Corey Casale

The University of Rhode Island

Friday, August 5, 2016

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Providence Vacancy Rates

Providence Office Market
At the end of the third quarter 2015,
the oce vacancy rate within the
Providence Oce market was 8.2%.
The fourth quarter 2015 closed with
an oce vacancy rate of 8.1%, 7.9%
at the end of the first quarter 2016,
and 7.3% at the end of the second
quarter 2016.
Statistics are showing that there is
less oce space available today than
at this time last year. The vacancy
rate is providing us with enough
information to determine that
available oce space is being filled,
thus lowering the overall vacancy rate.

Providence Office Class Projects

The Providence Oce market is divided into three project classes. The first class, Class-A projects, have
the highest rents. The high rents are a result from the buildings top notch qualities. These qualities
include, but are not limited to, being some of the newest and highest quality buildings that have a superb
building infrastructure, good access, and are managed by professionals. At the end of the third quarter
2015, the vacancy rate was 15.6%, followed by a fourth quarter 2015 vacancy rate of 16.0%, then a 15.9%
first quarter 2016 vacancy rate, and a second quarter 2016 vacancy rate of 15.7%.
The second class, Class-B projects, are buildings with similar qualities as Class-A project buildings, but
they are a bit older. Starting with the third quarter of 2015, the vacancy rate was 7.1%, which stayed
steady for a 7.1% vacancy rate at the end of the fourth quarter 2015. The vacancy rate improved to 6.9%
after the first quarter 2016, and improved once again to 6.5% by the end of the second quarter 2016.
Market Report

Corey Casale

The University of Rhode Island

Friday, August 5, 2016

The least desired third class, Class-C projects, have the lowest
vacancy rate out of the three project classes. The third quarter
2015 vacancy rate was 6.7%, followed by a 6.3% vacancy rate for
the fourth quarter of 2015, 6.1 % at the end of the first quarter of
2016, and a 5.0% vacancy rate to close o the second quarter of
2016.

Providence Office Sublease Vacancy

Providence saw a drop in vacant sublease space at the end of the
second quarter 2016. At the end of the third quarter 2015, there
were 50,608 square feet of vacant sublease space. The amount of vacant space rose by the end of the
fourth quarter of 2015 to 61,188 square feet. 2016 has brought some improvement with a decrease in
vacant sublease space down to 55,605 square feet at the end of the first quarter, and down to 31,245 by the
end of the second quarter of 2016.
Class-A projects saw a drop in vacant sublease space from 15,948 square feet at the end of the third
quarter of 2015, to 12,615 square feet by the second quarter of 2016. Class-B projects have seen a major
shift in vacant space from 31,310 square feet at the end of the third quarter of 2015 to 5,280 at the end of
the second quarter of 2016. Class-C projects saw a positive shift from the first quarter of 2016 to the
second quarter of 2016, but saw a negative shift from the third quarter of 2015 with only 3,350 square feet
vacant space to 13,700 square feet of vacant space at the end of the first quarter of 2016.

Providence Industrial Market

The Industrial Market vacancy rate at the end of the third quarter of 2015 was 6.1%. The first quarter pf
2016 saw a vacancy rate of 6.8% at the end of the quarter, but it soon dropped to 5.7% at the end of the
second quarter of 2016. Flex projects saw a drop from 11.6% at the end of the first quarter 2016 to 11.0%
at the end of the second quarter 2016. The vacancy rate for warehouse projects at the end of the first
quarter of 2016 was 6.5%, which dropped to 5.4% by the end of the second quarter of 2016.

Providence Industrial Sublease Vacancy

Providence Industrial Market sublease vacancy had a negative turn from the first quarter of 2016 to the
second quarter of 2016. Sublease vacancy went from 14,900 square feet to 22,240 square feet.

Providence Market Outlook

The Providence Market has seen positive change over the last two quarters. 2015 vacancy rates were high,
meaning there was more space to sell or lease. The commercial real estate cycle will hopefully continue to
drop vacancy rates for the next half a year, and then the cycle will cause vacancy rates to rise once again
giving brokers more opportunities to sell or lease properties beginning late next year. Although the
industry is very dependent on the economy, I feel that a dip in our countries economic strength will not
be as much of a contributing factor if we are to encounter a recession before the next cycle creates a peak
in commercial real estate sales and leases.

Market Report