Matt Fair is a partner at Hayes & Sherry, the Providence-based commercial real estate brokerage firm, founded in 1990 with a portfolio of around 10 million square feet of commercial properties. Fair started at Hayes & Sherry as a commercial real estate broker in 2007, 15 years before he and two of his colleagues purchased the company from its founders, Pete Hayes and Karl Sherry. Hayes & Sherry’s clients have included FedEx, Citizens Bank, Amazon, Ventas, Wexford, Johnson & Wales University, FM Global, IGT, Chase Bank, CVS, and others. While Hayes & Sherry is independently owned and operated, it is a member of the Cushman & Wakefield alliance, a leading international commercial real estate services firm, which provides around 50,000 brokers across 60 counties with access to real estate service platforms in major markets throughout the world.
PBN: What does the Providence office market look like right now, in terms of the vacancy rate and other indicators, and what do you think about the current state of the Providence office market?
FAIR: At the end of the second quarter of 2024, the downtown office market had a vacancy rate of about 19.8%, which we anticipate will continue to increase over the next few years as leases roll and tenants continue to shed space. Rental rates have largely held up well, especially across the Class A market. This is mainly due to a “flight to quality” effect, where tenants are willing to pay more for their office space, while still maintaining similar budgets due to their reduced footprint. Companies are betting that by offering their employees a better quality workplace, with enhanced amenities, they’ll be able to get their people back in the office.
PBN: How do you think this Providence office market, including the downtown area, will evolve in the next five to 10 years, and beyond that?
FAIR: We’ve seen older office buildings being converted to residential and educational/institutional use for the past several decades. I think this trend will continue to diversify the downtown and ultimately add to the vibrancy. Figuring out the relocation of Kennedy Plaza along with the revitalization of the Superman Building couldn’t be more important to turning the corner in the financial district. If we can get those two things done, we’ll be in a much better place and have greater opportunities to attract new people and businesses to the downtown community.
PBN: What about your perspective on the Rhode Island commercial real estate market right now, in terms of not just leasing but sales as well? How strong is Rhode Island’s commercial market compared to past times?
FAIR: Believe it or not the market is still fairly healthy overall, I’d give it a solid b rating in layman’s terms. Strength and weakness are largely sector and quality dependent so it’s not an even playing field. Having lived through the great financial crisis of 2008, that was no doubt the low point of the past 30 years in the Rhode Island commercial market.
PBN: Is there any segment or type of commercial real estate that is in particular demand right now? If there’s no particular demand, which is easier to sell, and why?
FAIR: Residential, industrial, retail, and medical continue to lead the pack as far as growth and demand right now which in turn attract investor capital and liquidity. Interest rates have been a problem for the past couple of years and have certainly affected the capital/sales markets. We finally appear to have some relief in sight as the Fed has projected multiple rate cuts in the near future, which will hopefully increase transaction volume as we head into 2025 and beyond.
PBN: You recently leased a medical office at 825 N. Main St. in Providence. Can you tell us more about that, who will be occupying this space, what was there before, and what it was like to find a new lessee for the property?
FAIR: This was not a new lease but rather a new long-term renewal for a radiation oncology treatment center that plays an incredibly important part in the healthcare ecosystem in Providence. For spaces like this that are built out with a high level of acuity, in this case, radiation vaults with thick encased concrete and significant power infrastructure, it is very expensive and typically cost-prohibitive to relocate, which is something investors look for when looking to purchase real estate.
Marc Larocque is a PBN contributor. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockObama.