Neil Amper is vice president at Capstone Properties, a commercial real estate firm in Providence. He spoke to the Providence Business News this week about how prices are holding up in the commercial market, due in part to constrained supply.
PBN: You posted recently that prices were not dropping, despite the decreased activity in the past few months. Why is that?
AMPER: Supply. There isn’t a big supply of property. When you don’t have a lot, demand will be weak, but unless the owner is motivated either financially or for some other reason, maybe they’re downsizing, going out of business, buying another building, there could be three or four different reasons, there’s no motivation for price.
PBN: What are you not seeing being listed?
AMPER: There’s a shortage of good industrial properties. There’s not a short supply of office space. That has been absorbed over … the past five years, and there hasn’t been any new construction, that’s part of the issue in Rhode Island.
You wouldn’t build that building unless you had tenants. There are different levels. There is an excess of Class A space. Specifically in Providence, a lot of Class B and C buildings were converted to residential.
PBN: So within the office market itself there is less supply than in years past, which is also keeping prices stable?
AMPER: Yes.
PBN: What is in the most demand?
AMPER: Warehouse space. Some of it, you can be very specific and say Amazon has remade the warehouse market. There are people who supply, who work for Amazon, and who have bought buildings. It’s called the “last mile.” There is quite a bit of that.
PBN: What do you think will happen to the market for the rest of this year?
AMPER: We’re already into the second quarter. Summer typically is a bit slow anyway, but the general atmosphere in the commercial market is there is a little more activity, there are more phone calls. Some of that was probably delayed because of the lockdowns, and now it’s regenerating.
People tapped the brakes because of the concerns over where the world was heading. Now, people are coming back and saying, well, can I get a better deal? That building that was X, can I now get it for Y?
It’s too early to tell. … It’s a recession, faster. The economy was OK and things were moving, but there were some structural problems. It was a long recovery. There is always a recession at some point. Instead of having it spread out over six months or a year, we did it all in two months.
Mary MacDonald is a staff writer for the PBN. Contact her at Macdonald@PBN.com.
