Throughout 2018, Rhode Island’s single family home market was characterized by demand outpacing supply. In May 2018, the Rhode Island Association of Realtors reported the state’s median single family home price reached $275,000, a 10% increase over the previous May. And, late 2018 reports showed home values were still rising, particularly on the East Side of Providence. With residents left to explore other housing options – and with a continued statewide focus on economic development and business expansions on the horizon – 2019 looks to be another strong year for multifamily investment real estate in Rhode Island.
The Rhode Island multifamily market
Beyond single family homes values, another driver for multifamily demand is the expansion of General Dynamics Electric Boat’s Rhode Island Facility, which was announced last May, and will create 1,300 new jobs heightening demand for workforce level housing. Further, The Wexford Innovation Center, located in Providence’s Innovation and Design District, is projected to create more than 1,000 jobs when it opens later this year.
Similar to nearby markets Connecticut, Massachusetts and New York, Rhode Island is also seeing its fair share of adaptive reuse projects bringing new multifamily units to market. An example of such, the Imperial Knife Factory was recently converted into 60 apartment units.
Among Northeast PCG’s current Rhode Island multifamily offerings are:
- Governor Street Apartments, a six unit multifamily property in Cranston being offered at a cap rate of 6.88 percent
- Ambassador Apartments, a 36 unit multifamily property in Providence being offered at a cap rate of 5.5 percent
- Columbus Lofts, a 79 unit multifamily property in Pawtucket being offered at a cap rate of 6.5 percent (a former mill, the entire property was renovated in 2018)
Economic development in Rhode Island
Governor Raimondo’s 2019-2020 budget plan, which was unveiled in mid-January, proposes additional funding for the Rebuild RI tax credit program for property development. Further, a Site Readiness Initiative to help municipalities prepare land for business development has been proposed by Commerce RI.
According to the Greater Providence Chamber of Commerce there was $500 million in construction underway in Providence alone during November 2018. In late 2018, three new “innovation campuses” were also announced in Rhode Island – in Kingstown and Providence – aiming to strengthen the economy and bolster job creation.
Rhode Island is also home to 25 Opportunity Zones, designated by the U.S. Treasury, where investors can benefit from tax incentives for helping to revitalize economically-distressed communities. Currently, Northeast PCG is offering an 11 unit commercial property in North Providence that is located within an IRS Identified Qualified Opportunity Zone. Learn more about Mineral Spring Ave Redevelopment.
“Commercial assets in the Providence submarket provide investors a higher yield than they are currently capable of finding in Greater Boston markets,” investment associate Timothy McGeary said. “With great neighborhoods on the East Side near Brown University, and Federal Hill near downtown, Providence is a market that continues to deliver rent growth and asset appreciation.”
As investors seek opportunities to expand their portfolios in 2019, the Rhode Island real estate market offers upside in multifamily as well adaptive reuse opportunities across market sectors.