NORTHEAST SNAPSHOT, SEPTEMBER 2004
Rhode Island Office Market
Rhode Islands 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 citys
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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