly bleak” even as vacancy rates remained “roughly stable” in the sector.
