Report: Value of commercial real estate sales grows 37% in 2015

THE VALUE OF COMMERCIAL REAL ESTATE SALES in Rhode Island increased by more than one-third in 2015, based on strong retail and apartment building (not shown) sales. / COURTESY CAPSTONE PROPERTIES
THE VALUE OF COMMERCIAL REAL ESTATE SALES in Rhode Island increased by more than one-third in 2015, based on strong retail and apartment building (not shown) sales. / COURTESY CAPSTONE PROPERTIES

PROVIDENCE – The value of Rhode Island commercial properties sold in 2015 increased 37.3 percent to $379 million, according to an annual report compiled by Capstone Properties.

The increase was driven by large asset sales, including the Royal Mills apartments in West Warwick, which sold for $31.7 million, and the interior sections of the Rhode Island Mall, which sold for $9.5 million.

Sales of apartment buildings, in particular, showed strength in 2015, with the number of closed units remaining flat, while the price-per-unit sold increased to $110,000, an increase from $82,000 the prior year, according to Capstone.

Overall, 266 commercial real estate transactions closed in 2015, an increase of 6.8 percent. The total sales volume of $379 million was an increase from $276 million in 2014.

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The average transaction size remains small, at $1.4 million, but it too has increased from $1.1 million the previous year.

Capstone summarized in its report that all that is missing in Rhode Island’s slow recovery is new construction, and the proverbial “cranes in the sky.” Investors in greater Boston are finding decreasing yields, and are looking for better options in secondary and third-tier markets such as Rhode Island and Providence in particular, the analysis found.

Notable transactions in downtown Providence included the sale of the largely vacant Providence Journal building for $3.3 million to a partnership of Cornish Associates of Providence and Nordblom Co. of Burlington, Mass. The building continues to house the Providence Journal newspaper as a full-floor tenant, and is undergoing a renovation on remaining floors for a mix of retail and office spaces.

Notable retail transactions included 1500 Bald Hill Road in Warwick, which sold for $1.5 million, or $206 per square foot. The retail center includes tenants LA Fitness, Bed, Bath & Beyond and Jo-Ann Fabric and Craft Store. A nearby center, 1400 Bald Hill Road, sold for $4.4 million, or $179 per square foot. The property includes tenants Petco, The Tile Shop and Cycle Gear.

A shopping center near the Providence line, at 727 East Ave. in Pawtucket, sold for $9.1 million, or $239 per square foot. The center includes several retail tenants, such as Hillside Family Medical Center and a Rite Aid store. The Aldrich Building, at 72 Pine St. in downtown Providence, sold for $3.3 million, or $105 per square foot.

In the industrial market, lease rates remain depressed, and speculative development of more modern facilities with high ceilings and loading docks remains “non-existent,” the report states.

The lease rates in Rhode Island are $5 to $6 per square foot.

Significant transactions in 2015 included Ava Anderson Corp. leasing 121,000 square feet at 99 Main St., Warren, the former American Tourister mill. Alex & Ani LLC expanded its lease at the Bostich Staple plant in East Greenwich. And Toray Plastics (America) Inc. also is leasing space at the Bostich property.

In the retail market, investors acquired small strip centers and indoor mall properties.

A 223,900-square-foot section of the former Rhode Island Mall sold for $9.5 million to MCB Real Estate of Maryland, or $42.42 per square foot. The company has begun a renovation to transform the former mall into space suitable for mid-sized retailers.

The 225,000-square-foot Wampanoag Plaza in East Providence was acquired by a Florida-based private equity real estate company for $25 million, or $110.66 per square foot. This plaza is anchored by a Stop & Shop supermarket.

Belltower Plaza in Bristol was sold to a Massachusetts investor for $3.2 million, or $63.60 per square foot.

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