Tuesday, March 30, 2021
Across downtown Providence, there are dozens of retail locations for lease.
The spaces come in almost all sizes and are located in buildings from newly constructed to centuries-old.
They spread across the core of the downtown area and beyond. The “For Lease” signs are in every section of the city — the financial district to the Wexford Building which houses CIC in the so-called Innovation District.
Much has been made about the change of work and the shift from traditional office space to working from home. Companies are cutting back their office footprints or closing their offices and going virtual.
Reality Captured by One Business Leader
“I don’t know any organization that rents office space that isn’t rethinking its value, including our team at BIF,” Saul Kaplan, Founder and Chief Catalyst of Business Innovation Factory (BIF) told GoLocal in February. BIF is known globally for its innovation conferences.
And, with fewer businesses and workers in office space comes less need for downtown sandwich shops, tailors, clothing stores, or coffee shops. E-commerce continued to see explosive growth fueled by shifting buying behavior during the pandemic.
The recalibration of the office is now progressing with many companies cutting back the office spaces as their leases come due. No place is being more redefined as a result of the coronavirus as fast as New York City and that may become the norm in second-tier cities like Providence.
The Wall Street Journal reports Tuesday that, “JPMorgan Chase & Co., Salesforce. com Inc. and PricewaterhouseCoopers are among the major firms looking to unload big blocks of office space, the latest sign that remote work is hurting demand for this pillar of commercial real estate.”
“Large companies typically sign office leases for a decade or longer, giving them few options for reducing their footprint beyond trying to sublease floors to other tenants. At the end of 2020, 137 million square feet of office space was available for sublease across the U.S., according to CBRE Group Inc. That is up 40% from a year earlier and the highest figure since 2003,” the WSJ reports.
And in Providence, the pandemic is resetting commercial office space — some buildings may be transformed from office to residential.
The slim hopes for the redevelopment of the vacant Superman Building may now be crushed, after plans have been proposed over the past nearly eight years to resurrect Providence’s tallest and most iconic piece of architecture.
The Providence Preservation Society writes in its annual list of the most endangered properties, “Long-term vacancy is the enemy of buildings. In the case of the iconic Superman Building in the heart of our capital city, it is kryptonite. The tallest building in the state and the keystone of downtown is well-suited for adaptive reuse and deserves the private and public investment and political will necessary to achieve a second act.”
The newest buildings that were developed with retail on their first floor nearly all have vacancies. The Wexford building has had a retail large vacancies on its first floor since it opened in July of 2019.
The Wexford project is 196,000 square feet and cost in excess of $88 million. The project received about $40 million in taxpayer subsidies, $18.8 million in incentives from the 195 Redevelopment Fund, $15 million in Rebuild Rhode Island Tax Credits, a million in sales tax credits, and the project has a tax stabilization agreement (TSA) with the City of Providence.
Similar retail vacancies continue in the River House project that received tens of millions in subsidies state and local subsidies. It has 5,500 square feet of vacant retail space, according to Loop Net. Similarly, the newly opened Nightingale Building has nearly 2,000 square feet. The retail For Lease signs repeats over and over across downtown — good news for entrepreneurs and bad news for landlords.