Neil Amper is vice president of Capstone Properties Inc. of Providence and conducts an annual report of commercial real estate transactions. His most recent analysis, of 2017 compared with the previous year, reveals the number of transactions for commercial real estate sales declined. He spoke to the Providence Business News this week about the broader trends.
PBN: Between 2016 and 2017, the number of commercial real estate transactions declined in Rhode Island, by 18.5 percent for industrial transactions. What is happening?
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AMPER: What you have to look at is first of all Rhode Island is a small market. You get these variations in the marketplace that sometimes distort the numbers. If you look at 2015, 2016 and 2017 as opposed to 2013, 2014 and 2015, there is a tremendous surge in business activity in the last three years, compared [with] the three prior, from that standpoint. I track the sales. I make sure they are arms’ length transactions. When you report the numbers based on actual data, yes, the numbers moved down, but it was still a very, very good year. A lot of people had excellent years in terms of leasing and sales.
PBN: One of the findings was the average industrial sale price increased by $5 per square foot to $32.65 per square foot. Was that distorted by a large transaction?
AMPER: There hasn’t been a lot of new construction in Rhode Island. When you don’t have new construction, the available properties become a little more valuable. People might pay a little more because they can’t find another property that suits their needs. There is almost an equity now between what’s available and what people are looking for. Depending on where your business is located will determine whether you go to those particular properties. It’s what happens in small markets sometimes, when you don’t have a huge demand. You have a steady marketplace, which we’ve experienced for the last six years, and you get absorption.
PBN: Looking at retail, which had a 36 percent decline in number of transactions, and a sale price decline as well, what is happening there? Is it a reflection of the retail marketplace being tough in Rhode Island?
AMPER: Sometimes there are a lot of smaller retail units around the state. In a strip mall, you might have a half dozen or 10. Those smaller units have suffered because the smaller businesses have disappeared. They have lost value.
PBN: Carpionato Group is purchasing the former Benny’s locations and plans an extensive renovation and relaunch. Will that work?
AMPER: Yes. They’re very integrated in the retail market. They have a lot of retail plazas around New England. They are dealing with regional as well as national retailers. Benny’s [stores were] all on state highways. They’re prominent and they’re in communities. That will have an attraction. The demographics where they’re located are all pretty good.
PBN: On large apartment sales, what is the larger story here? Your report indicates unit sales decreased this year, but the prices have increased. Housing is really tight in Rhode Island, is that making the housing complexes more valuable?
AMPER: Investors who buy these … larger apartments, the return on investment has gone down a little bit because there are more people looking for them. It’s viewed as a stable investment and the rents have gone up a little bit. The housing market has become a little tight, that’s why you’re seeing more apartment buildings being built.
Mary MacDonald is a staff writer for the PBN. Contact her at macdonald@pbn.com.
