PROVIDENCE – The office vacancy rate in Providence hit 15.12 percent at the end of last year, according to Hayes & Sherry Real Estate Services. The decline was led by the Class B market, where local vacancies doubled compared with a year ago.
Of the 6.54 million square feet of space available in 119 buildings citywide, 988,492 square feet were vacant as of Dec. 31, the Providence commercial brokerage firm found in its 2008 market survey.
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Vacancy rates will continue to rise, Hayes & Sherry predicted, spurred in part by Blue Cross & Blue Shield of Rhode Island Inc.’s move to its Capital Center headquarters. By the end of 2009, BCBSRI expects to move out of about 311,121 square feet of space in three buildings.
“We expect to see downward pressure on rental rates in 2009, considering there is almost 1 million square feet available in 2008 and an economic forecast that 2009 may not get much better,” the firm wrote in its report. “We expect to see a shift from a landlord’s market in 2007 and 2008 to a tenant’s market in 2009, making lease negotiations and lease renewals in 2009 very attractive to tenants looking for leased space.”
Class A vacancy rates in Providence jumped to 12.72 percent at the end of last year from 9.23 percent at the need of 2007, the survey found. Of the 2.92 million total square feet of such space available citywide, about 371,704 square feet were untenanted. That Class A vacancies were led by the 117,000 square feet of empty space at the Gateway Center, 60,000 square feet at 100 Westminster St. and 42,000 square feet of vacancy at the GTECH Center.
Class B vacancies citywide jumped from 7.48 percent at the end of 2007 to 17.31 percent at the end of 2008. That increase was due in part to the addition of 250,000 square feet of new space to the local market, including 180,000 square feet in The Foundry development, Hayes & Sherry said. Of the 3.34 million square feet of Class B space that existed in Providence at the end of 2008, about 578,388 square feet were vacant.
The Class C sector – the smallest in the Providence commercial market – was 14.01 percent vacant at the end of 2008. Of 274,100 square feet of Class C space available citywide, 38,400 were vacant.
Hayes & Sherry Real Estate Services, founded in 1990, is a commercial real estate brokerage based in Providence. For more information, visit www.HayesSherry.com.
