NEREJ Fall Preview
October 28, 2016
We collect data, conduct economic analysis, review economic indicators and engage consumers all to gain a better understanding of the influencers which impact the commercial real estate market. The amount of legislative policy proposals, the increase in consumer price index and the commercial interest rates all play a role in the volume of real estate transactions conducted through the year. We can say, without doubt that 2016 was a year of change, but how much change did we see? And can we expect that things will continue down this path of prosperity without any interruption?
To address the elephant (or donkey) in the room, it is an election year and while the two candidates tirelessly duke it out for the seat in the White House, the local politicians push to keep the real estate ball rolling. The Rhode Island Commerce Corp. board authorized $6.1 million in the Rebuild Rhode Island tax credits to encourage the action of $62.1 million in redevelopment projects. Commerce RI also authorized a grant for a proposal to build an agricultural related processing and distribution facility in Providence.
We have also seen a lot of intrastate moves by companies such as Neighborhood Health that has moved their headquarters to Smithfield due to their rapid expansion, BlumShapiro who moved to Cranston to grow its workforce and Citizen’s Bank that is now under construction on Greenville Ave. in Johnston. While the benefits of payroll taxes and temporary construction costs are “a nice second best” economist Leonard Lardaro states, “Ideally, you have people come in from other states.”
Earlier this year Rhode Island lost its bid to Boston for the General Electric headquarters, but we still manage to walk away with something to gain. While the location has yet to be announced the new GE Digital information technology center is said to hire over 100 employees. GE has already begun recruiting within the state at the universities and colleges. The governor recently welcomed the first group of employees to Providence.
While most of the development in an around Providence is still in the planning stages, the redevelopment of 75 Fountain St. (the former headquarters of the Providence Journal) is ongoing. The redevelopment is being led by Cornish Associates and Nordbloom Co. When renovations are complete the building will feature 160,000 s/f of renovated office space as well as over 10,000 s/f of restaurant/retail space facing the newly re-designed Emmet Sq. The Providence Journal remains as a lead tenant with the building now considering a number of full and partial floor tenants.
Royal Oaks Realty LLC plans to develop 24,000 s/f of commercial and retail space from new construction and redevelopment of a historic building along the I-195 Redevelopment District in the Fox Point neighborhood. Also along that corridor the Hilton Garden Inn just assed more work space in the rooms, a fitness center and 1,100 s/f of meeting space to entice more business travelers.
There are a flurry of extended stay hotels due to arrive in Providence. Martha Sheridan of the Providence Warwick Convention and Visitors Bureau says they will serve the corporate and transient project people who want to feel at home. There is a 154-room Marriott Residence Inn getting final permission from the city to be built between Sabin St. and Fountain St. Across from Burnside Park they are preparing for a 120-suite Homewood Suite hotel. On the west side of Providence they are expecting to break ground next year on a 76-room Best Western GLö hotel. And Hotel Associates LLC has proposed a 91-room Holiday Inn Express at 371 Pine St. that will be aimed at the price-conscious travelers.
So things are happening in the market and there is more on the horizon including Wexford’s proposed development in the I-195 district. The elections and other outstanding financial issues that face Providence and the state in general, continue to act as a governor on investment and development but the fact that there is activity bodes well for the state. Lack of product in both industrial and office product and the cost of construction will continue to exert upward pressure, though not significant, on both sale prices and rents. As long as the national and regional economies continue to expand and Rhode Island rides the wave, the market overall should continue to see stability and hopefully appreciation.