The 13.3-million-square-foot Providence general purpose, multi-tenant office market is essentially stable, but there is little sign of an impending boom. The 16.1% vacancy rate in the second quarter of 2012 was down 20 basis points during the period and 50 from a year earlier. Preliminary data put the third quarter rate at 15.9%. Two new buildings completed construction during the second quarter, the 40,000- square-foot office at the Shops at Quonset Point in North Kingston and the 45,000-square-foot 125 Metro Center Boulevard in Warwick. Reis reports 2012 net absorption through August at 143,000 square feet and new supply at 85,000 square feet.
Reis predicts net absorption for all of 2012 at 165,000 square feet. New supply for the year is forecast to be similar, as the 25,000-square-foot Taco Innovation Center completed construction in central Providence in September, leaving the 75,000-square-foot Dowling Village in North Smithfield under construction. The vacancy rate is forecast to end 2012 at 16.2%, but then change little through 2015 as new supply stalls out but so does net absorption.
Rents remain flat. In the second quarter, for the second quarter in a row, the average asking rent fell a penny to $20.41 psf, while the average effective rent was unchanged at $17.23 psf. The asking average fell another penny in the third quarter according to preliminary data, while the effective average was unchanged as of August. Reis predicts an increase of 0.4% asking and 0.2% effective for all of 2012, but it will have to take place in the fourth quarter. Moderate annual rent gains are forecast to follow that turnaround.
Cushman & Wakefield reports a vacancy rate of 18.6%, down 230 basis points from a year earlier, and a direct asking rent of $17.20 psf, down 1.4%.