Business owners and Realtors in southeastern Connecticut are celebrating the Base Closure and Realignment Commission’s recommendation that Groton’s Naval Submarine Base New London remain open. More than 500 Connecticut manufacturers are direct subcontractors of the sub base, including Groton-based General Dynamics Electric Boat (above).
Now that the Navy’s submarine base in Groton has been removed from the chopping block, business owners across southeastern Connecticut are rejoicing that one of the biggest businesses in town is staying put. Meanwhile, Realtors are seeing evidence that home sales, which had recently slowed down, are picking up again.
“What I sense is an overwhelming sense of relief in the marketplace out there,” said Lorelei Mitchell of the Lorelei Mitchell Agency in Groton.
After the initial announcement on May 13 that the Base Closure and Realignment Commission had recommended the base – known as Naval Submarine Base New London – and other military facilities across the country be closed, many people who were shopping for a home decided to wait and see what happened, and to rent in the meantime. Immediately after the announcement, some potential homebuyers put their plans on hold and some Realtors lost sales, according to Larry Gemma of Larry Gemma Realty in Groton.
“So it was a big sigh of relief [when last week’s announcement came],” Gemma said.
John Bolduc, executive vice president of the Eastern Connecticut Association of Realtors, agreed.
“The market in this area definitely slowed [after May 13],” he said.
But the latest announcement that the submarine base likely will be saved is having a positive effect on the housing market. Activity is starting to pick up again, he said. After the first announcement, there were around 2,800 listings in the area. Now, there are 3,700.
Mitchell also noticed a drop-off in activity after the first announcement.
“[During] the month of July, we were at an impasse,” she said. “There was a lot of apprehension and uncertainty.”
A number of transactions were in limbo, with people not knowing if they wanted to buy, she explained. But August has been slightly better, and since the announcement that the sub base is no longer on the list to be closed, Mitchell said she has received tremendous interest about a two-family home in Groton that she just listed.
“I think there’s more confidence now that Groton will continue to thrive,” she said.
‘Alive and Well’
Betsy Gibson, a real estate agent at RE/MAX Property Consultants in Groton, had similar experiences. She told the Associated Press that a family that planned to move from Georgia to Groton had told her earlier this summer that they wanted to rent.
“Today, that changed,” she told the AP on Aug. 25. “They’re going to buy.”
Gibson said she could not put a precise number on how, or if, property sales declined this summer compared with the past. Property sales often decline to some degree in the summer, Bolduc said. But activity was definitely off, she said.
“The phones quit ringing 50 percent of the time,” Gibson said.
But the story is different now, with Realtors’ business picking up.
“Southeastern Connecticut is alive and well and is not going to have a big drain on the economy,” Gemma said.
Realtors were not the only businesspeople pleased by last week’s news. The closure of the base would have had a great impact on the economy, economists at the Connecticut Business & Industry Association said after May’s announcement. But last week’s announcement was met with applause. The recommendation to keep the base open “is a good decision that will positively affect hundreds of Connecticut businesses and the state’s long-term economic health,” according to a statement from the CBIA.
“Today’s BRAC decision is good news for all of Connecticut, especially for businesses and workers whose livelihood depends on work from the sub base,” said Pete Gioia, CBIA economist, last week in a prepared statement. “We applaud efforts by state officials, our congressional delegation, businesses, community leaders and chambers of commerce, who worked together as a team, rallying support to keep the base from closing.”
More than 500 Connecticut manufacturers are direct subcontractors of the sub base, including Groton-based General Dynamics Electric Boat.
Scott Gencarelli, manager of Girard Mitsubishi in Groton, told the AP that sales had dropped by 20 percent since the Pentagon recommended the closure of the base.
“People were nervous,” he said. “We just waited to see what would happen.”
But that has changed since last week’s announcement.
“Today we’re busy, with lots of smiles,” Gencarelli said.
If Groton business owners’ worst nightmare had occurred and the base had stayed on the list of recommended closures, activity might not have gone back up, and that would have affected the commercial real estate market, as well, Gemma said in May.
Such a hit to the economy – some estimates said the economy would lose $3 billion if the base were closed – would likely have an even greater effect on the commercial market.
“I think it would seriously affect [commercial real estate],” Gemma said.
The closure of the base could have had an impact on office, retail and restaurant space.
“From a Realtor’s point of view Â… it’s a big sigh of relief,” Gemma said last week.
Had the base closed, it would have happened gradually, over six or seven years, and the real estate and business markets likely would have echoed that.
Although real estate agents across the region are thrilled by the latest news, the closure of the base might have helped with the area’s lack of affordable housing. Southeastern Connecticut still needs about 7,000 homes priced under $300,000 to meet the demand, and the base closure would have freed up naval housing units that would help reduce that number.
The market has a shortage of affordable housing because, like every other region in Connecticut, its prices have experienced double-digit increases, according to Bolduc. Now, southeastern Connecticut and the rest of the state are seeing a leveling-off of prices, which would have occurred regardless of the status of the sub base.
Since last week’s announcement, though – and before May’s announcement – homes have been selling for at or near their asking prices. People who bought five years ago are still doubling their money and most sellers are getting close to 100 percent of their asking price, according to Gemma. Commercial buildings are selling for 90 percent of their asking price.
“[The market] is still strong in the area,” he said.
The Base Closure and Realignment Commission decided to take the Groton sub base off its list because commissioners said it didn’t make sense to close down a facility where sailors are trained alongside employees of the nearby Electric Boat shipyard, which builds the submarines. The vote was 7-1 with one abstention, according to the AP.
“If we close New London down, we will never get it back,” Chairman Anthony Principi said. “The New London sub base is truly the center of excellence.”
Local and regional officials argued that the Pentagon’s closure recommendation would be bad for national security. The future size of the Navy’s sub fleet had not been set, and closing the base would make it impossible to expand, they said.
If the Pentagon wanted to close a submarine base, it should have given the commission the opportunity to review all the East Coast bases before deciding on one, said Commissioner Samuel K. Skinner.
Another commissioner, retired Air Force Gen. Lloyd Newton, said the idea of closing Groton simply didn’t make sense.
The Pentagon included the submarine base on its May 13 closure list and recommended moving its subs to bases in Virginia and Georgia. Connecticut lawmakers inundated BRAC commissioners with data, reports and letters questioning that recommendation.
The decision will be sent to President Bush, who can accept the report or order the commission to make changes. He has indicated he will not make any changes, according to the AP. If he accepts the list, the decision becomes law unless Congress passes a joint resolution rejecting it, but lawmakers have not taken that step in any previous base-closing rounds. Bush has until Sept. 23 to accept or reject the recommendations, and Congress will vote on the plan by the end of this year.
