October 2007

      The Western Massachusetts commercial Real Estate market started off flat compared to 2006 but increased by 60% in the 2nd quarter partially due to a large sale we had in June. The residential market started its slide by early spring and continues to have problems. All summer everyone talked about the shake up in the Capital Markets and wondered what effect it would have overall. The effect has been to curb activity in our market by almost 20%.

      A group assembled by the principals of NAI Samuel D. Plotkin and Associates purchased the majority interest in a distressed Class A office building known as One Financial Plaza and is turning the property around nicely. A historic downtown hotel, across from City Hall, will be redeveloped next year and there is talk of a new parking garage being built. A $2.5M construction project is underway to redo the sidewalks and street lights on Main St. Governor Duvall Patrick has been to town a half a dozen times already which makes that six more times than Romney made it (I guess it helps he has a weekend house in the Berkshires). The class A office market seems to be rebounding after three very soft years, however safety remains the biggest concern for people coming downtown.

      The trend of manufacturers leaving Western Massachusetts continued. We do however have a growing number of smaller specialty manufacturers expanding. Performance Food Group has moved into its new 275,000 square foot distribution facility in Smith and Wesson Industrial Park and Harvey Industries will build a new 250,000 square foot manufacturing facility in the Chicopee River Industrial Park. An investor from NY acquired six office buildings on Main St. in the last 18 months sighting that Springfield has "good bones". He noted that often local buyers are to close to the ground to see the values in their area and he will continue to invest in Springfield.

      At this time last year Springfield was still reeling from a $40 M budget deficit, which is now balanced.

      Our 40 million square feet of industrial space had an increased vacancy rate from 10% to 12% but the office vacancy stayed in the single digits.

      The focus in Springfield now is implementing a plan prepared by the Urban Land Institute from an exhaustive study they performed last year. They highlighted the good points and how to fix the bad and for the first time in a long while it looks like Springfield has taken action. The York Street jail by the Connecticut River will be raised for new development and the old Basketball Hall of Fame is becoming an L.A. Fitness. Bike paths, clean parks, and new development ahead. Look for Springfield to really rebound in 2008.