NORTHEAST SNAPSHOT, SEPTEMBER 2004

Rhode Island Office Market

Rhode Island’s office market is experiencing significant development in and around Providence, according to Peter Scotti, president of Scotti & Associates, a Providence-based brokerage and appraisal firm. The suburban market has seen consistent growth for a number of years, while action lagged in the city. Recently, though, activity has increased within the city’s central business district (CBD).

Throughout the CBD, particularly in the Capitol Center area, the Jewelry District and the Foundry Corporate Office Center, new office space is being built and existing property is being sold. In the Capitol Center, G-Tech is commencing development of Parcel 9, a new mixed-use office and retail property. Also, Brown University is completing its $25 million renovation of the Spiedel Building in the Jewelry District. That particular area continues to absorb the expansion of both Brown University and Rhode Island Hospital.

“Within the CBD there has been some expansion of existing tenants. However, the acquisition of Fleet by Bank America may result in an increased overall vacancy rate in the Financial District,” adds Scotti. “The big news in the CBD is the planned move of law firm Adler Pollock & Sheehan from the Hospital Trust Building to the Citizens Bank Building. The firm will take up approximately 20,000 square feet in the Marsella Development tower.”

In the surrounding area outside Providence, the suburban office market continues its growth. “For the past 15 to 20 years, Rhode Island has experienced a surge in office development. In the suburban market, there has been significant growth in both the Lincoln/Smithfield corridor, home to Fidelity Investments and Amica Insurance, and in the Warwick/East Greenwich corridor with the recent development of the Gardens Office Condominium project,” explains Scotti. Within the Warwick/East Greenwich suburb there has been a trend of small users (1,500 to 4,000 square feet) purchasing office condominium units.

With no single tenant taking up a majority of space, developers are looking to small businesses to fill office buildings in the future. According to Scotti, “Suburban office condominium development for small and medium-sized users is a market that has not been fully exploited; we expect significant growth in this sector.”

Developments in Rhode Island are typically homegrown, due to the small size of the state. Local developers such as Marsella Development Corporation, Integlia & Company, Churchill Banks, The Gilbane Company, The Wasserman Group and The Foundry Group are highly active throughout the area.

“Rhode Island is poised to take advantage of the higher rates in the Boston market,” notes Scotti. “The convenience of Providence via commuter rail to downtown Boston, the relative affordability of its office stock, as well as significant state and municipal incentive programs, will eventually be enough of a catalyst to lure tenants from the more congested and pricier quarters elsewhere.”

Vacancy rates are currently around 5 percent, and with rental rates ranging from $25 to $30, the area is becoming increasingly attractive to companies seeking to expand or relocate.

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