Despite Lagging Job Growth, Retail Projects Underway in Rhode Island

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Rhode Island’s economy continues to struggle with unemployment that is above the national average. As a result, it has been difficult to get new ground-up development projects started with only a few exceptions.

In Johnston, Saletin Real Estate Group has completed construction on the first phase of Johnston Towne Center on Hartford Avenue. The 95,000-square-foot shopping center is anchored by a 40,000-square-foot Price-Rite grocery store. BankRI has also opened a new free-standing facility on the site. In order to make the development a reality, the mayor and town council worked with the developer and issued tax increment bond financing. The project is considered a major redevelopment victory for the town of Johnston, as the construction of Johnston Towne Center required the demolition of the former Stuart’s Plaza shopping center — which had been 100 percent vacant for many years, and had become an eyesore along Hartford Avenue, one of Johnston’s busiest streets.

Johnston Towne Center serves as the second victory for the rejuvenation of Hartford Avenue. The former Shaw’s grocery store, which had been vacant for several years and shares the same traffic signal as Johnston Towne Center, is now fully leased to Ocean State Job Lot and Planet Fitness.

The only other new ground-up shopping center construction in Rhode Island is Bucci Development’s 600,000-square-foot Dowling Village Shopping Center in North Smithfield. In addition to the Walmart that opened in 2011, Kohl’s, Aldi and Lowe’s are also now open.

Although this is a major boost to the town of North Smithfield, it also serves as a major setback for the nearby town of Woonsocket as Walmart and Lowe’s both closed stores on Diamond Hill Road in Woonsocket in conjunction with the openings of their new stores in North Smithfield. These large vacant boxes, along with an existing vacant former Shaw’s grocery store, make Diamond Hill Road the submarket with the highest retail vacancy rate in the state of Rhode Island.

Other retail activity includes more redevelopment of existing shopping centers or construction of individual retail buildings. As an example of the latter, the new Sam’s Club opened earlier this year on Route 2 in Warwick. The new 116,000-square-foot store is a replacement store for the former Sam’s Club that closed on this same site in 2011. Because the former building was sinking into the site due to dangerous soil conditions, the Warwick Building Department required the building to be closed and torn down. Sam’s worked with the town to correct the soil conditions and rebuilt a brand new building of the same size in the same location. The fact that Sam’s could close its store for approximately 2 years and then reopen again is a testimony to the strength of the Route 2 retail corridor in Warwick.

CarMax is another individual retailer planning to build its own location. The company recently acquired the former Building 19 land and building in Warwick. CarMax will tear down all existing buildings and build a totally new facility from the ground up.

The most significant shopping center redevelopment in the state is the ongoing upgrade of Garden City Center in Cranston. Considered one of the first lifestyle centers in the United States, Garden City recently added new and exciting tenants to its already strong lineup. The Container Store has opened in the 25,000-square-foot former Linens’n’Things location and LA Fitness has opened a 40,000-square-foot club in the former Borders Book location. Other retailers new to Garden City include Pottery Barn, which is a relocation from Providence Place mall in downtown Providence, as well as Sephora, J. Crew and Corner Bakery.

Although not with the same degree of retailer activity that we saw prior to the recession, Rhode Island’s retail market continues to improve. As the state’s unemployment rate continues to decline, the amount of retailer activity should increase accordingly.

— By Jed Hayes, Principal of SullivanHayes Northeast/TCN Worldwide. This article first appeared in the May 2014 issue of Northeast Real Estate Business magazine.

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