There is no better time than the present for commercial real estate developers and building owners in Rhode Island to “get smart.” That’s the idea Joseph Hammang, director of science and technology at the Rhode Island Economic Development Corporation, and Kip Bergstrom, executive director of the Rhode Island Economic Policy Council, are selling. It’s not an easy sell. Suggesting to property owners that it makes sense to invest in major high tech overhauls to make properties more attractive to fledgling companies takes some convincing.
“Building owners are particularly cautious,” said Hammang. “Many are operating on borrowed money – and borrowed time. They may in fact be a credit risk.”
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
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But nevertheless, said Hammang, they are in all likelihood, a risk worth taking.
“The ability to move companies in and out of a space within weeks is now here,” he said.
Hammang reasons that by substantially investing in a “fourth utility,” that is a system of conduit and fiber optics, building owners avail themselves to a growing segment of prospective tenants.
“These companies will do the work themselves if they have to, but that takes a considerable amount of time,” said Hammang. “The sense that building owners and developers are getting now is that companies do not want to wait six months, or 12 months or 18 months.”
And Hammang said the idea of creating “smart buildings” does not have to be overwhelming. High tech companies, he said, are not necessarily looking to be overrun with amenities.
“They don’t have to have million dollar lobbies with mahogany and granite,” he said.
Few willing to wait
The current lack of available high tech space is definitely a problem.
In an interview with the Providence Business News last month, Brad Waugh, a president at Akibia, a 400-plus employee software company outside of Boston, said the company had considered relocating a major portion of its operations in Providence, but backed away from that idea when a lack of adequate space became an issue. Instead, the company will open a recruiting office here.
Waugh said he and other Akibia officials spoke with the state, but could not find the kind of “smart” space the company needed – about 80,000 square feet. Jay Fluck, a principal of CB Richard Ellis, Rhode Island’s largest commercial real estate firm, said smaller spaces – perhaps, of 15,000 to 20,000 square feet – are easier to come by, but larger ones are nearly nonexistent.
Fluck hears from companies interested in relocating to Rhode Island, and existing companies considering expansion, but that such companies are not willing to wait for “smart” buildings to emerge.
One “smart” building that will emerge in the market is under construction on Route 295 at the intersection of Route 7, about a mile from Bryant College and Fidelity Investments in Smithfield. Developer Jack Keigwin is building a 100,000-square-foot, three-story office complex that he said represents the first “spec building” in Rhode Island to be built from the ground up as a “smart building.” The building should be ready – and wired – by the spring of 2001, and Keigwin does not expect a problem in finding the tenants to occupy it.
George Loftus, a consultant with Meier & Loftus and former director of network technology at Brown University, discussed the concept of “smart buildings” at a seminar on Sept. 11 called “Smart Building Initiative.”
Held at the Greater Providence Chamber of Commerce, the event was sponsored by The Providence Foundation, the Rhode Island Economic Development Corporation and the Rhode Island Economic Policy Council. Loftus delivered a simple message – suggesting that the adage of “location, location, location,” is now accompanied by the equally important “access, access, access.”
“Providing access attracts today’s tenants,” he said. “I can’t think of a business operating today that is not looking for access.”
Denver provides blueprint of success
There may be no better model for Rhode Island than Downtown Denver, where more than 310 high tech companies occupy 25 million square feet of office space and employ at least 17,000 workers. Downtown Denver also boasts of more fiber per square mile than any other business park in the Denver region and has three college campuses nearby, with 35,000 students.
Among the selling points of Downtown Denver is its District Cooling System. Public Service Company’s chilled water production facility makes ice at night, when power rates are low. When the rates rise during the day, the ice is melted to create chilled
water that is delivered through an underground distribution network to buildings throughout downtown.
The chilled water is used in HVAC systems 24 hours a day, with no internal chiller to maintain, no cooling tower to operate, no refrigerant pressure to monitor. The Downtown Denver Partnership, Inc. boasts of the cooling system’s direct benefits to high tech companies. According to the group, those benefits include:
High tech companies can eliminate capital, operations and maintenance costs associated with self-cooling, improving reliability and availability of cooling.
Companies enjoy increased floor space by canceling the need for on-site mechanical equipment rooms, including chillers, cooling towers, pumps and refrigerant-monitoring systems.
Peak-demand power consumption is reduced, leveling energy use and helping customers manage their energy costs.
Building security is increased with fewer maintenance contractors on site.
Environmental improvement resulting from the elimination of ozone-depleting CFC-based refrigerants, and from the reduction and re-use of water in the cooling process.
A Downtown Denver Web site boasts of the region having a labor pool that is “vast and varied.” It adds that the downtown area is the “heart of the region and the hub for all transportation options.”
But even with the attributes Downtown Denver has to offer, Hammang is convinced that Providence can attain the same level of success in attracting high tech companies.
“Denver does not have the low cost of doing business that Providence has,” said Hammang.
The timing, he said, has never been better. Boston is a hot, but saturated city. There are high tech companies looking for “smart” space.
“We’re not losing business because of a lack of this space,” said Hammang. “But we could sign up many more companies here if we did have it. If we do not pull the trigger, ultimately we could lose out on some good companies.”
