WASHINGTON (MNI) – The following is the second and final section of
the Beige Book report on economic activity by the Boston Federal Reserve
Bank, published Wednesday:
Staffing Services
First District staffing contacts report mixed activity through the
end of October, with some experiencing downticks and others posting
modest increases. Year-over-year revenue changes vary widely, from flat
to up by more than 25 percent. Labor demand is generally flat relative
to three months ago, although a few contacts report upticks in the
software-IT, manufacturing, and legal sectors. Demand for permanent and
temporary-to-permanent hiring continues to grow. Supply of high-end
labor remains tight in the region, and a few contacts report difficulty
finding medical assistants, CNC operators, and welders. Bill rates and
pay rates are steady or up slightly, with most contacts attributing
increases to more high-end placements as well as a tight supply of
skilled workers. First District staffing contacts say they believe that
the labor market is performing better in New England than in the nation
as a whole; they express hope for more consistent growth in 2012.
Commercial Real Estate
The majority of contacts in the First District describe conditions
in commercial real estate markets as roughly unchanged since the last
report, although some note small improvements in fundamentals. In
Hartford, vacancy rates for Class A downtown office space continue to
hover around 20 percent and leasing demand remains muted in light of a
flat labor market. In Boston, office leasing activity is roughly steady
at a moderate pace, although tenants reportedly lack a sense of urgency
to sign deals. Bostons Back Bay and East Cambridge submarkets continue
to show strong demand and relatively low vacancy rates, with the result
that rents on Class A office space in Back Bay now exceed those for
comparable space in Bostons financial district, where vacancy rates
remain in the mid-teens. Portland saw modest absorption of retail and
Class B office space and in recent weeks amid strong overall leasing
volume, while some new vacancies arose in the Class A office market.
Leasing demand tapered off in recent weeks in Providence, as suburban
Rhode Island experienced a modest uptick in leasing activity.
The investment sales market remains strong in Boston, as prices
edge slightly higher for prime office and apartment buildings. Apartment
construction in greater Boston remains very active, with numerous
developments in progress and more new buildings in the pipeline,
although other construction activity remains limited throughout the
region. The lending environment continues to offer plentiful
financingXand on increasingly favorable termsXfor premier properties,
especially in Boston, while financing remains harder to obtain for
riskier properties and those in secondary and tertiary markets.
Residential Real Estate
Sales activity in New England for single-family homes and
condominiums continues to languish according to contacts throughout the
region. Sales figures rose moderately in September compared to a year
ago, but these increases reflect several months of dismal sales
following the expiration of the tax credit in mid-2010. Respondents say
housing market conditions have remained largely unchanged in the last
several months. Most contacts characterize the market as stable and
consistent, but believe the beginning of a recovery remains fairly
distant. While low interest rates have made financing more affordable to
qualified homebuyers, contacts report tighter credit standards as a
constraint. The median sale price of homes also rose in September from a
year earlier in the region, except for Rhode Island, where prices have
been below year-earlier levels for several months. October data for the
Greater Boston area, by contrast, show a 10.5 percent year-over-year
decline in the median sale price of homes.
Outlooks for the remainder of the year are mixed, with some
contacts anticipating 2011 sales falling short of last year and others
predicting sales to reach last years level. Respondents expect
relatively stable prices in the coming months, but note the possibility
of moderate declines.
(2 of 2)
** Market News International Washington Bureau: 202-371-2121 **
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