ADP, the payroll services and human resources management company, will be consolidating its East Providence and Coventry offices in about 25,000 square feet of new offices at 300 Jefferson Boulevard. The move is expected to happen in September once the space has been built out, Thomas Sweeney of Sweeney Real Estate and Appraisal said last Friday.
The lease is a bright spot in the Warwick market for Class A office space, although City Tax Assessor and Collector Ken Mallette doesn’t see it as a complete turn around … yet.
He said the city has 1 million square feet of Class A office space, of which he estimates 15 to 20 percent is vacant. Before 2008 and the recession, he estimates as little as 5 percent of the available space was vacant.
“It’s slow, but it’s pulling up,” he said of the recovery. “There’s no boom here.”
Sweeney brokered the lease to bring ADP to Warwick and nearly fully occupy the three-story office building owned by DBS Development LLC. The building was completed in 2007 and sat virtually vacant for several years.
“It’s a reflection of what was happening in the economy,” Sweeney said of the building’s prolonged near vacancy.
Now that it is about 95 percent leased, is it an indicator that the demand for Class A office space is returning?
Sweeney is not prepared to make that leap. He said that ADP had been looking to expand offices for some time and at one point was looking for 40,000 square feet. Other sites were looked at and the Warwick location was picked on the basis that it is not too far from its offices on Pawtucket Avenue in East Providence or those in Coventry. He said Warwick’s central location and Jefferson Boulevard’s easy access to Route 95 were factors.
As for signs that the demand for office space is improving, Sweeney said there are “underlying issues” that are dampening the market. He said municipal deficits and financial stability play a role, although he does not believe, in this case, it either played a role in ADP’s decision to leave East Providence or to pick Warwick.
From Mallette’s perspective, the office space market is showing some life.
“At least it is not going the other way,” he said.
Office space is a critical component of city plans for the Warwick Station Development District. The plan calls for 1.5 million to 2 million square feet of new uses between the rail corridor and Post Road. Envisioned is a combination of office, residential and retail development in the Intermodal zone.
According to Costar, a commercial multiple listing service, Warwick had a total of 3.9 million square feet of Class A, B and C office space in 350 buildings with a combined vacancy rate of 8.7 percent in 2011.
Sweeney did not disclose details of the lease agreement, but talked in general terms about the office space market. He said that at the height of the market, Class A space was going for the mid $20 per square foot with a triple net lease for 5,000 square feet of space and more. Today he said that space is leasing for the low teens with smaller offices of 1,500 to 2,500 square feet leasing at higher rates.
Sweeney contacted ADP and asked that they speak with the Beacon.
Sweeney then returned the call to the newspaper, saying that ADP really didn’t have much to say other than “they are happy to be coming to Warwick.”