Another Major Office Building in Providence Goes Up for Sale - What Is the Future of the Office

Another Major Office Building in Providence Goes Up for Sale - What Is the Future of the Office

GoLocal reported Tuesday that the 12-story Citizens Plaza tower is for sale. Now, GoLocal has learned that another major Providence commercial office building is up for sale.

“Gateway Center offers potential investors the opportunity to acquire a Class A office building with an aesthetically modern feel and ideal location with large and accommodating floor plates allows for the flexibility that current tenants seek in today’s environment,” according to the marketing material for property prepared by CBRE.

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The Gateway Center office building today has a 43% occupancy rate. The building was originally built more than 30 years ago and American Express was the major tenant. It had been wrapped in controversy.

Construction was financed through $23 million in Rhode Island state bonds, which the state retirement system acquired. In 2004, the building’s developer went bankrupt and the pension fund took control of the property.

In 2006, a Connecticut developer acquired the building. Most recently, in 2009, U.S. Bank purchased the property at a foreclosure auction for $13 million.

And the building has sold again and again.

 

The Sale of Two Major Class A Buildings Raise Questions About the Future of Class A Office Space in Providence

The two buildings are a major portion of Providence's Class-A office space. Citizens Plaza is 218,850 square feet of Class A and Gateway is 117,982 square feet. Combined the two buildings are 336,832 square feet.

With some companies returning to the office in part or in full, questions continue to be asked about the future of the office workplace. Some workers want to continue to work from home avoiding painful commutes. Others want to return to the office to enjoy face-to-face collaboration and socialization.

No company demonstrated the competing issues better than the battle at Apple -- the most valuable company in the world.

"Apple expects employees to return to their desks at least three days a week when its offices reopen. And although the Covid-19 delta variant has made it unclear exactly when that will be, Apple’s normally heads-down employees are pushing back in an unprecedented way. They’ve created two petitions demanding the option to work remotely full time that have collected over 1,000 signatures combined, a handful of people have resigned over the matter, and some employees have begun speaking out publicly to criticize management’s stance," reports Vox.

"Apple employees who don’t want to return to the office are challenging the popular management philosophy at many Silicon Valley companies that serendipitous, in-person collaboration is necessary to fuel innovation," continued Vox.

Closer to home, Rhode Island companies are having the same debate. In a February of 2021 article in GoLocal, one top business leader pointed out how the pandemic changed everything.

“I don't know any organization that rents office space that isn't rethinking its value, including our team at BIF," said Saul Kaplan, Founder and Chief Catalyst of Business Innovation Factory (BIF).  BIF is known globally for its innovation conferences.

 

Citizens Plaza for Sale

The sale of One Citizens Plaza less than three years after it last sold raises more questions about the market's stability.

The asking price for Citizens is unknown, but according to Providence tax records, it is assessed for tax purposes at more than $33 million.

In 2018, GoLocal reported that the Citizens Plaza was being auctioned off. The minimum bid in 2018 was $11 million.

Presently, the owner of the property according to Providence tax assessor's data is Blue Bell Citizens Plaza, LLC — the limited liability corporation's address is listed at a single-family home in Oklahoma City, Oklahoma.

The value of office space, in general, has been wildly impacted by the pandemic. It is unknown what the short and long-term impact of the virus is on the Providence commercial real estate market.

A report from CBRE recently found that the Boston market has been the fastest in the country to rebound. But, the future of Providence's office space recovery is in question.

 

Gateway Attracted Major Tenant in 2010

In 2010, GoLocal reported that the building had attracted a major tenant:

Admirals Bank, formerly Domestic Bank, is moving its headquarters to the Gateway Center which used to be known as the American Express Building. The bank has over $265 million in deposits and is presently headquartered in Cranston.

In October, along with the name change, Admirals announced expansion plans, "(Admirals) has entered into an agreement to acquire four new branches from Investors Savings Bank, pending regulatory approval. These former Millennium bcpbank (“Millennium”) branches will expand the Bank’s total retail branches to 13, consisting of seven in Rhode Island and six in Massachusetts."