From repurposing former Benny’s sites to building new business hotels and wet-lab space, Carpionato Group is bullish on Rhode Island

By Mary MacDonald

COMPELLING DEVELOPMENT: The Row at College Hill is a mixed-use development proposal by Carpionato Group to build on parcels 2, 5 and 6 on the East Side of Providence in the Interstate 195 Redevelopment District, which would include 203,000 square feet of medical and wet-lab space and incidental office space, a business hotel with meeting space and restaurants. / COURTESY CARPIONATO GROUP
COMPELLING DEVELOPMENT: The Row at College Hill is a mixed-use development proposal by Carpionato Group to build on parcels 2, 5 and 6 on the East Side of Providence in the Interstate 195 Redevelopment District, which would include 203,000 square feet of medical and wet-lab space and incidental office space, a business hotel with meeting space and restaurants. / COURTESY CARPIONATO GROUP

As president and chief operating officer of Carpionato Group LLC, Kelly Coates has had a more visible role this year as the commercial-development and management company has pursued high-profile projects.

Carpionato owns the Chapel View mixed-use retail center in Cranston, the Crowne Plaza Providence-Warwick and numerous other mixed-use and residential locations in southern New England.

Within the past six months, the Johnston-based company has announced its purchase of all the Benny’s locations in Rhode Island, Connecticut and Massachusetts, as well as the site of the Newport Grand Casino, which will be redeveloped.

The company has also made a proposal to the I-195 Redevelopment District Commission to develop three of its prominent parcels on the East Side of Providence, a project location that has drawn competition from two other developers and will be subject to review through the summer.

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During numerous community meetings held in advance of the proposal being finalized, he said he heard one negative comment: from a woman who liked the sunflowers at the site.

“The woman said, ‘It makes me smile.’ I said, ‘It’s interesting, it makes me cry,’ ” said Coates. “I think of the children in schools that have leaky ceilings. And the only solution to that is real estate tax.”


NEW LIFE: Kelly Coates is the president and chief operating officer of Carpionato Group, which recently purchased all 29 of the Benny’s locations in Rhode Island, Massachusetts and Connecticut for redevelopment. Coates says the new tenants will include dollar stores, auto-parts stores and hardware stores focused on the value shopper, with the first slated to open in early December. / PBN PHOTO/RUPERT WHITELEY
NEW LIFE: Kelly Coates is the president and chief operating officer of Carpionato Group, which recently purchased all 29 of the Benny’s locations in Rhode Island, Massachusetts and Connecticut for redevelopment. Coates says the new tenants will include dollar stores, auto-parts stores and hardware stores focused on the value shopper, with the first slated to open in early December. / PBN PHOTO/RUPERT WHITELEY

Carpionato has purchased 29 of the former Benny’s stores, which is all the property formerly owned by the company. Why was this an advantageous purchase and redevelopment for you, given the scattered nature of the sites? They fit within our portfolio almost perfectly. We, with current projects, span from southeastern Massachusetts through western Connecticut. These are all contained within that envelope. The three states we’re very active in are Massachusetts, Connecticut and Rhode Island.

You won’t be competing with these sites? No, definitely not. These are tenants that are typically not shopping-center oriented. The typical tenants going here are not reliant on a supermarket. They’re not relying on critical mass for their retail. They feel they have an independent draw to the street. Many of them typically stand alone.

Can you give us any hint as to who will be going there? Tenants who focus more on the value shopper.

A dollar store? There will be quite a few dollar stores. There will be quite a few auto-parts stores. There will be quite a few hardware stores.

Did Carpionato approach Benny’s in advance? Only upon announcement of the closing. It was straightforward. They announced they were closing and we said, given that these are closing, we are interested in purchasing all of them. From the announcement to our agreement to purchase, it was done over the period of 10 days. We kept the business terms very simple. It’s an as-is, where-is purchase.

The first [former] Benny’s will open for Christmas, in early December.

When can we expect to see some redevelopment on those sites? The first [former] Benny’s will open for Christmas, in early December. Then they’ll be in waves, going forward, over the next 36 months, by the time they’re all fully leased out. Each building is going to be divided into one, two, up to four or five tenants, depending on the size. So, a Benny’s typically was 27,000 square feet. These tenants that I’m discussing are typically in the range of [10,000 square feet].

Are they typically going to look different than a Benny’s? We’ll have new facades. They’re broken up, they’re all going to look different.

On the Newport Grand Casino property purchase, what is the plan for this location? Points to a preliminary site plan. We are planning hotels, retail, and the rest of this is going to depend upon where the [state] highway network ends up. This plan contemplates we would knock down the casino. [But] we have not finished our meetings with our neighbors and all of the opinion leaders, people who have a stake in this. That’s what we’re contemplating. What we definitely want to do is at least two hotels, some restaurant/retail and mixed use.

Is there a new access road planned? This shows an expansion of that road. From the bridge, you can see this site. Right now, there is a ramp that takes you to the right, downtown. That is going to go away and you’re going to be directed further north and then it will curve around. Where that road ends up will dictate what properties are declared surplus by [the state] and Newport. And so, we have to have their master plan to finish our master plan. We hope the elements are done very quickly so we can get the property back on the tax rolls.

Can you put a quantity on how much this redevelopment would entail? You’re in the $75 million range, depending on how big we go.

Two new hotels are in the plan. Does Newport have a demand for more hotels, as Providence has had? There is a definite [demand] for quality. People want to go to new. … And there are a lot of good franchises out there. We’ve done our market studies and we’re confident that we can put forward a good product and have the demand. We’re going to offer a shuttle to downtown. We’ll offer some services the other hotels don’t offer. And we’ll also have restaurants right on the site. For people who want to have a low-key evening, they’ll be able to come or stay for business. If you want the waterfront, we’re not a waterfront hotel. But we will have water view. It’s more elevated. We think there will be a compelling opportunity. … We want a true, live, work, play environment. We operate … hotels that are directed to the business trade, not the traveler trade. Aquidneck Island has a lot of business. It’s not just a tourism town. If you have an office, and you can add a hotel on your office premises, all your guests can stay there.

So, in terms of mixed use, you are looking at office, as well as retail? A combination of office, first-floor retail, second-floor office, third-floor office, is a very compelling offering.

Rhode Island apparently has a lot of small office spaces, but little in the way of 30,000-square-foot, contiguous spaces? Yes. This is not for dentists and doctors. This is for companies that want the amenity and will pay for the amenity. The dentist will say I can find cheaper space … and people will find me.

When you presented plans for The Row at College Hill, on the East Side of Interstate 195 land, you said the company founder wanted a legacy project in Providence. The company already owns such a site, the location of the former Providence Fruit and Warehouse Co. building. Preservationists are still upset that building was torn down. What happened with that site? We purchased the building from [the state]. A portion of the building was knocked down, prior to our purchase, in order to put in the ramp. Then, vagrants moved into the building. Over a period of many years, the vagrants had fires. So, there was a total of 30 fires. The integrity of the roof was destroyed.

[The state] put the property up for sale. They had a structural engineer. At the time of [the state’s] purchase, the structural engineer analyzed the building. He determined the building at that time had structural integrity. By the time we purchased the building, he walked through the building, and determined that, as a result of the rain that had come into the building for many years, the building had lost its structural integrity. The building had 90,000 square feet [including the basement], imagine how valuable that was to me? I could have reused it right away. I could have been collecting rent. The structural engineer declared the building was not ­structurally sound. … Providence ordered [the building torn down.]

What happened to the original redevelopment plan for that site? Was it the economy? The economy. Rhode Island went into a certified depression. … The change in retail. Our view was to do retail and office on that site. The retail, we signed a letter of intent with Crate & Barrel, and with The Container Store. West Elm, we had a negotiated lease. We had every intention of building a project out there. The economy changed, and these tenants did not want to be proximate to the mall. Two of them went suburban. One went quasi-suburban on the East Side, more of a neighborhood site.

What is the current plan for the site? 100 Harris Ave. is a multifamily development of 458 units.

You’re looking at residential, not retail, but what has changed in the economy since? Has Providence turned around economically? We hire the best experts we can with each of our projects and prepare market studies, market analysis. We’re confident based on those studies that first-class luxury housing will be successful on this site. These are all apartments. We hope to break down Sept. 1. We have [city] master plan approval and we’re working through the state before we can go back to the city for the preliminary and final site plan.

PBN PHOTO/RUPERT WHITELEY
PBN PHOTO/RUPERT WHITELEY

On the I-195 proposal, The Row at College Hill, one of the elements in your proposal that seemed interesting was office space. How much are you proposing and what is the rationale for that? Approximately 203,000 square feet of medical lab, and incidental office space. We’re not building an office development. It has medical-research space. This is lab space. This is Cambridge, that surrounds [Massachusetts Institute of Technology] and Harvard, it’s no different.

Do you have tenants and demand for this? Rhode Island wet-lab space all has a Cambridge, [Mass.], address. They never start here. All the space gets built in Cambridge. If you go to New Haven, [Conn.], which as a community is a tier below Providence, they have hundreds of thousands of square feet of lab and research space. This should be one of our focused new industries in Rhode Island.

Where is this proposed? It is almost the entirety of Parcel 6. … We are not building speculative office space. We are building wet-lab space. There will be a limited amount of office built in it, but the bulk of this is medical office and research space.

Carpionato wants all three sites – Parcels 2, 5 and 6. Some people argue a developer, in general, shouldn’t be given all three because the city won’t have the variety of architecture that it would get with three developers. Does that make sense to you? Absolutely not. Only if you sell it to different companies can they come up with a different design? … This is a proposal, this is just a starting point.

Some people think the design looks like a suburban development, not a city development. Is that fair, or unfair? I would say the following: We will hire the best architects and we will work with the community. It’s no different than the processes we go through. The key is the building massing. The general envelope. We proposed three stories, to be consistent with the buildings that are immediately across the street.

Some people, in a neighborhood forum, have said they’d prefer the land remain undeveloped.

We met with 30 different organizations, in advance of finalizing our proposal and submitting it. … We had a couple of concerns. And one negative comment. And that was, ‘I like the sunflowers that are on that site right now.’ The woman said, ‘It makes me smile.’ I said, ‘It’s interesting, it makes me cry.’ I think of the children in schools that have leaky ceilings. And the only solution to that is real estate tax. Real estate taxes from commercial development. I think of the people in the neighborhood who can’t walk down to a job. Who have to commute.

Everybody in Rhode Island paid a lot of money to buy this. The commission bought it from [the state], they bought the land. They have heavy bills to pay. Every time they give away a lot for free, that doesn’t reduce what they owe.

Is there any parking for the housing in the plan? The entire building has parking underneath, 640 spaces. It’s underneath this.

Underground parking? Isn’t that tremendously expensive? I can’t afford not to do it. We are high-end oriented. All of the executive parking is in the building. For the residents, they have to have parking in the building. You can’t say, go park in the neighborhood.

For the laboratories, where would they park? Three levels of parking, two underground and one at surface.

You’re saying the organization has enough revenue to put the parking underground? If you don’t do the parking underground here, you don’t have a credible project.

You told the I-195 Redevelopment District Commission Mr. Carpionato wants a signature project. Is this it? Our desire is not to have a 195 project, but to have a compelling project in Providence. … How many years has this land been available? And there is nothing built on the East Side of Providence. This was [cleared] with the express demand that there be job generation, employment generation.

This [proposal] has jobs. People don’t realize that Chapel View has [more than] 1,000 jobs. There are [more than] 1,000 people employed at Chapel View. If you go to this project, the research and lab portion of the project will employ [more than] 800 people, with an average compensation of $100,000 per employee. Your payroll is $80 million a year.

There is a definite [demand] for quality [hotels]. People want to go to new.

Have you done a market analysis for the wet-lab space? We have. If you have the anchor tenant to kick off the project, we can certainly fill the space. We are in active negotiations right now for the bulk of the space. This is not a speculative project. We are building a hotel here. It’s a business hotel. That’s what we build. It’s centered on servicing our research and lab space.

In the negotiations with our users, they want to make sure there are places to go to eat, there’s restaurants, and that there is hotel and meeting room space. So, we’re building hotel and meeting space, so the researchers can go over and present the latest research on whatever topic they’re studying, with people who fly in and stay at this hotel.

Why all three? Without the amenity pack, there is no hotel on this side of the river for the researchers to walk to. The restaurants, the meeting space, the hotel, those are crucial. Secondly, we will serve as amenities for the other side of the I-195 district. Lastly, we’ll help the commission sell the other parcels because the amenities will be built in here.

What is the biggest challenge you face with this project? Is it opposition from the neighborhood? Is it competing with the other proposals for the sites? Selling our vision that, in this case, it’s important to do the three parcels together. Rather than increase risk to the commission, it increases the likelihood of execution. Because I can spend more on the project knowing … the next building is going to get built.