It’s 11 a.m. on a sunny, January morning, and the Wexford Science & Technology building – located in Providence’s I-195 Redevelopment District – booms with activity. The sounds of construction reverberate from the staircase, while laughter echoes in the lobby as a group of 20-somethings cluster around a table with coffees. One floor up, the noise dies down, hushed by the sealed glass offices where workers huddle in discussion or click away on computers.
But continue up to the sixth and seventh floors, and things look very different. Instead of a bustling coworking space with brightly painted walls and plants, the two, 31,000-square-foot floors are empty shells: unpainted, unvarnished, gray. Wires dangle from the ceilling; a ladder is propped in the corner.
State officials and business leaders lauded the seven-story 196,000-square-fot building at 225 Dyer St. – now dubbed “Point225” – as a key piece of Providence’s fledgling innovation and design district. It cost $88 million to construct, with help from a $35 million incentive package from the state.
Now, six months after the building opened, the fact that two floors remain unoccupied could be read as a sign of market weakness. But developers of Point225 did not express too much concern, and maintained that finding the ideal tenant was more important than filling the space quickly.
The underdeveloped look of the vacant space is intentional, designed to give the prospective tenants the freedom to build out the space to their needs, according to Andrew Galvin, first vice president with CBRE Inc. in New England, who’s marketing the space for Wexford. Since Point225 opened last summer, Galvin said he has given “numerous” tours to companies both in and out of the local market.
“Ideally, we’d love to have it fill now,” said Gregg Herlong, director of development for the Baltimore-based Wexford Science & Technology.
The opportunity afforded by the new office space, centrally located in a growing business area with access to New York City and Boston, means they’re not looking for just anyone.
And not just anyone can afford it, either. A listing on LoopNet, an online commercial property marketplace, lists the rate as available upon request. Herlong and Galvin declined to specify rates, although Herlong said the company considered appropriate rates to be 10% to 15 % higher than the top end of existing Class A office space in Providence.
Class A office space in downtown Providence leased at $33.69 per square foot on average in July 2019, according to a CBRE report.
Tom Osha, Wexford’s senior vice president of innovation and economic development, named life sciences or-technology innovation among the “ideal” uses of the space.
“It’s more than just a building … it’s a strategy of building an ecosystem,” Herlong said.
When the building opened in July, a majority of the space was already occupied. Boston-based Cambridge Innovation Center anchors the building, with a 15-year lease for a 63,000-square-foot coworking space called CIC Providence. Above CIC, Brown University has rented 50,000 square feet for its continuing and professional studies programs and two Warren Alpert Medical School graduate programs. Johnson & John-son has also signed a lease for 10,000 square feet on the first floor, and it plans to move its new health care technology center from the adjacent 1 Ship St. building by June, according to a company spokesperson.
Already, more than 50 businesses are leasing space through the CIC, a number that “far exceeded expectations,” according to R.I. Commerce Secretary Stephan Pryor. Several tenants have upgraded their spaces to accommodate more employees, another sign of success, according to Rebecca Webber, CIC Providence general manager.
Global wind-energy giant Orsted also plans to open up a U.S. Innovation Hub at CIC this spring. And District Hall, a part of CIC’s space run by Boston-based non-profit Venture Cafe Providence, has already hosted more than 100 events in its public collaboration space since the building opened, according to the R.I. Commerce Corp.
That the top two floors remain vacant was not a source of concern for Pryor. In fact, having available Class A “spec space” was intention-al, Pryor said.
“We frequently receive inquiries from end-users, i.e. potential tenants, seeking larger blocks of space, so it’s important that we are infusing our market with new spaces capable of accommodating such uses,” Pryor said.
Peter Hayes, co-founder of Hayes & Sherry Ltd. and partner at Cushman & Wakefield PLC, also stressed the importance of having available Class A office space in Providence.
“Our biggest fear is we attract companies here and they don’t want to wait three years [for construction of a new building],” Hayes said.
Some level of vacancy for new office buildings is not unprecedented, either. When the IGT Center (formerly THE GTECH Center) in Providence – the last new Class A office building to come on the mar-ket – opened in 2006, there was also vacancy on the top two floors, said Matt Fair, senior vice president at Hayes & Sherry.
Fair was confident Wexford’s vacancy would be absorbed within a few years, adding that the higher price was appropriate given the quality of the space.