At our 2018 Rhode Island Market Overview our Rhode Island team presented on the state of the industrial, office and investment markets.
“22 companies have chosen Rhode Island over anywhere else…invest in Rhode Island. Let’s keep going.” – Governor Gina M. Raimondo
The panel portion of the morning was lead by Jeff Havsy, Chief Economist of CBRE Americas and Managing Director of CBRE Econometric Advisors. Jeff spoke of the recent changes in Rhode Island, the tax policy that passed in December, GDP growth, interest rates, retail sales and global tailwinds. Jeff ended his discussion with five concerns for 2018: inflation, Presidential management style, Brexit, consumer confidence and emerging market debt.
Andrew Galvin, First Vice President, spoke of the Rhode Island Office market trends. He stated that downtown office buildings that perform well have walkability to public transit, and suburban office buildings that perform well have high parking ratios. Jeff chimed in and stated that landlords need to keep in mind that the way we transport individuals will change (self-driving cars, ride share). Therefore, landlords need to think of short-term temporary solutions for parking. Andrew additionally spoke of the necessity for Rhode Island landlords to attract and retain talent from the local universities and colleges.
“Downtown vacancy is at 11.9% and is down for the third straight year… On the suburban side, in aggregate, the suburban vacancy rate is 12.4%, which is down from a high in 2009 of 25.5%” – AG
“In the last 60 months in the Financial District, rents have increased 13.4%, or nearly 2.7% per year on average” – AG
Alden Anderson covered the Rhode Island Capital Market trends, stating that “Industrial is a very desirable asset class today for investment if the buildings fit key design parameters of easily accessible and clear height in excess of 20-24’.”
Investors are noticing Rhode Island. Alden has observed investors focusing on areas with millennials, amenities and the live-work-play environment. The market is starting to get validated by transactions taking place and big brand name companies coming to Rhode Island.
Tom Barry, Vice President, covered the Rhode Island Industrial market, stating that, “a major theme of the past year was the continued growth of the manufacturing sector, which continues to account for a higher percentage of transactions than warehouse space.” Nationally from 2012-2017, ceiling height and square footage increased for the average warehouse space, which Rhode Island has a limited supply of. While speculative construction has not happened, there are plans in the works. Tom mentioned that he expects big box retail stores to come on the market, which could be a creative way for developers to create industrial space. Jeff chimed in and stated that retail centers converting to an industrial use (distribution or last mile) has been a national trend.
“The Rhode Island Industrial market in 2017 continued to exhibit solid prospect activity and deal execution bringing the vacancy rate to another record low of 1.72%.” – TB
To wrap up the presentation, we were fortunate to welcome Providence Mayor Jorge Elorza, who left us with this solid takeaway, “It’s impossible to have a strong and vibrant Rhode Island without a strong and vibrant capital city… and vice versa.”
Visit the CBRE/New England Vimeo page for an audio clip from the event.
Did you miss our Boston or Hartford Market Overview recap? Click here to catch up.