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s we enter the second quarter of 2025, Rhode Island's industrial real estate market remains stable and growing, with low vacant rates ranging from 3% to 4% for modern buildings. This is significantly lower than the national average of 6-7%. Lease rates are expected to remain steady, with bulk warehouse space in the $6-$7 per s/f range, general purpose industrial space at $7.00-8.50 per s/f, and flex space at $10-$12 per s/f.

    The demand for industrial spaces is driven by key sectors such as e-commerce and logistics, manufacturing, and life sciences/pharmaceuticals. Retailers and 3PL providers are seeking larger facilities with modern amenities to meet the demands of e-commerce fulfillment. Top manufacturing sectors in Rhode Island include transportation, food processing, aerospace/defense, biopharmaceuticals, HVAC products, jewelry, and textiles/plastics/films.

    Notable recent lease transactions include Metropolitan Pipe & Supply Co.'s 48,000 s/f lease at 1600 Division Rd. in West Warwick, Visual Creations' renewal of their 110,000 s/f lease at 340 Waterman Ave. in Smithfield, and Pilkington's renewal of their 16,500 s/f lease at 1048 Wellington Ave. in Cranston.

    The supply of available industrial land sites is low, but a recent sale of 8.92 acres off Sharpe Dr. in Cranston for $2.7 million to a local investor/developer suggests that demand remains strong. The Comstock Industrial Center, a proposed development project in Western Cranston Industrial Park, will deliver a 70,000 s/f high-bay warehouse building and a 200,000 s/f build-to-suit high bay warehouse building.

    Investors continue to recognize the industrial sector's stability, driving steady demand for investment opportunities. However, interest rates are causing investors to be cautious about underwriting. A notable recent investment transaction is a 39,120 s/f industrial building on Market St. in Warren purchased by a local investor for $3.2 million.

    Low vacancies and higher interest rates have led to fewer buildings coming available for owners/users, forcing some potential end-users to lease rather than purchase. Despite this, the leasing market remains strong, with landlords becoming more competitive to attract tenants. Recent sale transactions include a 38,000 s/f industrial building in Cranston sold to a current tenant for $3.25 million and a 23,000 s/f industrial building under contract in Providence.

    The outlook for Rhode Island's industrial real estate market heading into spring 2025 is positive, with steady demand expected to remain low vacancy rates. Rents have moderated as more supply has come online, but the leasing market remains strong. The sale market continues to be driven by a low supply and steady demand, sometimes leading to multiple offer scenarios.