CBRE sees optimism in rising rents despite higher vacancy rates
DESPITE AN INCREASE in the downtown Providence office-vacancy rate in 2013 to 16.17 percent, CB Richard Ellis-New England Vice President Andrew Galvin pointed to rising Class A asking rents as a cause for optimism at the firm's annual market outlook Tuesday. Overall, CBRE executives described a healthy Rhode Island commercial real estate market.
PROVIDENCE – Despite rising office vacancies in downtown Providence over the past year, CB Richard Ellis-New England executives described a healthy overall Rhode Island commercial real estate market in the firm’s annual market outlook Tuesday.
The downtown Providence office-vacancy rate rose 0.15 percentage points in 2013 to 16.17 percent on 81,000 square feet of negative absorption during the year, CBRE told business leaders at the Omni Hotel.
That vacancy rate and negative absorption did not include the vacant Industrial Trust Tower on Westminster Street, which CBRE said is no longer being listed as office space.
The Class A vacancy rate rose from 8.4 percent at the close of 2012 to 9.6 percent at the end of last year.
But CBRE Vice President Andrew Galvin pointed to causes for optimism including Class A asking rents rising – to $30.50 per square foot from $30 per square foot in 2012 – and a scarcity of large spaces creating strong potential demand this year.
“This is a new normal, but within this new normal things are improving,” Galvin said.
Submarkets that did well in 2013 included the Capital Center, where there was a 2.9 percent year-over-year increase in asking rents, and the Financial District, where there was a 5 percent year-over-year increase in asking rents.
In the suburban market, office vacancies rose in every region except Northern Rhode Island and West Bay.
Northern Rhode Island vacancies dropped 2.87 percentage points to 27.9 percent.
Suburban Providence vacancies rose 1.43 percentage points to 16.3 percent.
West Bay vacancies dropped 1.43 percent to 14.9 percent.
East Bay vacancies rose 0.46 percentage points to 21.5 percent.
Aquidneck Island vacancies rose 1.06 percentage points to 18.1 percent.