NORTHEAST SNAPSHOT, SEPTEMBER 2006

Rhode Island Office Market

In the city of Providence, Rhode Island, the first office development has come on line since 1994, when Citizens Plaza was constructed. Across the rest of the state, office product is growing in the Providence suburbs, as well as in Warwick, where Michael Integlia and Carpionato Properties are developing projects.

Land availability with all utilities and low vacancy rates have made the development climate positive throughout Rhode Island. For the entire market, the vacancy rate for Class A office space is just less than 8 percent. In Warwick, the West Bay area of Rhode Island, vacancy hovers around 6.4 percent; in the north submarkets of Smithfield and Lincoln, vacancy stands at 4.8 percent; and in Providence, the rate is 7.8 percent. Overall rental rates for Class A properties in Rhode Island range from $28 per square foot to $38 per square foot.

In the downtown Providence market, the G-Tech building currently is under construction, comprising a 250,000-square-foot headquarters facility for the company. In addition, Procaccianti is planning a new 496,000-square-foot tower in the market. Extell Development also has a project in the works, a new building on a site near the Providence River. Several new developers including Extell Development, Intercontinental, Blue Chip, and USA Real Estate with Commonwealth Ventures, have entered the Rhode Island office market recently. Fidelity is taking a large amount of space, as it just leased the entire former American Express building, a property encompassing 113,000 square feet. In addition, Fidelity is adding 500,000 square feet to its campus in Smithfield.

Other than the significant Fidelity lease at the former American Express building, Providence Equity Partners signed on for 40,000 square feet at 100 Westminster Street  and the Rhode Island Department of Economic Development inked a 20,000-square-foot deal at American Locomotive on Valley Street in Providence.

In the future, the office development in downtown Providence likely will spur ancillary construction across the city, the East Providence waterfront will see activity, and the Interstate 95 corridor from Warwick to West Warwick is primed for development.

Aside from activity in the office market, four separate residential condominium towers are on the rise, bringing more than 400 units to the market. In addition, other projects converting existing space to residential uses are underway. This activity in the residential sector generally is contributed to attractive federal and state tax credit programs.

— Charles Francis, president-Rhode Island/partner at CB Richard Ellis/New England in Providence, Rhode Island.

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