When Rick Antonelli went shopping for an office for his company, Galaxy Nutritional Foods, he found landlords willing to compromise on rent, pay to renovate the office and otherwise generally extend a helping hand. The CEO ended up with a 6,000-square-foot office in Quonset Business Park in North Kingstown and a monthly rent half the price of his former Florida office of roughly the same size.
“We were welcomed with open arms,” said Antonelli, who visited at least four suburban Rhode Island communities in search of space. “People very much wanted to attract our business.”
Even as office-vacancy rates in suburban Rhode Island slip, people close to the industry say it remains very much a tenants’ market. Earlier this month, CB Richard Ellis-New England reported vacancy rates in suburbia fell from 25.5 percent at the end of last year – the highest in at least a decade – to 22.6 percent at the end of June. Even with the slip, the rate remained the second highest in at least 10 years, according to the commercial real estate company.
CB Richard said 1.7 million square feet of space was available to tenants in a marketplace with 7.6 million square feet of space. And average lease rates have remained largely stagnant during the past three years after seeing small gains during the previous seven years.
CB Richard Senior Vice President Alden Anderson said the poor economy weighed on the market. Companies shedding employees need less physical space and the downtrodden economic outlook leaves business executives hesitant to expand or move.
“Demand is driven by job growth and we’re not seeing job growth,” Anderson said. “Until we see more job growth we will see more of a shuffling of cards than a true absorption of the space.”
Brokers saw movement this year in the West Bay as companies left offices flooded by the record March rainfall. That helped drive down the vacancy rate from 26 percent to 19 percent. Vacancies also fell because, in many cases, companies that relocated retained their leases to flooded offices even as they stood empty. And the Federal Emergency Management agency snapped up 50,000 square feet of space for a temporary office housing workers responding to the flooding.