Providence Office Market
Source: Hayes & Sherry, an affiliate of Cushman & Wakefield
Average asking rent
Providence office market
per square foot
Total vacancy rate
The office market in Providence, the state’s capital and largest city, can
best be characterized as “steady as she goes.” Vacancy rates have been on
a downward slope since 2013, helping to drive steady, though moderate,
increases in asking rents, according to a market report by Hayes & Sherry,
an affiliate of Cushman & Wakefield. The city’s office market is projected to
continue to strengthen in the near term, driven by tenants from outside
Providence as well as new state-sponsored, jobs-based tax credits and
other economic incentives.
There is limited new office development, however, even as older buildings
in the city’s downtown, in particular, are converted to apartments or for use
by educational institutions. That has led to tightening market conditions
that favor landlords. One major private development underway in the city
is a 195,000-square-foot office building that has lease commitments from
Brown University, Cambridge Innovation Center and Johnson & Johnson.
What the locals say
“Providence is one of the older cities in the U.S., and it has a lot
of old buildings. A lot of [these former office] buildings have
been converted to residential, so that takes away from supply.
… We don’t build on spec and most companies who want space
want it now. So, it’s hard to find a large block of space. We’re not
going to be in an overbuilt situation, because we’re not building. What I’m nervous about when you do have a requirement
is not having places to put companies.”
By Bill Conroy
The Ocean State’s economy is accelerating.
The “Ocean State,” as Rhode Island is known, is the smallest state in size but
it also claims some 400 miles of coastline, which helps to propel its tourism
and maritime industries.
The state’s median household income, at $60,596 in 2016, was slightly higher than the national average and the median value of an owner-occupied
home in Rhode Island was about 20 percent higher than the national average, according to a report by U.S. News & World Report.
Rhode Island’s economy, however, has suffered through some doldrums
in recent years. The Ocean State’s gross domestic product (GDP) grew at a
compound annual rate of 0.3 percent between 2007 and 2017, compared with the national growth rate of 1.2 percent over the same period.
The state’s unemployment rate as of this past May exceeded the U.S. unemployment rate by some 60 basis points.
Last year, however, the state’s economy started to show some signs of
accelerating. Rhode Island recorded the third-highest rate of wage growth
nationally between December 2016 and December 2017, with average hourly
wages jumping by 8. 3 percent. In addition, Rhode Island’s GDP growth in the
third and fourth quarters of last year jumped by 3. 5 percent and 2.7 percent,
respectively, according to the U.S. Department of Commerce.
Major corporate players operating in the state include Amica Mutual
Insurance, Citizens Bank, CVS Pharmacy and FM Global, making Rhode
Island a major center of finance in New England. The finance, insurance
and real estate sector accounts for more than a quarter of the state’s GDP,
according to Department of Commerce figures. The sector is supported by a
number of universities and colleges, including Brown University, Providence
College and the University of Rhode Island, which provide industry with
access to a diverse and highly skilled talent pool.
Manufacturing is another major driver of Rhode Island’s economy, representing some 8 percent of the state’s output of goods and services, and
employing nearly 42,000 people, according to the National Association
of Manufacturers. Other industries that fuel the Rhode Island economy
include tourism, which draws more than 24 million visitors to the state
annually; and marine trades, with ship and boat building representing the
bulk of the employment.
Rhode Island also is home to major U.S. Navy operations, including the Naval
Justice School and the Naval War College. With some 30,000 people
employed directly or indirectly in defense-related jobs, the state is a
significant player in the defense industry, with much of that work supporting
U.S. submarine construction. n
Partner, Hayes & Sherry,
an affiliate of Cushman & Wakefield