The 6.4-million-square-foot metro Providence community-neighborhood shopping center market remained weak through the third quarter of 2012. In the second quarter 11,000 square feet of negative net absorption pushed the vacancy rate up 10 basis points to 13.1%, and was up 50 basis points from a year earlier. Another 19,000 square feet of negative net absorption had been recorded by August, and preliminary third quarter data put the vacancy rate at 13.5%, a new high for the cycle. It is expected to end 2012 at the same level, and then fall very slowly.
The 250,000 square feet of negative net absorption recorded in 2009 and 2010 brought a halt to community-neighborhood center construction, and any revival is expected to be limited. The 14,000-square-foot first phase of the Village at Berkley Commons neighborhood center did complete construction in Cumberland in September; a 7,000-square-foot second phase is planned. Existing centers of this type, however, continue to face competitive pressure from big-box developments. In addition to those listed in the sidebar, the 875,000-square-foot Stonehill Marketplace remains under construction in Johnston. “Existing tenants include: Home Depot, Burlington Coat Factory, PetsMart, Deal$, BJ’s Wholesale Club, Ruby Tuesdays, Sleepy’s, Aspen Dental, and Bon Asian Bistro,” according to developer Carpianato Group, which is seeking more tenants.
Community-neighborhood center rents are edging up. The average asking rent edged up 0.1% to $20.97 psf in the second quarter, and edged up another 0.1% in the third quarter, according to preliminary data. The average effective rent rose 0.2% to $17.97 psf in the second quarter and was at the same level in August. Reis predicts respective gains of 0.3% and 0.6% for all of 2012, with the expected annual gain rising by about 100 basis points per-year to increases of 3.3% asking and 3.7% effective forecast for 2015.