While many sectors shook with the wind of the recession last year, the Providence office market held steady, standing on a firm foundation.
That’s according to Hayes & Sherry Real Estate’s recently published Providence Office Market Survey 2001.
"Things really aren’t that bad," said Karl Sherry, a Hayes & Sherry partner. "We’re in a time where the economy is a little soft and I don’t think the office market has been hurt by it."
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The report showed that the vacancy rate for Class A office space went up less than one percent, and for Class B, just over three percent.
With the vacancy rate remaining at less than five percent, Sherry said he expects rents to remain at present levels and incentives for tenants to be minimal.
"We always go back to the point where there hasn’t been anything new built in Providence for a few years," he said. "I think we’re at a point where we don’t have a lot of supply, but there’s not a lot of demand."
The report showed that two buildings, totaling 480,000 square feet have been proposed over the past year, but the likelihood of the buildings being used as office space is slim. The buildings, owned by Foundry Associates, are the Sharpe Building at 25 Holden St. and the building at 265 Promenade St.
"If someone came in and wanted the entire Sharpe Building, we wouldn’t necessarily turn them away," said Anthony Thomas, a partner of Foundry Associates. "It would have to be a pretty strong commitment for a pretty lengthy period of time though, because we’d actually be competing with ourselves."
As to what could be done with these spaces Thomas suggested his group is "really leaning towards mixed-use."
"We’ve already got almost 600,000 square feet of office space," he said. "Office space also just requires more parking."
Foundry Associates is also working on finding tenants for two existing Providence spaces. Thomas said the group is close to signing a lease on the 18,000-square-foot former Spaghetti Warehouse building, but could not comment on the tenant until the lease is signed. He also said there are a few prospective tenants on another 45,000-square-foot space on Promenade Street that was vacated by a high technology company.
Sherry said lack of high technology companies is the reason Providence has fared so well this past year.
"In the Boston market when the dot-com companies had a difficult time getting funding, they gave back between two and three million square feet of space," he said. "I think that’s probably the biggest reason why Providence survived this soft period."
Sherry also said the future looks bright.
"I really think we’re seeing the signs that activity level is starting to pick up a little bit and the real estate market has been at the end of the curve," he said. "We may be seeing this softness begin to wane a little bit and see the market really come back beginning anywhere from July to September."
