Thus far in 2019, much of the growth and development in Rhode Island has been focused on downtown Providence. Much of this has to do with the colleges and hospitals, as well as the residential component in general.
But Rhode Island continues to develop hotels, especially in downtown, due in part simply to having a vibrant, in-demand city. Officials want to create the ability for Providence to compete for and attract top-tier conventions.
Mike Giuttari, MG Commercial Real Estate
Hotel Development Wave
With 1,000-plus hotel rooms coming on line over the next 18 to 24 months, along with another 1,000 residential units of new and redeveloped housing, the long sought-after downtown Providence residential market seems to be here. Examples of this hotel development include the following:
• Procaccianti Group’s 176 room Marriott Residence Inn at the Convention Center, coming in the second half of 2019;
• First Bristol & Paolino Properties’ 120-room Homewood Suites Extended Stay, which opened in April;
• Hotel Beatrice, 28-32 Kennedy Plaza, 48 rooms, under construction;
• Best Western Glo Hotel, 322 Washington Street, 76 rooms, commission/board review approved;
• Aloft hotel, Innovation Complex, 170 rooms, commission/board review approved;
• Holiday Inn, 371 Pine Street, 91 rooms, commission/board review approved;
• Hotel Hive, 187 Westminster Street, 129 rooms, pre-application; and
• Woodspring Suites Hotel, 181 Corliss Street, 124 rooms, completed.
Schools Expand Footprint
Schools such as Brown University, Rhode Island School of Design (RISD), Johnson & Wales and the University of Rhode Island have continued to grow and expand their footprints in Providence, with private real estate acquired by these schools and redeveloped for their own uses. You cannot drive through almost any part of the East Side without bumping into development at Brown or RISD, such as new administration buildings or Brown’s new engineering center on Brook Street.
Medical Proliferation Boom
Medical is right in line with the hotels and the schools. There are signs of the medical development not only in Providence, but also across the state. This development is not only driven by large groups such as LifeSpan, but also by other private groups such as University Orthopedics and Rhode Island Medical Imaging.
A great example of this is the new University Orthopedics development on the water in East Providence. The 90,000-square-foot medical and surgical center redefines the term “state of the art.” In concert with Michael Integlia & Co., the developer created a masterpiece of waterfront luxury along with the best surgical practice unmatched anywhere.
Office, Industrial Trends
In the bread-and-butter world of industrial and office space, 2019 will not be the whirlwind of activity that the earlier discussed disciplines will be. The very high cost of construction keeps any significant industrial development, whether spec or user-based, to a minimum. A lot of this is based on the continued health and success of the Boston market — we are too close to Boston. Construction companies and subs can float back and forth and base local bids on Boston numbers. This all relates to office development in a smaller way. Both the office and industrial markets have very shallow demand.
The northern Rhode Island office market is almost devoid of any significant office availabilities. Typical complexes, such as 24 Albion Road in Lincoln, that usually have some available space are 100 percent occupied. In this submarket, a tenant needing 10,000 square feet would be limited to three or four options, such as Northwoods in Johnston or Albion Crossing at One Albion Road in Lincoln.
In the West Bay submarket, south of Providence, the situation is similar. Michael Integlia & Co. is considering coming out of the ground in 2019 with the 100,000-square-foot office property at One Metro Center in Warwick. There are a few other options on the drawing board, but not close to reality during the next year or two. Otherwise, there again are few choices for large users on one floor. Options include properties such as One International Way and 847 Jefferson Boulevard in Warwick.
Industrial availability is even more severe for the better, larger spaces with ceiling heights approaching 20-plus feet. In northern Rhode Island, a tenant searching for 30,000 square feet with good ceiling heights would come up empty. South of Providence, this same tenant may find three to four options.
Both the office and industrial markets occasionally have properties that come up for sale and a buyer must be ready to act. 95 Jefferson Boulevard in Warwick is a 24,000-square-foot, two-level office building that went on the market last week and has seen immediate interest. 676 George Washington Highway in Lincoln, a modern 41,000-square-foot industrial facility had an offer before going on the market. When it went public, multiple showings were set up immediately.
The prior paragraph is meant to show the lack of any significant inventory in our market in general. Whether it is office or industrial space, lease or sale, options for users or investors in this market are slim to none. When a desirable property that meets the specifications for these users or investors becomes available, those parties need to act quickly and seriously.
— By Mike Giuttari, President, MG Commercial Real Estate. This article originally appeared in the May 2019 issue of Northeast Real Estate Business magazine.