The Hartford region and Connecticut commercial banking in general will continue to be challenged with stiff competition and lower growth.
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The Hartford region and Connecticut commercial banking in general will continue to be challenged with stiff competition and lower growth.
Traditional commercial and industrial companies are performing well having survived the economic downturn and lower growth over the past several years. Investments in capital projects will continue to be on the low side and centered in manufacturing efficiencies to reduce labor costs and remain competitive.
Sales projections and forecasts for companies without high value-add products and services continue to be difficult to predict, which has added to the less than robust investment in the future. Well-positioned companies will continue to seek strategic acquisitions for add-on growth both in market and out of market.
At the same time, Connecticut companies will continue to be courted and acquired by out-of-market companies and private equity firms. This and opportunities to move to more attractive states, will put further pressure on the local commercial-banking market as the pool of well-heeled companies shrinks.
The underlying economics of investment real estate in the Hartford region, and in Connecticut in general, remain healthy and both debt and equity are abundantly available.
As the Fairfield County, New York and Boston markets have become extremely pricey, there is renewed interest in Hartford, and up-state Connecticut in general, from commercial real estate investors.
Finally, migration to urban centers is beginning to show with higher demand and upward trending rental rates. Suburban markets have seen increased vacancies and as leases roll there will be some downward pressure on lease rates and increased concessions.
Despite the high competition and lack of robust growth in the Connecticut market, most local and regional banks will continue to show growth in their commercial footings as a result of aggressive commercial real estate lending as well as niche commercial-industrial lending both in market and out of market.
The regional commercial banking market has been highly competitive and there once again appears to be a lack of discipline in the market. Terms typically reserved for quality deals have reached down to the lower quality deals. In the commercial real estate market we appear to be at or near the top of the market with a potential for prices to drop if rates finally rise.
[See what others are saying on HBJ's Economic Forecast 2016 page]
