now owned by Lifespan
According to the Rodman Report Office Survey, the advent of the first speculative office projects in 10 years has changed the landscape and perception of the office market throughout the state. The report stated that while there has not been the volume of inquiries that was expected from outside the state, activity has been steady.
It’s not like office space is scarce, said Rodman Real Estate Vice President Neil Amper, but the local expansion of companies is continuing, and “smart buildings” (energy efficient buildings specifically wired for communication) continue to be in demand as companies looking to relocate view this as a primary component of their search.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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“There’s not a lot of space in the suburbs, but more is coming on the market as far as sub-leased space,” said Amper, ” and now the economy is slowing a little bit it remains to be seen how it’ll impact what’s available.”
The report found that in the East Bay’s estimated 835,000 square-feet of office space there is a 7 percent vacancy rate. While vacancy in the area is traditionally low, the number is skewed by the new construction by Marshall Properties, which has two new buildings under construction, totaling 116,000 square-feet. The main office areas are in East Providence in the Westminster Office Park, the Waterman Avenue area and along the Wampanoag Trail. The American Arbitration Association will locate on Warren Avenue, and according to the Rodman Report there is substantial interest in the remaining space.
The 8,000,000 square-feet of office space that make up the four distinct areas of Providence command a range of rates from $9 per square foot to $34 per square foot.
The most expensive area is Capital Center, which continues to be at 100 percent occupancy. Citizens Plaza commands lease rates starting at $26. In the Financial District, where there are 85,000 square-feet of space rented, the median price per square-foot is $18.71. The Fleet Center, Fleet National Bank, Hospital Trust Tower, Hospital Trust Building and 40 Westminster Street have lease rates in the $22 to $26 per square-foot range. These five buildings along with Citizens Plaza represent 25 percent of the marketplace in Providence.
The availability of onsite or nearby free parking has kept lease rates high and occupancy low in the Providence Suburban/Perimeter. The report said there has been space leased over the past three years in the $9 to $12 per square-foot range on the East Side, North Main Street and Atwells Avenue area, but low vacancy has caused these numbers to escalate. Lease rates range from $15 to $18 per square-foot in the West Exchange and Promenade areas.
Amper said that if Providence Mayor Vincent A. Cianci’s “Three Cities Plan” comes to fruition those low leases could change. That plan calls for massive development along the city’s waterfront – as well as in other underdeveloped areas of the capital city.
“It all depends on the demand, obviously,” he said. “I mean, it’s close enough to the city that it’s an attraction and if the area starts to upgrade you’ll see more people go there, and the rates will go up.”
Space in the Jewelry District generally runs from $9 to $16 per square-foot, the report stated. Davol Square has the largest amount of space available in the area with 40,000 square-feet.
There are 100,000 square-feet in the former Speidel Building on Ship Street. Belvoir Properties, which now owns the building, said it has no plans for its development or occupancy yet.
Belvoir Chief Executive Officer James Winoker said the company is considering all options, but probably will not announce anything until next year.
“We are completely open and flexible in our thinking and we have not come to any conclusions as to what we’re going to do,” he said. “Whatever we do we expect to turn it into a first class facility whatever its ultimate use.
Also in the Jewelry District, Lifespan has purchased the Coro complex and plans to consolidate its operations.
In Rhode Island’s Suburban Central market, which includes Warwick, Cranston, East Greenwich and West Warwick, there are 1,800,000 square feet of space, most of which is occupied. Industry experts attribute this region’s popularity to its proximity to the airport, all major highways and its central location. Rates here have typically remained steady with Class A space in the office parks, which have maintained a 10 to 15 percent higher rate than non-office park sites. There has been new construction on South County Trail in East Greenwich, which has been attracting medical offices, and F.H. French has a 40,000 square-foot building that could be used for general office purposes or medical purposes. The report stated that although the market has softened for new space, the lack of inventory should keep rates stable.
The most change in the office market over the past five years has occurred in the Suburban North region, which includes Lincoln, Smithfield, Pawtucket, Cumberland and Woonsocket.
The construction of the Fidelity Campus, the growth of CVS and the easy access to Massachusetts has made this area the most consistent region for new construction, the report stated. Rodman executives said the lease rates are some of the highest in the state and as Fidelity expands they say this will attract more office occupancy and construction. F.H. French has constructed a 108,000 square-foot smart office at the Route 7 ramp in Smithfield and Fidelity has contracted to lease 75,000 square feet. The total square footage in the area is estimated 1,300,000 square-feet, but with land that is available to be developed in Lincoln, Smithfield and Woonsocket, the report said there is ample reason to be optimistic for continued growth.
