Click here for a larger version of this chart. / " title="ALL COMMERCIAL DISTRICTS in Providence showed increased vacancy rates in the first half of 2009. Click here for a larger version of this chart. /"/>PROVIDENCE – Rhode Island’s commercial properties saw a “significant” amount of negative net absorption in the first half of 2009, led by Providence’s Capital Center district, which is now 30.8 percent vacant and the lowest-performing submarket in the state.
The overall vacancy rate in Providence stood at 17.87 percent after the first two quarters of 2009, according to the “Mid-Year 2009 Market View” report released today by CB Richard Ellis-New England’s Providence office.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
The vacancy rate in Providence when CBRE prepared its ”Mid-Year 2008 Market View” report was 14.48 percent. The vacancy rate had risen to 15.17 percent by the end of 2008.
In the 12-month period ending in June, the total available space in Providence rose only 0.5 percent – climbing from 6.024 million to 6.058 million square feet. But vacancy jumped from 872,249 square feet to 1.083 million square feet, a 24.1 percent increase.
In the 12-month period ending in June, vacancy in Capital Center rose from 52,819 square feet to 183,047 square feet. About 70 percent of the increase was attributed to the Gateway Center, which recently was vacated by Fidelity Investments. Despite the high vacancy rate, however, the average asking lease rate was $32.22 per square foot, the highest of the eight Providence commercial districts studied.
The high vacancy rate in Providence is leaving much of the power in the hands of companies, CBRE reported.
“Companies with strong balance sheets will be able to execute favorable long-term deals,” today’s overview stated. “Companies facing uncertainty will look to short-term leases to get through the economic malaise.”
Outside the city, the vacancy rate also rose in the first six months of 2009.
In the first six months of the year, the vacancy rate rose to 21.71 percent from 19.14 percent, with a negative absorption of 148,000 square feet, CBRE reported. Of the 7.55 million square feet of office space outside Providence, there are now 1.64 million square feet vacant.
There was negative net absorption in every suburban submarket, led by negative net absorptions of 52,918 square feet in Northern Rhode Island and 42,309 square feet in West Bay, the two largest submarkets. Average lease rates outside Providence now range from $14.10 on Aquidneck Island to $18.40 in West Bay; those rates fell in every submarket in the first half of 2009.
“Even more so than the Downtown office market, tenants of all sizes have multiple options” in the suburban markets, the report said. “Active tenants in the market who can commit to long-term deals are receiving aggressive concession and rent deal packages from well-capitalized landlords.”
In December 2008, CBRE had predicted that a turnaround in the commercial market wouldn’t happen quickly. At that time, 17.36 percent of Rhode Island’s office space was vacant, up from 13.67 percent at the end of 2007.
“Rhode Island historically has been a slow recovery economy,” CBRE Providence Office Senior Vice President and Partner Alden M. Anderson Jr.told Providence Business News last month, “which I don’t see being different this time.”
CB Richard Ellis Group Inc. (NYSE: CBG), a Fortune 500 company headquartered in Los Angeles, is one of the world’s largest commercial real estate services firms with about 14,500 employees at more than 200 offices including downtown Providence. Additional information is available at www.cbre.com.
