BOSTON – Commercial real estate prices in Providence are likely to continue to decline over the next six months, the Federal Reserve Bank of Boston said yesterday in its survey of economic conditions.
The Fed said its survey of New England business leaders found growing confidence that the region’s economy is headed for a recovery, although most said business remains below the level of a year ago. The survey – known as the Beige Book, for the color of its cover – is used by the central bank to guide it in setting monetary policy.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
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“Contacted retailers, manufacturers, and software and IT services providers, while still reporting mixed results, are more confident about their companies’ and the economy’s eventual recovery,” the survey found. Staffing firms noted “upticks in activity,” and there is little sign of inflation pressure.
In addition, the number of firms saying they plan layoffs has fallen. However, staffing firms said they do not expect to see growth in demand for permanent workers until 2011.
Across New England, the real estate market continued to be under pressure, the survey found. Residential home prices continue to drop even as sales have increased in recent months. The Fed reported that “commercial real estate markets remain very soft.”
A survey respondent in Providence reported “an increase in foreclosure sales of commercial properties, all of which had been originally financed through commercial mortgage-backed securities.” In some cases, prices have fallen by as much as 60 percent from their peak in 2007, the respondent said.
Rents also continue to fall throughout New England, and the central bank said “delinquencies and foreclosures are expected to increase further in the coming months.”
Nationwide, the Federal Reserve said 11 of its 12 regional banks reported conditions to be stable or improving in July and August, based on anecdotal evidence collected for the survey.
“We are slowly on the road to recovery,” former Fed Governor Robert Heller said in an interview with Bloomberg News. The Beige Book “confirms that we have turned the corner,” he said.
The Fed is expected to hold its key interest rate at its current near-zero level when it holds its next meeting on Sept. 22 and 23.
