38 Studios leaves big space to fill

'We were looking at Providence long before 38 Studios.'

When Blue Cross & Blue Shield of Rhode Island left One Empire Plaza in Providence for its new Capital Center headquarters in 2009, it only took a year for the building’s owner to find a new tenant, Curt Schilling’s 38 Studios LLC. More

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REAL ESTATE

38 Studios leaves big space to fill

'We were looking at Providence long before 38 Studios.'

PBN PHOTO/DAVID LEVESQUE
TENANT WANTED: One Empire Plaza in Providence was home to 38 Studios LLC for just over a year. The company’s sudden bankruptcy filing earlier this month has left 104,000 square feet of vacant office space.
Posted 6/18/12

When Blue Cross & Blue Shield of Rhode Island left One Empire Plaza in Providence for its new Capital Center headquarters in 2009, it only took a year for the building’s owner to find a new tenant, Curt Schilling’s 38 Studios LLC.

Replacing 38 Studios, which vacated the building before filing for bankruptcy this month, might not be so easy.

The video game startup was lured to Providence with a $75 million state-backed loan that required rapid hiring of in-demand, highly skilled workers who needed a large, modern building in a desirable part of town.

Similar deals are unlikely to reappear anytime soon and the kind of companies that are looking for space these days tend to be much smaller.

“It’s a 100,000-plus-square-foot building and that size of tenant just isn’t around,” said Mike Giuttari, president of MG Commercial Real Estate.

As a result, the Empire office-space submarket that had been approaching full occupancy at the beginning of the year – after vacancy rates of more than 30 percent in 2010 – will likely see that rate spike up again.

Last year the vacancy rate for the total 6 million-square-foot downtown Providence office market dropped 3 percentage points to 19 percent, according to CB Richard Ellis New England.

Out of the roughly 3.6 million of that in the core Downcity area, the 104,000 square feet of One Empire Plaza is a noticeable chunk.

“It is a lot of square feet to dump in downtown Providence,” said developer and landlord Joseph Paolino Jr, who owns nearby 444 Westminster St., which was leased by the city planning department last year. “I know there was a lot of money spent in there and it is a nice area, so it should be marketable. But it is a good institutional building, not necessarily a good multitenant building.”

Built in 1981, One Empire Plaza was bought in 2008 for $26.7 million by Berkeley Investments of Boston along with 15 LaSalle Square from Blue Cross, which remained briefly as tenant while its new building was under construction.

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