In April of 2015, Dan Meyer authored an article for the Rhode Island Small Business Journal entitled: Thinking Outside the Box: Negotiating Office Leases in a Recovering Real Estate Market.
While economic growth statewide, and in the Capitol City in particular, remains sluggish compared to Rhode Island’s neighbors in New England, the downward trend in the unemployment rate and other positive economic indicators show that a sustained recovery appears to be underway – albeit at a slower pace than Rhode Islanders would like to see. One area where recovery has been apparent over the past two to three years is in commercial real estate leasing activity for office space in the Providence and suburban submarkets. Indeed, the 2014 MarketView report published by global commercial real estate firm CB Richard Ellis notes the following positive year-end trends:
• The overall downtown Providence market for office space ended 2014 with a vacancy rate of 15.2%, a decrease of approximately 100 basis points from 2013’s vacancy rate.
• The downtown Providence market for office space experienced an overall net positive absorption of 64,174 square feet. This is significant given the relocation of Dassault Systems from Providence to the suburbs, a move that added approximately 85,000 square feet of vacant space to the Providence market.
• The vacancy rate for Class A office space in Providence has dropped to 8.62% – which represents the third year in a row of single-digit vacancy rates. This decrease in vacancy was accompanied by a modest uptick in the average Class A rental rate to $30.80 per square foot.
• The suburban Rhode Island office market ended 2014 with an overall vacancy rate of 18.07%, which represents the lowest vacancy rate in this market since 2007 (before the Great Recession began in earnest).