What are your predictions for your industry as it pertains to the commercial real estate industry in 2020?
I expect the Connecticut investment sales market, particularly as it applies to my core business of multifamily, to continue to be strong, buttressed by low interest rates, steady rent growth, and continuously increasing demand.
It is clear to me that the paradigm of home-ownership as the ultimate personal goal, especially as it applies to younger people early in their careers and family formation and empty-nesters, is obsolete. Of course there will always be those who must rent out of necessity, either because of financial limitations or the need for the ability to move on short notice, but I believe that many people who had traditionally considered ownership as the only option for housing are now choosing to rent. This is demonstrated by the growth of cities like New Haven and Stamford, but also in the number of people returning to places like Hartford and those who are choosing to rent versus own, even in the suburbs.
The growth of the cities is being driven by people of all walks of life choosing to rent in an urban, walkable environment with diverse dining, shopping, entertainment, and cultural attractions, while suburban renters are finding an advantage to eliminating concerns of home maintenance and upkeep and always rising property taxes. In both cases the decision to rent versus own improves the quality of the life of the renter, a statement that may have been considered sacrilege by earlier generations.
This paradigm shift increases both the quality and quantity of the renter pool, which drives rent growth. While rent growth in Connecticut may not set any records, particularly when compared to southern growth markets, it remains consistent. I continue to see consistent growth in investor demand for CT multifamily. This is driven both by local investors and, more predominantly, by investors from nearby markets like Westchester and NYC. Buyers from outside the market have been a large part of my business for quite some time, but the growth in that segment of the market has only accelerated with the recent changes to housing laws in NYC. This has opened the CT market up to a massive segment of buyers who would have previously never considered the area as an investment target.