Office Space

John J. Macliver's company MPM<br>manages several buildings.
John J. Macliver's company MPM
manages several buildings.

Property manager analyzes city’s core

John J. Macliver

Position: President, MPM LLC

Background: Macliver has more than 24 years of experience as a general
contractor, developer and property manager. He previously served as vice president
of development for Marsella Development Management Inc., where he was responsible
for overseeing the design, development and construction of One Citizens Plaza,
the restoration of Union Station, the SpringHill Suites by Marriott in West
Warwick and the Providence Courtyard by Marriott. Macliver and several other
Marsella employees acquired Marsella in 2001. MPM now manages eight office buildings
in Providence, including One Citizens Plaza, 121 South Main St. (Providence
Washington Plaza), One Smith Hill and several Union Station office buildings.
The company has 12 employees.

Education: Attended University of Rhode Island

Age: 57

Residence: Warwick


Q. How did your career begin in development and management?

A. I went into construction in the mid-1970s and I haven’t looked
back since. I started putting gutters on a garage and put an addition on someone’s
house, and it’s just grown from there. It went from that to building custom
houses to doing commercial work, then I went with Ron Marsella in 1988. I was
working as his main property manager and construction person. I purchased the
company in 2001.


Q. What are the services you provide?

A. As far as the property management is concerned, we negotiate leases
to the point that we might have to bring in an attorney for legal issues. We
act as an owner. For example, if there is a tax situation we would have to address
it. We communicate with all the tenants, we collect the rents, we maintain the
buildings, we control all the operating expenses …


Q. Is Class A space available in the city?

A. The Class A market is real full. There are a few tenants that have
downsized because of the stock market post-Sept. 11, but the market is still
very full. Recently, there has been a lot of activity, with smaller well-known
companies looking to open up some space in Providence. They are all looking
for Class A space, and they want to be downtown. Because Class A is full, you
would like to think that you could build another office building, but you need
tenants before you can get financing. You need to have at least 50 percent,
probably 75 percent, in today’s market of pre-leased space to be able to build
an office building. If there is an office building built in Providence right
now … it would be in upwards of $35- or probably $40-square-foot rent right
out of the shoot.


Q. What trends have we seen in the price of square feet?

A. The price per square foot has gone up in the last few years. Class
A space in this city is from high 20s to low 30s.


Q. When you were working on the Citizens Plaza project you must have had
a vision of how the building would fit into the changing landscape of Providence.
Now, 14 years later, is the landscape what you thought it would be?

A. I’m surprised it hasn’t developed faster. While this is a stable
city, it’s also a small city. The Rhode Island Convention Center and the mall
have been successful. Yes, they cost the state money, but we need these things
to make Providence a good city. We need that civic center, we need Providence
College playing basketball and the Bruins playing hockey. But, I think the biggest
drawback to development in the Capital Center, specifically, is some of the
out-of-state developers come in and I think they don’t realize the market. It’s
just not as big as they think it is. They look at these projects and they put
a little too much cost in them. They make all these wonderful proposals and
draw all these pretty pictures, with 300 hotel rooms, 200 apartments and 150
condos. When you get down to the nitty-gritty it doesn’t make economical sense.
The market is just not big enough to support it.


Q. What about the out-of-state landlords that have come into the city in recent
years to take over existing buildings, like Providence Washington Plaza, one
of the Fleet buildings and Providence Place? What do they see in this market?

A. Quincy Mutual Fire Insurance (which bought Providence Washington
Plaza in 2002) bought a product that was very stable. When we started managing
that building in 1995 the rents were $18 and $19 and there was at least a 40
percent vacancy. Right now that building is 98 percent filled and we are getting
rents in the high 20s and 30s. We have taken it to the next level by making
improvements, like it used to be all electric and we have put in new chillers,
and we put in heat exchanges – moves that have reduced the electrical costs
by $100,000 a year. The new owner bought the building, which goes into its investment
portfolio, and looks at it as a 12 to 15 percent return. Inland (Real Estate)
should have bought (111 Westminster St.) based on the master lease it got from
Fleet to support its costs. If the building goes dark in 20 years or 15 years
when the master lease is up, the company would have made all the money it needed.
I don’t know how some of these out-of-state companies think; obviously, it must
be long-term.


Q. Are there any concerns about out-of-state landlords and the role they might
play, or might not play, in the business community here?

A. No, it’s not a concern. I think the two biggest concerns right now
are (Boston Financial Data Services Corp.) is taking its people out of (the
former American Express building), leaving 113,000 feet on the market … and
then you have Bank of America and what is it going to do with all the Fleet
people? If Bank of America decides to take a bunch of people out of Providence
it will open up a lot of office space at the Fleet Center. I think the Fleet
Building is all set because they have the master lease and Bank of America is
going to have to honor that.


Q. As a developer, when you consider the upcoming construction of the GTECH
headquarters in Capital Center, what are some of the concerns you would have
about the project?

A. I have no concerns. It’s a wonderful thing for the city. We were
involved in the early discussion with them, and we put a proposal in for the
project. That project is going to be a breath of fresh air for the city.

Q. You made a pitch for the GTECH project. How much of your job is chasing
companies and making pitches for projects?

A. There’s not much. Since we have been in business in 2001 we probably
have put three serious proposals on the table – two property management proposals
and that GTECH development (which involved several other players).


Q. The major projects involving big companies and many jobs carry a great
amount of confidentiality I would imagine during the planning. How does that
process work?

A. In some cases there are confidentiality agreements when you are
starting to do a deal when companies are coming into town. They don’t want their
names public. Most of it is business common sense, business courtesy and professionalism.
You don’t put names out there until you have a deal, and you don’t have a deal
until you sign on the dotted line. Unfortunately, look at some of the projects
out on Capital Center. How many projects have you seen announced and how many
have happened?


Q. Speaking of projects looking to get off the ground in Capital Center,
what about the Masonic Temple? Do you think that proposal is going to happen?

A. From what I understand (Sage Hospitality Resources) is a pretty
substantial company. I think three different times Marsella Development looked
at the building and I had some involvement. I just don’t understand how they
can make the numbers work. I think the cost of the hotel rooms are going to
be such that I don’t think it is going to be economically feasible. They are
going forward and they say it is going to work though. On the construction part
of the project, I know for a fact that the limestone skin on that building has
to be reattached to the building, and the way to do it is to take it down and
put it back up again. Also, a hotel requires a lot of windows, so they are going
to have to create a lot of windows to make it work. Number three, the parking
will have to be at the mall. They have a tough nut to crack there. I don’t think
a hotel is the best use for that building. Maybe it would be nice if it was
a state office for the senators and representatives. It would be nice if it
could be tied into state government.

Q. Your company also does work with parking development. I was wondering
if you agree with other developers that it would be difficult to take on a parking
garage or other parking project without some type of public financing?

A. I don’t think you can build a parking garage today and finance
it affordably. I don’t think you can do it and make money. It would be a loser,
unless there was some subsidy – public financing. In the downtown area, the
cost of property is too high and I don’t think you can get the rates you need
to offset the cost. The parking rates around here are not Boston rates.


Q. Following Sept. 11 and – closer to home – The Station nightclub tragedy,
there are a slew of new safety concerns with commercial property. How have you
addressed them?

A. We take life safety serious, and we did prior to Sept. 11. We held
fire drills years before Sept. 11 in our high-rise, mid-rise buildings. That’s
how we find out if we have problems. As far as the security aspect of life safety,
Sept. 11 increased security around here dramatically. It’s evident at Fleet,
and it’s evident here at Citizens. Our elevators here are card access; everyone
needs a card to get to their floor. It’s not Fort Knox, but it’s pretty good.
We also have that capability at (Providence Washington Plaza), but don’t use
it during the day; we do it at night.


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