The way we work has changed because of the COVID-19 Pandemic.
Most of the big companies have no choice but to allow employees to work from home because at one time they would never consider it.
Big insurance companies, places like Twitter, and news organizations are all included. What has that done to our state’s ability to attract new business?
Commissioner David Lehman from the Department of Economic and Community Development spoke with NBC Connecticut’s Mike Hydeck about it.
“One of the big pushes in the last year or so was to get massive data centers to build up and relocate here or locate here in the beginning.” That appears to be on the back burner. We haven’t heard much about that recently. Where is that now?
David Lehman said that the legislation was passed one year ago. We are talking with a few people that are either planning a data center or in the first stages of looking for tenants. We’re still optimistic that we will see data centers here. It’s a function of getting that first one or two done, as we’ve spoken with between 15 and 20 potential users. I think you will see more about that later this summer. We’re optimistic that that is part of a development strategy for the state that’s going to be successful.
Mike Hydeck asked, “Would that be tax revenue in the millions?” Is it possible for a place like that to get investment in the state and get tax breaks for it?
Face the Facts with Connecticut NBC asks tough questions, giving an in-depth analysis of the big stories.
Depending on the size of the data center, there can be anywhere from $150 or $200 million in construction spending. In the millions of dollars of incremental grand list revenue the tax revenue is significant. These are very sticky long-term investments. What we’ve seen with data centers in other states, like Virginia, is a significant amount of construction jobs, given the size of the centers and the initial spend, as well as significant revenue to the towns over time, in addition to better data infrastructure.
“Another big project of concern is this state’s goal to make our shoreline the eastern hub of the United States for wind turbine construction, to try to get clean energy going here in New England.” The cost has risen. Eversource is sounding the alarm that they may pull out of the Orsted deal. Is the state doing anything to protect this investment? And how?
David Lehman thinks so. I mean, offshore wind and the transition to renewable energies, wind being one of them, solar being the other significant one, that’s going to happen over the next two or three generations, not just over the next five years. I encourage those that haven’t seen it to do so because the investment in New London is quite significant. It is going to be a hub for the offshore wind industry. You mentioned that the state continues to work with partners It’s going to be a big industry when we think about 20 to 30 years in the state. Connecticut is going to be a significant part of that industry because states are making investments down to Virginia. That’s a big focus of ours. It is important that the state diversifies where it gets its energy. The prices of solar, wind and hydrocarbons have been volatile. They’ve been going up recently. We want to make sure that we have clean energy. In addition to being cleaner in the future, it’s going to give more price certainty.
Mike Hydeck wonders if more of the tab will come to the taxpayers if Eversource pulls out.
“No, it doesn’t.” David Lehman said.
“So are we looking for another company to take their place?” asks Mike Hydeck. What if they pull out?
Yes, David Lehman. My expectation is that if they do that, they will look to sell their interest, and you will see a new partner at the table. The transaction will be a private one. We don’t think this will have an impact on the state or on the economy.
“So we have more and more major corporations, as I said at the beginning of the segment, with employees working from home, so that means there’s much less need for a big office footprint.” It doesn’t necessarily mean they’re renting buildings, does it? Is that making an impact on trying to recruit companies here and rents that could take place in places like Stamford and so many people moving out of New York City into Connecticut?
David Lehman said it depended. We’ve seen over 40 business expansions, some of which were businesses in state, some relocations from places like New York, as well as increasing rents, and we’ve seen it in places like the Stamford area. There is a difference between a central business district and a suburban office park, where there is not as much activity and there is not as much demand. We expect more decisions to be made by corporations in terms of their footprint and what’s needed, as we are now through the phase of COVID. Some of the structural vacancies in the buildings will continue to be seen in places like Stamford and Hartford. There was too much space in some of the areas before the Pandemic. We hope that you will continue to convert to residential. Offices and businesses are going to make decisions about hybrid and remote and what do they need. You’re going to see it transition if they still need 50,000 square feet or if it’s now 30. This will take time. It will take between 10 and 20 years. 10 years from now, I think you’ll see more residential in our downtowns. You’re going to see a different type of commercial space.