
M. JODI RELL – ‘A solid start’
Efforts are under way in Connecticut to interest young people in high-tech manufacturing careers, but for the time being, the expansion of the state’s manufacturing base seems to be taking a back seat to warehousing.
“You’re not going to find [much manufacturing expansion] anywhere here,” said Nick Morizio, a broker with Colliers Dow & Condon in Hartford.
The construction of new warehouses has been helping to carry the industrial real estate market for some time. Colliers is working on a deal with Walgreens to build a new 1 million-square-foot, $175 million warehouse in Windsor, a deal which follows several similar ones in other parts of northern Connecticut.
But there could be a future in Connecticut for very high-tech, high-paying manufacturing that cannot be done overseas, Morizio added.
To that end, the Connecticut Business & Industry Association last week sponsored a conference and career expo focusing on manufacturing. The event came after a survey from CBIA last year in which manufacturers said the cost of doing business in the state was becoming too high. Also, Connecticut and other New England states have been losing some employee base and, as CBIA Chief Economist Peter Gioia said last year, are not doing enough to train a replacement labor force.
Businesses overall also told CBIA in a more recent survey that they are having trouble filling open positions with qualified workers. Companies responding to CBIA’s first-quarter 2006 economic survey indicated they have job openings but are having a hard time finding applicants with the experience or skills needed to fill positions.
The survey did not break down the results by industry, but Gioia said the survey did draw somewhat on manufacturing sources.
Government officials hope CBIA’s career expo, which drew around 3,500 students from high schools and community colleges last week, will be a step toward fixing the state’s brain drain.
If even 500 of the 3,500 students who attended the expo are impressed by the technology they saw and decide to go into engineering or another high-tech field, it will help the state’s manufacturing base, according to Gov. M. Jodi Rell, who spoke at the conference.
The conference and career expo came at an opportune time, Rell said, as baby boomers are retiring from the manufacturing sector. The focus now should be on recruiting young people with the information that much manufacturing now is clean, challenging and high-paying.
Rell pointed out that China is producing many more engineers than the United States per capita, and said the United States needs to catch up.
“Everyone in this room understands competition is what’s driving us,” she said. “It illustrates how the [United States] must rise to the global competition.”
‘A Good Picture’
The governor focused on some efforts by the state government to help keep manufacturers in the state. The General Assembly this year voted to phase out the property tax on manufacturing equipment.
“The bill we passed was a solid start in making the Connecticut economy business-friendly,” Rell noted.
The General Assembly also eliminated the 15 percent surcharge on the corporate business tax, which will end next year, she said.
Rell also talked about an idea to make the job-creation tax credit – which goes to companies that create 50 or more jobs – more accessible to small businesses, which likely could not create 50 jobs at once, as well as the possibility of giving businesses that hire displaced workers – such as the 800 who were recently laid off from the North Haven Stop & Shop distribution center – a tax credit.
The real estate market for manufacturing buildings has remained steady, according to Morizio. The state was never over- or undersupplied, and vacancy is low in newer buildings. But older buildings, which do not have the high ceilings and other amenities that most companies look for now, are still experiencing high vacancy. Most of those will not remain manufacturing buildings, but will be knocked down or renovated as retail or apartment or condominium buildings, Morizio said.
As long as interest rates remain steady, however, Morizio expects the state’s industrial real estate market to remain steady.
“I think it’s a good picture for industrial real estate in the state of Connecticut,” he said.
Nationally, the industrial real estate market remained solid in the first quarter of 2006, according to a report from Colliers International.
Absorption totaled 44.5 million square feet compared with 57.5 million square feet during the fourth quarter of last year, and 45.3 million square feet during the first quarter of 2005. Colliers forecasts that demand in every market across the country will remain at current levels or higher. Rising energy costs are causing concern, however.
“A few of the larger markets posted disappointing results in the first quarter, but generally speaking, market momentum is unchanged from last year,” said Ross Moore, senior vice president and director of market and economic research at Colliers International, in a prepared statement. “We are definitely concerned about rising fuel costs, particularly for those companies involved in distribution and transportation, but we do not expect this to materially affect the overall warehouse market at this particular time.”
Vacancies in the first quarter of this year were 8.5 percent, versus 8.6 percent during the fourth quarter of 2005 and 9.2 percent during the first quarter of last year. Warehouse rents dropped marginally during the first quarter, but are up 5.5 percent year-over-year.
The Northeast, however, appears to have higher vacancy rates than many other regions. Of the 31 markets tracked by Colliers, Boston’s showed the highest vacancy rate, at 25.7 percent. That is down somewhat from the vacancy rate a year ago, which was 26.5 percent. No Connecticut markets were on the list.