Business owners contemplating upgrading to Class A commercial office space from Class B in Providence – but slightly hesitant because of the uncertainty of the economy or other concerns – may want to go ahead and take that jump now, real estate experts say.
There is prime Class A office space available downtown and the prices are in sync with the market, meaning you may get a deal today that you won’t get next year.
“If you look at the market today, compared to a year ago, it’s clearly in a better place than it was a year ago,” said Alden Anderson, Jr., senior vice president; partner, brokerage services for CB Richard Ellis New England.
“I think as the general economy has improved, the overall market, both the Class A and Class B markets, because the two markets are really linked to each other,” he said. “One can’t prosper while the other one falters.”
In recent years, when renegotiating lower lease rates with landlords the tenants would threaten to move out to the suburbs for a cheaper rent. But that’s not happening as much now.
“I think it just reflects that fact that the [overall] market’s beginning to stabilize,” said Jim Rizzo, senior vice president and regional manager of commercial lending for southeastern Massachusetts and Rhode Island for Rockland Trust. “Given the current stability of Class A office occupancy rates and the willingness of certain property owners to provide reasonable incentives, coupled with limited planned new additions to the market, this may be a good time for many to consider upgrading to Class A office space,” Rizzo said.
The Providence office market ended the third quarter of 2011 with a vacancy rate of 9 percent, according to CoStar Group, a commercial real estate information company. The vacancy rate was down over the previous quarter, with net new space leased totaling 213,806 square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 137,895 square feet.