Will RI’s Commercial Real Estate Market Rebound in 2013
Friday, January 18, 2013
Three significant messages were presented by a series of top regional CBRE experts.
First, the Boston market is on fire. It is growing and rents are improving. Average asking rents increased in downtown Boston, reaching $42.97 per rentable square foot. Much of this growth can be attributed to the 20%+ rent growth in the Seaport District over the last 18 months, according to CBRE.
Second, RI's unemployment is a significant barrier to the state's recovery and is an outlier to the rest of New England. According to CBRE, New England lost 307,000 jobs during the Great Recession and has recovered 190,000.
Third, the Rhode Island commercial real estate market is showing signs of a slow recovery. Class A space in Providence had a strong year in 2012, but faces challenges with the loss of Bank of America to the Superman Building on Westminster Street.
The Downtown Office market ended 2012 with a vacancy rate of 16.02%, slightly higher than the 15.9% at the end of 2011. There was significant positive absorption in the Class A sector, leading to the lowest Class A vacancy rate in nearly a decade. The vacancy left by a large tenant default has brought 104,316 square feet back on line and contributed to an increase in Class B vacancy.
Alden Anderson, Senior Vice President of CBRE, pointed out the the Rhode Island market is showing signs of improvement across most of the sub-markets although there are still challenges to the recovery - job growth and investment.