Demand is still there, activity has not decreased, but lack of inventory of all types is a real concern - by Mike Giuttari

MG Commercial Real Estate" width="150" height="150" /> Mike Giuttari, MG Commercial Real Estate

After coming off an excellent, and in some ways, record-setting year in 2015, 2016 will have a lot to live up to, but as in the past few years, we will have to work very hard to find suitable locations for our clients. One of our chief concerns, which has been a concern for years, but now exacerbated due to a very active 2015, is the real lack of inventory in all product types. In Rhode Island, the demand is still there, the level of activity that the brokers are going through each day has not decreased, but the reasonable locations to place buyers and tenants continue to decrease.

Industrial Within the industrial market, the demand remains strong, but the complete lack of any spec development leaves the 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 add on to their existing facility. During 2015, we saw much of the large requirements fulfilled. What we are seeing during the first half of 2016 are generally smaller requirements, 10,000 s/f up to 30,000 s/f hunting for better space. Although a few larger searches are around, or have been fulfilled this year, the majority of the activity is in the < 50,000 s/f size range.

Office The first half of 2016 has seen a flurry of movement in the financial district of Providence. No less than five or six requirements larger than 10,000 s/f in size are seriously looking around the financial district. One of them just recently secured 12,500 s/f at 10 Dorrance St. The rest of the Providence CBD continued to show moderate activity while the suburbs have seen a slow start to 2016. Northern Rhode Island, the west bay sub-market south of Providence and the East Bay area have seen minimal new activity. Even the prospects that are out looking, many times will be recaptured by their existing landlords realizing they shouldn’t lose what they have, given the low level of suburban activity. Although it sounds like a broken record, in the south, the top quality properties such as any of Michael Integlia & Co.’s product at The Summit, Jefferson Gateway and Metro East continue to see excellent prospect activity with new lease showings, and condo unit sales at the Summit (another 4,500 s/f unit at the end of May). Generally though, the suburban market, outside of Providence, has seen below average activity for the first half of 2016.

One continuing paradox in the office market is that while we can show good activity for the sale of downtown Providence office buildings, they are not for office uses. Almost every recent sale has been for a residential conversion; 170 Westminster St., 32 Custom House St., 20 Westminster St., 290 Westminster St., 95 Chestnut St. and the recent sale of the 120,000 s/f old Providence Journal building and the adjacent Kresge building.

Retail The retail market continues to look hard for only the best locations, not settling for the 2nd choice. One segment of the retail market that remains strong is the do it yourself, fix-it industry. Both O’Reilly Auto Parts and Tractor Supply have three new locations in the area, with more to come. The latest being in Johnston where a new O’Reilly Auto Parts is being constructed as a pad site to a larger new Tractor Supply location.

Another concept in the food arena that is growing very and expanding in Rhode Island quickly is CilantroMex (cilantromex. com). Based out of Conn., CilantroMex now has nine locations in the northeast and will be opening two more shortly. They are locating both inside malls and in inline space in retail centers. There are fast expansion plans for this company, and the two latest openings were in Syracuse, N.Y. at the Destiny Mall and in Albany, N.Y. at the Crossgates Mall.

Garden City in Cranston will continue its extremely successful makeover during 2016. The next big opening will be an L. L. Bean outlet during the next quarter. Additionally, the old Rhode Island Mall continues its transformation into a new, bigger box concept with Burlington Coat Factory, Dick’s Sporting Goods and Planet Fitness rumored to be the initial tenants.

Other Significant Happenings During 2016 The major downtown development continues to be the 270,000 s/f, $220 million South St. Landing project on the water in the Jewelry District. Brown University / University of Rhode Island / Rhode Island College will occupy space in the development, generally administrative space for Brown and a new nursing school for URI and RIC. Along with this development, is an adjacent parking garage under construction that will accommodate parking for 744 cars. The building is scheduled for occupancy in the summer of 2017 and the parking garage will be complete in the fall of 2016.

Another major announcement is that Citizens finally made their decision during the first half of 2016 to leave the city and consolidate operations into a new 420,000 s/f facility they will build at a new interchange on Rte. 295 in Johnston.

Mike Giuttari, SIOR, is president of MG Commercial Real Estate, Providence, R. I.