Thomas Sweeney is the principal and chief appraiser of Sweeney Real Estate & Appraisal, a commercial real estate firm based in downtown Providence. He is a graduate of Providence College.
Sweeney responded recently to questions posed by the Providence Business News about how the industry has changed in recent months.
PBN: Tell us about a recent, notable transaction.
SWEENEY: We represent a group that is selling off a portfolio of multifamily investment properties around Rhode Island. We have had lots of success in selling the assets for this group, most recently with the sale of a 24-unit in North Providence for $1.2 million. Of the 17 assets, we only have four opportunities left. There is a strong population of qualified investors in the market.
PBN: Have you found more commercial listings or fewer listings since the COVID-19 pandemic became an issue in Rhode Island?
SWEENEY: The commercial real estate market isn’t as volatile as the stock market. The activity of properties coming online and going under contract is steady. There is certainly the process of trying to ascertain what the impact will be, but we have only seen about 1% of our current listings be put on hold due to COVID.
PBN: What has changed the most in office space since the pandemic for your firm? Are commercial tenants still coming in or has that stopped?
SWEENEY: As many of us have experience working from home previously, we are seeing an increase of highly productive and complex processes being handled remotely. Personally, I have participated in remote closings and town hall hearings. We are all becoming masters of Zoom.
The office users, while they are starting to return to their offices, we are seeing that heavily depends on the location of the company. Those that are in heavily populated areas, with a reliance on public transport, are keeping more numbers at home, while those that are in single-tenant buildings with private parking may hold a larger staff presence.
You may think that with more people working from home, office users would be reducing their square footage requirement, but we believe that this will be offset by new regulations put in place for social distancing. We expect to see a trend of short-term lease requests while businesses flex with these new influences.
PBN: What has changed for industrial sites? Curious if listings or activity is similar to pre-pandemic era.
SWEENEY: The industrial market in Rhode Island has continued to have an ongoing trend of lack of inventory. Properties that are appropriately priced are a highly sought-after commodity. We don’t expect to see activity or pricing diminish, as the pandemic has brought forth more regulations and demand on manufacturing and distribution uses. If anything, we may see a spike of activity in Q3.
PBN: How do you see the rest of 2020 playing out for commercial real estate in general?
SWEENEY: We will see higher vacancy in the retail market as it continues to suffer, especially restaurants. Which is unfortunate, as Rhode Island has some of the best dining in the country. We expect to see a slight increase in office vacancy as businesses finish the year working from home. I wouldn’t expect office staff to all be back full time until Q2 2021.
This pandemic has forced owners to rethink not only how they conduct business but the timeline of their businesses. Those that were staying with their business because the economy was strong are moving on to other things and letting the business run out its course.