NORTHEAST SNAPSHOT, MAY 2008

Rhode Island Multifamily Market

McDonough

The Rhode Island multifamily market continues to ebb and flow with the conditions of the commercial real estate market. The majority of the new apartment development over the past 5 years has occurred in the northeasterly section of Rhode Island. The city of Providence has been experiencing an oversupply from recently constructed residential condominiums, and as the sale of individual units slows, apartment offerings are expected to increase notably in the near term. However, due to the limited supply of land and the lack of much new development, long-term over supply is not considered an issue.

As mentioned above, new multifamily development has been sparse in Rhode Island due to a limited amount of vacant land zoned for residential development. To help combat this issue, the majority of new multifamily product in the past few years has been mill conversions. In addition, in 2001, the state introduced an historic preservation investment tax credit of 30 percent, which also helped spur the conversion of Rhode Island’s many vacant mills.

ForestCity converted a former cotton mill in Cumberland, now known as The Riverlofts at Ashton Mill, into 207 one- and two-bedroom lofts. In West Warwick, the Streuver Brothers, Eccles and Rouse converted a 118-year old former velvet, corduroy and lace mill into an apartment complex. The 250-unit facility is now known as the Royal Mills.

The DSF Group recently completed its conversion of the Slatersville Mill in North Smithfield. Now called The Halstead at Slatersville Mill, the village complex has been renovated into a luxury 224-unit multifamily community spanning four buildings. Amenities include a 24- hour fitness center with an indoor sports court, a 24-seat private screening room, a business center, a residents’ lounge with 52-inch plasma TVs and billiard tables, a resort style swimming pool overlooking the Branch River, as well as walking and bicycle trails along the scenic river.

Although the state recently cut the historic tax credit, many developers are still finding ways to lessen the cost of conversion and development. Several recent mill projects will include affordable housing units to take advantage of incentives from the federal government. Depending on the location, rental rates in Rhode Island range from $950 to $1,500 for a newly constructed one-bedroom apartment to $1,200 to $2,000 for a newly constructed two-bedroom unit. Vacancy rates for the state’s multifamily market are sitting at 5 percent. In the future, the state will focus multifamily development efforts in the great metro area with an emphasis on center city rehabs.

— Gerard McDonough, MAI, is the managing director of Integra Realty Resources

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