NORTHEAST SNAPSHOT, JUNE 2005
Rhode Island Industrial Market
Due to the lack of industrial development in Rhode Island over the last few years, end-users are looking toward more build-to-suit projects than in the past. “The trends seem to be heading toward build-to-suits, although when they can, companies still prefer to purchase existing properties well below replacement costs,” says Jeff Finan, a partner at Providence, Rhode Island-based Hayes & Sherry Real Estate Services.
Before, the leasing and buying of existing product was always a far more popular option than build-to-suit. However, according to Finan, the dearth of quality product has a number of companies opting to either upgrade and add on to their existing facilities or look to build-to-suit opportunities.
Because of this lack of quality modern space, industrial parks with infrastructure in place are thriving. “Parks with existing infrastructure and that are located along major access points have seen land values increase dramatically over the past few years,” says Finan. “From the early 1990s to 2000, land values were in the $60,000-to-$85,000 range per improved acre range. In today’s market, it is not unusual to find values of $150,000 per acre or higher.”
Industrial developments in northern Rhode Island have been thriving of late, due in large part to close proximity to the Massachusetts border. One such project that is receiving an influx in interest recently is the Highland Corporate Park in Cumberland, Rhode Island. With its infrastructure in place, attractive parking and proximity to the Massachusetts border, it has been extremely successful for developer Highland Corporate Park Ventures, according to Finan. Tiffany & Co. recently constructed a state-of-the-art, 100,000-square-foot manufacturing plant on 22 acres within Highland. Also, Trilateral, a joint venture between Harvard, Yale and Massachusetts Institute of Technology, has developed a 150,000-square-foot facility on 12.5 acres in the same park.
The western Cranston area, which is located along Route 295 just south of Providence, has also seen a surge in activity, with a number of build-to-suits under consideration off Plainfield Pike and in the new 185-acre Lakeside Commerce Center.
Most landlords and developers are seeking manufacturing and back office businesses (call centers) as tenants. Much of the leasing activity is made up of local companies expanding and consolidating within the state.
Triple-net rental rates for industrial properties range from $3 to $7 per square foot. Finan says that the vacancy rate is in the high single digits in the state’s premier industrial areas in the cities of Cranston, Providence, Pawtucket, Warwick and West Warwick.
In the near future, South County in southern Rhode Island is an area to watch for new growth. The abundant available land will attract interest, though Finan cautions that most of the land is raw and in need of infrastructure to really begin attracting prospects. As activity in Rhode Island continues to heat up, look for a continued increase in build-to-suit projects, as companies seek to create and inhabit modern facilities.
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