Providence, R.I. Apartments Stabilize, Increase Rents
- Aug 16, 2010
Providence, R.I.–Despite its 11.5 percent unemployment rate (as of June 2010, according to the U.S. Bureau of Labor Statistics), Providence, R.I.’s apartment market is relatively stable.
“We have limited land for development in Rhode Island, and this in itself has mitigated a lot of over-development,” points out Jerry McDonough, managing director in the Providence, R.I. office of Integra Realty Resources, a commercial real estate valuation, counseling and advisory services firm.
Occupancy rates in Class A apartment buildings are in the 90 percent to 95 percent range, according to McDonough, and while there had been some rent concessions and reduced security deposits, the market began to see some rental increases in the second quarter of this year.
The well-maintained 1960s and 1970s product is experiencing similar occupancies to the newer communities, while older, walk-up buildings are in the 85 percent to 90 percent range, which, McDonough tells MHN, “is higher than expected, but that’s because lenders are actually trying to vacate their buildings so they don’t have the management overhead while they foreclosure.”
Meanwhile, pricing is difficult to determine, since there haven’t been any notable transactions, though McDonough estimates that the newer facilities have seen about a 20 percent drop in pricing.
McDonough believes the market has hit bottom, though, as evidenced by the rental rate increases. He also asserts that the city’s accessibility to Boston and its lower pricing—compounded with the lack of new development—position the market for a stable future.