NORTHEAST SNAPSHOT, MAY 2007
Rhode Island Office Market
The office market in Rhode Island continues to grow as existing businesses expand and new office developments come online. Vacancy rates in the suburban market (any area outside of Providence) are sitting at an extremely healthy 5 percent for Class A space while the vacancy rate in Providence is approximately 9 percent for Class A space. In the suburbs, rental rates range from the low $20s per square foot to $25 per square foot (does not include electric).
One of the largest office developments underway in Rhode Island is located just outside Providence. West Greenwich Business Park is currently being developed by Condyne, LLC Real Estate Development and Dead River Properties in West Greenwich, Rhode Island. The park is home to GTECH and the Amgen Corporation, which currently lease the two existing buildings in the park. The development also has several acres of additional land for development, and once complete, it will feature 336,000 square feet of commercial space.
The site will offer anywhere from 5,000 square feet to 232,000 square feet of office space, 10,000 square feet of retail space and a 162-room hotel. Set on 51 acres just off Interstate 95, the property was sold in December 2006 for $43 million. GTECH, the previous owner, then secured a leaseback of approximately 170,000 square feet and Amgen leased 93,000 square feet in the second building. The master planned business park is scheduled to break ground on its first building before the end of 2007 with an expected completion of the park over a 3- to 5-year period. Typically, in Rhode Island, a business park consists of one or two buildings or a company will build and own its own office building. Therefore, a master planned multi-tenanted business park like West Greenwich Business Park is very unique to the area.
Other office developments are cropping up in the popular Warwick market because of its close proximity to the airport and the junction of many roadways. Michael Integlia recently completed construction on Jefferson Gateway in Warwick, which includes 75,000 square feet in one building and 45,000 square feet in a second building set on an 8-acre campus. This development is unique because it was developed on a speculative basis, which is rare in Rhode Island, and it was 100 percent leased prior to its completion. First Bristol recently finished renovation of the former GE Buildings on Service Avenue in Warwick, which offers 100,000 square feet of office space in tow buildings and is currently 100 percent leased. Just south of Warwick in East Greenwich at 2000 South County Trail is Patriot Commons. This former semiconductor plant is being completely refurbished to offer 140,0000 square feet of office space. The tenants for these new buildings run the gamut from small law firms to large corporations.
In addition to these office developments, office space is also being developed within several upcoming mixed-use projects. Well-known developer, Struever Bros. Eccles & Rouse is currently developing several mixed-use projects with upscale office components throughout Rhode Island. Dynamo House is a six-story, 295,000-square-foot mixed-use building located at Eddy Street on the waterfront in Providence. The historic brick building will include unique office space as well as a 70,000-square-foot hotel on the two top levels, the 55,000-square-foot Heritage Harbor Museum and 12,0000 square feet of retail space.
American Locomotive Works, also by Struever Bros., is a 2.3 million-square-foot mixed-use project located on the banks of the Woonasquatucket River on the west side of Providence. The development will include 350,000 square feet of office space, 657 residential units, 93,000 square feet of retail and restaurant space, a 180-room hotel and 2,500 parking spaces. In West Warwick, Struever Bros. and Westerman Realty are redeveloping the historic Crompton Mills site into a mixed-use waterfront development that will include 300,000 square feet of commercial space and residential units.
Future development is anticipated for the Metro South/95 market, which stretches from Providence to West Greenwich. There has been more than 500,000 square feet built there in the last few years already. The Centre of New England, a 480+ acre mixed-use development, will be bringing more residential and commercial real estate to this market. Developed by Universal Properties, the site sits on the southbound side of Interstate 95 between exits 6a and 7, and will include residential units, retail and restaurant space, hotels and some light industrial space.
— Peter Hayes, SIOR, is a partner with Hayes & Sherry Real Estate Services in Providence, Rhode Island.
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