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PROVIDENCE, R.I. (March 20, 2018) — Neil Amper, vice president of Capstone Properties in Providence, RI, analyzed the current state of the Rhode Island real estate market in his recently released The Capstone Report. Among Amper’s key finding, there were less transactions across all sectors of the Rhode Island real estate market in 2017 than there were in 2016. However, the first 6-weeks of 2018 were up compared to the same 6-week period in 2017. Another bright sign for the future is the additional 633 hotel rooms that will be added in 2018-2019 to the current 2,300 rooms in Providence.
Despite increased building activity in Providence and in other pockets throughout the state, the office market has not had a full recovery and the average gross rents are approximately $18 per square foot. The slow absorption has reduced the vacancy statewide to under 6 percent, and new construction in the industrial sector is at a standstill.
“The lack of new construction in the industrial sector, which is also the only segment showing an increase, may be the factor for the increase in price per square foot,” explained Amper. The lack of new construction in the industrial sector has created a vacancy factor statewide of less than 4 percent with positive absorption throughout the entire state. There has been a stabilization in the price per square foot of buildings between 5,000 square foot and 60,000 square foot.
While the retail market saw a 29 percent increase in dollar volume, resulting in square footage sold increasing by 78 percent, Amper explained, “It is important to take into consideration that 2016 saw the lowest sales volume and square footage sold since 2009.”
While there have been very little new additions to the retail market, there has been some shifting of retailers from Bald Hill Road in Warwick to the Rhode Island Mall. On Thayer Street in Providence, 37,000 square feet of space, representing 26% of the existing retail stores, has been leased to new tenants primarily from Boston and New York.
Amper also noted that three institutional retail investors sold five properties at reduced price per square footage rates to opportunistic buyers in 2017. He cited the Carpionato Group’s agreement to purchase 29 Benny’s locations throughout Rhode Island, Massachusetts, and Connecticut as an example.
The office market continued to absorb space with very little new construction occurring, but rents have remained stable at a $18 per square feet. There was $296 million sold between 2015– 2017, resulting in a total of 3 million square feet transacted. Amper believes this recent activity should be looked at in comparison to the $211 million sold between 2012– 2014 and the 2 million square feet transacted.
Even with less units sold in 2017, the apartment market continued to show improvement, resulting in sales volume increasing to $188 million from $173 million in 2016. The price per unit also increased from $104,595 in 2016 to $188,702 in 2017.
“The apartment sector has been a consistent performer for a number of years,” Amper said. “The price per unit in smaller apartments has steadily increased especially on the East Side of Providence. It has been the strongest market sector, and while mill conversions have slowed, new construction has continued.”
About Neil Amper, SIOR
Neil Amper, SIOR, is vice president of Capstone Properties, a Providence based real estate investment and property management company. A licensed broker in Rhode Island and Massachusetts, Amper is a member of The Society of Industrial and Office Realtors (SIOR). During his 26 years in the commercial real estate industry, he has facilitated over 400 transactions, including assembling 8 lots for Walgreens in Providence, RI, and representing Citizens Bank and Bank RI in selling foreclosed properties.
About Capstone Properties
Capstone Properties has provided real estate brokerage, asset property management, and construction services to the real estate industry in New England for over 25 years. Company principals bring over 100 years of collective experience in the marketplace, taking a multi-disciplinary perspective combining a depth of understanding about local areas with extensive real estate knowledge and experience. The company was created after founders Chris Greenman and Paul Griesinger completed over $300 million in lease and sales transactions and participated in the acquisition and development of more than $50 million in assets in 1990.