BOSTON – With the onset of spring, New England businesses are relying on improved consumer confidence and higher sales to drive economic recovery after a difficult first quarter affected by severe winter weather, according to the Federal Reserve Board’s Beige Book released Wednesday.
Commercial real estate leasing activity slowed in the greater Providence area during the first quarter, lowering the confidence of some developers, the Fed reported. However, contacts cited “positive developments in the Rhode Island economy that should contribute to job creation in coming months.” The Beige Book did not specify which positive developments it referred to.
“Rents in Providence are described as flat on average, with some modest upward pressure in the class A office sector and diminishing concessions in suburban locations,” the report stated.
A few of the Fed’s contacts, located in Boston and elsewhere in the region, expressed concern that current construction levels of high-end apartments are excessive in relation to potential demand for such units, but said such units appear to be fetching rents in line with developers’ projections. Meanwhile, although speculative office construction remains limited, respondents said the pipeline of planned office construction in Greater Boston is growing.
In the residential market, Rhode Island contacts cited declines in sales of both single-family homes and condominiums, while condominium sales in Massachusetts increased year over year. Consensus among Beige Book respondents indicated that the decline in sales will be short-lived, and was driven partially by lingering winter weather and uncertainty about new federal flood insurance regulations.
Residential real estate contacts said they expect sales to pick up seasonally this spring, but in Massachusetts, contacts said inventory shortages remain a challenge.