PROVIDENCE – Rhode Island’s commercial real estate market saw improvement across all sectors in 2013, but high vacancy rates, shorter lease terms and a dearth of high-bay warehouse properties continue to challenge the market’s recovery, according to Capstone Properties’ 2013 real estate survey.
Commercial real estate sales rose 10.6 percent during the year to 239 compared with 216 sales in 2012. Total sales value increased as well, rising from $363 million in 2012 to $479 million last year.
Apartments “remain a safe investment in the eyes of investors compared to industrial or office” units, Capstone said. The apartment market has continued to outperform the other sectors, with 1,891 units sold in 2013 for total value of $170 million compared with 751 units the previous year for $71 million total.
“While some sectors showed modest declines as compared to the recession years, there were gains in the office and retail categories,” Capstone said. Specifically, the report cited the sale in December of the Wal-Mart and Kohl’s properties in the Rhode Island Mall, as well as the continued efforts of the I-195 Redevelopment Commission to begin marketing The Link for sale.
Retail sales accounted for 43 of the 239 total commercial real estate transactions in 2013, with a median sales rate of $115 per square foot and total sales value of $113 million. In 2012, 27 sales totaled $75.3 million with a median sales rate of $101 per square foot. Despite the rise in sales, however, the statewide retail vacancy rate of 6.5 percent has not improved significantly compared with the previous year, Capstone said.
In the Rhode Island office market, sales remained flat during the year, but several major transactions “reflect continued investor confidence in multi-tenanted, well-located properties,” including Foundry Associates’ acquisition of the American Locomotive Co. property for $19 million and United Way’s $3.3 million purchase of 531 Valley St. in Olneyville.
The office vacancy rate rose to 9.7 percent in 2013 from 9.1 percent a year before. Capstone cited one million square feet of vacant space in downtown Providence, not including the Superman Building at 111 Westminster St., which Bank of America vacated in April 2013.