As 2015 arrives, we’re still in recovery mode

For the most part, folks are hunkered down still waiting for the economy to really take off

With the arrival of 2015, there has so far been little snow in southern New Hampshire. The ski areas are hoping for snow, especially in southern New England, since with no snow outside their front door, folks don’t think about skiing.

Being a ski area operator is a risky business – you would be better off putting your money into commercial real estate.

In the commercial real estate sector, tenants are extending their leases, but most are tightening space standards and looking to trim occupancy costs. Sales of commercial buildings are about the same as last year, investment sales are at reasonable volumes but occupant or user sales seem to have slowed. This has been confirmed by conversations with lenders who tell me they have plenty of money to lend but fewer bankable deals.

For the most part, folks are hunkered down waiting for the economy to take off. The stock markets have hit new records, not so much on fundamentals but because there are few alternatives providing any yield.

At a recent national meeting in Boston, word was that this “quiet” pattern was prevalent throughout the country, except in the super-hot markets of Boston, New York, Washington, Chicago and San Francisco. There was anecdotal evidence that the next tier of urban markets was experiencing more activity, which is a sign of momentum and strength in the office sector at least. Multifamily development was up compared to post-2009 levels, but not at earlier robust levels.

The New Hampshire picture

Here in New England, we continue to see mill conversions and infill, but not many large “new” multifamily construction projects. Single-family housing sales are tepid, as witnessed by real estate transfer tax revenues at the state, which are down. This can be reflective of fewer transactions (most of the bank foreclosures are behind us) and lower average prices.

In Concord, smaller homes selling below $250,000 are flying off the shelves, while larger and more expensive home sales are less robust.

In other words, the somewhat sluggish recovery from the Great Recession goes on. One local economist stated that we are about halfway back to 2007 levels, so it could be four, five or even six years before we get there. While the number of jobs lost in 2008 and 2009 have been regained, the quality is lower. Thus about 60 percent of the “new” jobs are at lower wages, benefits and hours compared to those before the recession.

What we know is New England is aging. This demographic change is significant. Exactly what it means in fine detail nobody knows, but it should be good for senior housing, downtown revitalization, many sectors of the medical arena, AARP and senior centers!

Seriously, many retirees have saved and will be net contributors to the local and regional economies. Some, however, will struggle to get by. I have two wonderful neighbors, sisters who are 90 and 92 years old. They did save and live modestly, but they worry they may outlive their resources. I ponder this as I help them with various tasks and issues and contemplate my own retirement one of these days.

One of my New Year's resolutions is to review my living expenses over the past three years and determine a baseline budget to plan for. I felt I was on top of this, especially after nearly a decade of little or no inflation. But December's mail brought a quarterly real estate tax bill (up 14 percent), an electric bill (up 18 percent) and a natural gas bill (up 22 percent). I thought there wasn't any inflation! Oh, wait a minute, energy and food prices are not included in the calculation. Because we buy food every week, these prices can quietly sneak up on you. I think I know what my “nut” is, but it will be interesting to see if I am close.

Best wishes for a joyous and healthy 2015.

Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of Chartered Surveyors (FRICS). He can be reached at