In March, developer Robert Roth leased the first building of his downtown condominium development, Capitol Cove, to Johnson & Wales University. The university, which will use the building to house students, has a three-year lease with an option to renew for two additional years.
Roth took a few minutes recently to talk about the future of the building and further build-out at Capitol Cove.
PBN: Has construction wrapped on the first building? Did it come in on time and on budget?
ROTH: The final certificate of occupancy has not been issued. We are expecting a certificate of occupancy in the next few weeks. Final landscaping has just started and should be completed in June.
The final costs are very close to the budget.
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PBN: Have you set a timetable for construction to continue on the rest of the project?
ROTH: No, that will depend on the health of the economy.
PBN: Why did you decide to lease to JWU?
ROTH: Both the condominium market and the rental market have suffered in this economic downturn. Sales have been slow and vacancies have grown, causing prices to soften and absorption rates to slow.
After receiving calls from local institutions inquiring about potential student housing opportunities, we decided to evaluate this option. It appeared to us that the universities, including JWU, had an acute housing need, while we were just finishing 96 condominiums in a slow market. It just seemed sensible to rent to JWU for a three-year period, which would satisfy their needs and at the same time give us a longer sales horizon.
It’s important to note that this is a lease not a sale so that the property will stay on the city’s tax rolls. Capitol Cove will continue paying property taxes to the City of Providence throughout the duration of the three-year lease.
Our hope is to re-enter the market in 2012, when we think there will have already been a full market recovery.
PBN: Do you think the lease will hinder your ability to sell those units as condos in the long run?
ROTH: Not at all. The core reasons why Capitol Cove will be successful have not changed. The location is priceless; the layouts and finishes are superb.
PBN: The façade design of the low-rise is a step away from traditional Providence architecture, but it’s not as large a leap as the GTECH Corp. headquarters or Waterplace condo towers. Can you tell me a little bit about the design process? Will the other buildings look similar?
ROTH: The architecture is meant to mimic its important venue, which bridges the residential – East Side – and business – downtown. The second building to the north will be similar in design.
The back parcel, next to the train station, will probably be a high-rise building that is more modern.
