MG Commercial Real Estate" width="180" height="250" /> Mike Giuttari, MG Commercial Real Estate2015 was a year that we may consider, or look back on, as a peak in the never ending real estate cycle. It was very active on the sale side and even the downtown started to awaken on the lease side, something that has been stagnant over the last few years. A result of this high level of activity has been a continuing depletion of the minimal inventory that Rhode Island lives with year to year. Although all indications are for another good year during 2016, the even greater lack of inventory will put a lot of pressure on the market to reach 2015 levels.
Industrial Within the industrial market, the demand and need remains strong, but the complete lack of any spec development leaves the existing requirements either doing nothing and living with their inefficient situations during 2016, leasing some short term, off-site space, or trying to figure out how to expand their existing facility. 2015 saw most of the larger requirements in the market for modern buildings satisfied. Wildtree Herbs purchased 15 Wellington Rd. in Lincoln (144,000 s/f). Ardent Displays purchased 275 Ferris Ave. in East Providence (303,000 s/f). Antaya, looking for 150,000 s/f during 2015, should finalize a deal in Warwick this month. The long vacant, 250,000 s/f facility at 2700 Plainfield Pike in Cranston, has seen a high level of continual activity but the financial institution in Chicago that owns the building remains intent on keeping the building empty due to internal value situations and turning away multiple fair market value offers. 2000 Plainfield Pike (230,000 s/f) will become available in July as Honeywell vacates the property, and takes this division out of Rhode Island.
Office There is movement in the office market, which is good for the brokers and not so good for some property owners. The movement comes from shifting within the market, rather than new users coming in from outside the market. Tenants are looking to upgrade or expand, but the landlords left with the vacancy, mostly B space, could see a lengthy recovery process. The suburbs remain very active at locations such as 24 Albion Rd. and 640 George Washington Hwy. in Lincoln and Airport Professional Park and The Summit in Warwick. All of these locations continue to review multiple prospects at the same time. Downtown, there are multiple legal and accounting firms in search of new space, shifting from long occupied space to different space within the city, sometimes in search of parking, which can be a $5-$8 per s/f operating expense line item for the tenant. Of note is the Citizens consolidation/move, which is a 400,000 – 500,000 s/f office move within the state affecting thousands of workers. Will Providence lose? Who will be the big winner, Johnston, Smithfield, Warwick? This should be determined during 2016.
Retail Retail in Rhode Island is going through an up and down cycle more than usual. Garden City continues its expansion and conversion into an elite shopping experience with the top national retailers and the opening of the first New Balance store in RI and a new Crate & Barrel location. In the same Cranston / Warwick area, the “Rhode Island Mall” continues its change into a big box location with a major internal reconfiguration going on during 2016 and the welcoming of Burlington Coat Factory as the first new tenant and a few other large retailers to be announced during 2016. On the negative side, The Providence Place Mall has lost J. C. Penney and the recent announcement of Joe’s American Bar & Grill closing, one of the anchor restaurants, leaves some large vacancies to fill in an urban location where the retail trend more and more in Rhode Island seems to be pushing to the suburbs. Joe’s closing leaves another major restaurant vacancy in a city known for its variety and quality of food. The recent move of The Capital Grille “across the street” to Memorial Blvd. into the vacant Ruth’s Cris Steak House location, which leaves another large restaurant space vacant within a short walk of Joe’s, shows some consolidation in the Providence restaurant scene and just how competitive the dining experience is in Providence.
2016 Outlook 2016 will be seen as the year that the “195 Land” really took off. The South Street Landing project is underway, creating hundreds of thousands of square feet for Brown University, University of Rhode Island and Rhode Island College. The large parking garage in between South Street Landing and the location of what was to be the Pawtucket Red Sox stadium is under construction. Churchill & Banks will be coming out of the ground on Parcel 8 of the 195 Land with a mixed-use development including office space, retail space and rental housing. A major life sciences project is proposed for parcels 22 and 25 that could be in excess of 1 million s/f. It would be a joint effort between Brown University (adjacent to its medical school), Wexford and CV Properties, developer of the South Street Landing project. Finally, in 2016, I can watch long awaited 195 Land development out my office windows.
Mike Giuttari, SIOR, is president of MG Commercial Real Estate, Providence, R.I.
