Re-leasing a 35-year-old Johnston building with about 346,000 square feet of commercial space poses a few unique challenges, but New York-based Capital Lease Funding Inc. said it wouldn’t have bought the Central Avenue building now occupied by FM Global if it didn’t think it could re-position the space.
CapLease bought the building in 2007 and it will be leased by FM Global until next summer, when the company is expected to move into new headquarters being built literally across the street. Built in 1973, FM Global has occupied its current space since the early 1980s, said CapLease Senior Vice President Gary Landriau. Though the commercial- and industrial-property insurer leases the building, it owns the 26 acres on which it is situated.
The building’s age and design present a few challenges, Landriau explained.
“The building, for example, right now has 12 escalators,” he said. “I think those escalators are enormously inefficient. You could even say impractical. I don’t see a future for the escalators in this building.”
For that and other issues, including an HVAC system that is “long past its useful life,” CapLease has brought in architects Symmes Maini & McKee Associates, which has an office on Providence’s Westminster Street.
“Really, the role that we’d like them to play is to help us – more frankly to help prospective tenants to envision what this building can become,” Landriau said.
He said the firm has been given the mission of going through the whole building, “seeing what we can salvage and what has to be replaced.”
Renovations might cost more than $15 million and could take about six months, he said. CapLease, which nationally has an estimated $2.2 billion portfolio, paid about $50 million for the building, he said. Last year, the company’s revenue was $172 million.
Landriau said the three-story building will be suited for companies needing more than 50,000 square feet.
In order to get a sense of how easy it will be to draw a large firm, CapLease a few months ago enlisted CB Richard Ellis – New England’s Providence office to do a market study of the property. Afterwards, it hired them to market the property, Landriau said. “We wanted to tap into their network of national contacts, who may have firms looking to relocate or bring an operation to Rhode Island,” he said.
Although a few prospective tenants have toured the building, Landriau declined to say which companies have shown preliminary interest. He also wouldn’t say whether they were Rhode Island-based companies. Leasing is still months away, he added.
For the town, the re-leasing of the building is also a priority.
“Obviously, it’s very important to us that that is leased out,” Mayor Joseph M. Polisena said last week, “because they are a corporate citizen in the town and we respect them. We want to make sure we do whatever we can do to assist them.”
Annual property tax for the site is $780,548.07, Polisena said.
The town isn’t yet working with the R.I. Economic Development Corporation, but does have an “open dialogue” with them concerning the influx of new businesses into Johnston, Polisena said. Within the next 24 months, he said about $500 million in new economic development is expected to be created in the town.
Reworking the inside of the Central Avenue building will improve it, Landriau said, but he did acknowledge some limitations to how up-to-date a 35-year-old building can be.
“In real estate, you hear the term ‘green building’ all the time,” Landriau said. “I think it’s difficult to turn a 1973-vintage building into a green building, but I do want to move the building in a direction as close to green as I can.”
Outside, the building is “unique,” Landriau said, referencing a Frank Lloyd Wright-like façade he said should be preserved. •
