In December 2007, Trammel Crow Co. bought a 548,000-square-foot warehouse and office within throwing distance of Interstate 95 in West Warwick for $21.5 million.
Then the housing bubble burst, the economy contracted and some of the tenants in the building at 1600 Division Road left. Eventually the Trammel Crow affiliate that owned the property started falling behind on its mortgage with Citizens Bank. Five days before Christmas, Brookwood Financial Partners LLC of Beverly, Mass., announced an agreement with Citizens to buy the warehouse in-lieu-of-foreclosure for $10 million, $11.5 million less than Trammel Crow paid for it five years earlier.
Plunging sale prices and rents have been the fate of many Providence-area industrial properties, even relatively good and recently built industrial properties, in the years since the financial crisis.
With a shrinking manufacturing sector compounding the soft Rhode Island economy, warehouses and factories less than 40 years old began to look more like the century-old mills the region has been repurposing than modern commercial space. But there are signs that now, nearly a half decade since starting its plunge, the industrial market has stabilized.
Built in 1973, the West Warwick property purchased in December by Brookwood Financial “was acquired at a significant discount to both the current replacement value and the owner’s purchase price in 2007,” Brookwood noted in a press release announcing the acquisition. “Given our low cost basis in the property, we will be able to offer very attractive rental rates and generous tenant-improvement allowances.”
At the close of 2012, the vacancy rate for Rhode Island industrial space dropped below 10 percent for the first time since 2009, according to statistics from CB Richard Ellis-New England. The availability rate, which includes space that is occupied but on the market, also hit a three-year low of 11.8 percent, after reaching 13.2 percent at the end of 2011.
“Last year was slow in both leasing and sales, but we are starting to see activity now,” said Michael P. Wall, vice president with CB Ellis-New England in Providence.