What's In and What's Out for '97

FOR OUR FOURTH consecutive year, we bring you, "What's In and What's Out in the World of Real Estate".

One of the major trends throughout New England is that Fidelity and others involved in the mutual fund industry are moving in everywhere, while Digital is moving out from everywhere.

Nonetheless, even in the previously poorly performing, urban office market and suburban R&D market, single digit vacancy rates are beginning to creep in. In fact, large chunks of empty space at the old Wang Towers of Lowell, MA are being taken out as numerous tenants move in. And yes it's official, increasing office and retail values are in. Even new commercial construction (remember that) is in. So when developers bring projects to lenders, they are no longer (at least immediately) thrown out.

Overall, single digit commercial mortgage rates, vacancy rates, and "cap" rates are in; double digit commercial mortgage rates, vacancy rates, and "cap" rates are out (or at least on the way out).

Although apartments have always been in, and assisted living facilities for the elderly continue to be in, for a l-o-n-g time, developing new condo projects were out. Developing new condos, however, are no longer out and in limited areas, qualities, and quantities are ... errhh, in (never thought I'd hear myself saying that again). Also, with the recovery of the hotel/motel industry, fire-sales of existing hotel/motel properties are out.

In the retail sector, Staples is in the process of buying Office Depot out. And in most high traffic retail areas, vacancy rates below 5% are in. So in these areas, rental increases have been in as well. Still, in Saugus (MA) Sam's Club is out, yet "Nobody Beats the Wiz" is in. In Falmouth (ME), K-Mart is out, yet in downtown Portland, L.L. Bean is moving in.

In the regional mall sector, Jordan's is out, Macy's is in. Significantly larger Filene's stores at the Maine Mall and at Manchester's Mall of NH are in. In addition, an entirely new regional mall came in (Solomon Pond Mall, Marlborough, MA), and at the Mall of NH, a significant expansion also is bringing many new stores in.

In name at least, Boston Chicken is out, but Boston Market is in. At Dunkin Donuts (and it seems everywhere else) bagels are in. So, chicken and bagels are in; burgers and fries are out.

Speaking of food, in the supermarket arena, larger supermarket sizes are in. In the virtual supermarket world, however, Shaw's Market brought virtual grocery shopping in, but just as quickly took it out, while Hannaford Brothers (Shop'n Save fame), announced it will be bringing it in.

Speaking of the virtual world, 33, 66, and 75 MHz computer speeds are out, while 133, 166, and 200 MHz computers are in. Modem speeds of 9,600 and 14,400 BPS are out, while 28,800 and 33,600 are in, and 56,000 is coming in. And soon even for the general public, regular speed computer phone connections will be out, while faster ISDN, and cable connections will be in.

In the appraisal world, flexible scope real estate appraisals are in; rigid scope appraisals written for one-occasion-only are out.

In banking in NH, First NH Bank is out as Citizen's Bank moves in. Also in NH, First and Ocean is moving in. Family Bank of MA and NH is now in at People's Heritage of ME. And of course BayBank has been folded in to Bank of Boston.

Of course, if you need commercial or industrial appraisal work performed, we are always in. Give us a call, "that's what we're here for."

Happy New Year!

Steve

Stephen Traub, ASA
Publisher

The author, Stephen Traub, ASA, is Chief Commercial Appraiser for Property Valuation Advisors, Newburyport, MA. He is a certified general appraiser in NH, ME and MA. He can be reached at (508) 462-4347 or:
by e-mail: straub@shore.net