CB Richard Ellis says 'sky is no longer falling' for commercial real estate market
CB RICHARD ELLIS-NEW ENGLAND said Thursday more Providence office space sat vacant at the end of 2010 than at the same time in 2009.
PWCVB / MICHAEL MELFORD
PROVIDENCE – CB Richard Ellis executives remained “cautiously optimistic” about the market in 2011, said Senior Vice President Alden M. Anderson Jr. to a crowd gathered for the company's annual market update conference on Thursday.
Anderson said the economy has “found the bottom and we’re slowly working our way up the hill to a good economy.”
CB Richard Ellis executives noted that unemployment was expected to start falling and could return to pre-recession numbers as early as 2013. That would be good news for the commercial real estate market that relies heavily on providing space for employers. And in Rhode Island, a number of companies are searching for space.
“We have the data to know the sky is no longer falling,” said Andrew Galvin, an associate broker at CB Richard.
Despite the tempered optimism for the new year, CB Richard Ellis-New England said Thursday that more Providence office space sat vacant at the end of 2010 than at the same time in 2009.
The commercial real estate firm said there was 1.2 million square feet of office space available, up from 1.1 million in 2009. The vacancy rate increased to 18.9 percent from 17.2 percent while rents fell across the board.
Across Providence, Class A, or prime space, was renting for an average of $29.60 a square foot, Class B space averaged $20.58 a square foot and Class C space, an average of $17.44 a square foot.
Rents ranged from a low of $18.01 a square foot in the Jewelry District to a high $31.35 a square foot in the Capital Center.
Galvin called the Jewelry District – where Brown University is building a new medical school – the up-and-coming “hot spot” for development. But he cautioned that just two buildings house 80 percent of the available office space. That will force companies to build pricey new buildings or – more likely – push companies to other parts of the city, he said.
Elsewhere in the city, CB Richard executives noted that 38 Studios agreed in December to occupy One Empire Plaza – a former Blue Cross and Blue Shield building – but has yet to move in. That deal will help absorb vacant space and, if state economic officials are right, spark a cluster of gaming companies searching for office space nearby.
Besides 38 Studios, other companies are on the move. The Big East basketball conference left a Richmond Street building to make way for the Brown medical school and took up space at the former American Express building across from the Capitol. Admirals Bank, formerly known as Domestic Bank, will also be a resident at the American Express building. Public relations and marketing company Duffy & Shanley left the Richmond Street building for new offices on Charles Street.
In the broader real estate market, there are already positive signs, said Dan Baudouin, executive director of the Providence Foundation. Occupancy of first floors is strong and there is lots of activity, he said.
“I think it’s fabulous from every perspective to have that kind of diverse interest in downtown,” Baudouin said. “That’s what downtown is all about.”
Elsewhere in the state, CB Richard said office vacancies ranged from 10.5 percent on Aquidneck Island to 30.5 percent in northern Rhode Island. In the East Bay, vacancy stood at 22.7 percent, in the West Bay 19.8 percent and in suburban Providence 22.2 percent.
Vacancy rates for industrial space across the state increased to 10.1 percent from 9.1 percent in 2009.