Few investments have seemed as risky in recent years as the construction of speculative office space in Rhode Island. Since the recession, only a handful of small office projects have been completed without a tenant already lined up.
But Johnston insurance company FM Global is not afraid to test conventional wisdom.
Hobbs Brook Management LLC, FM Global’s real estate arm, began work this month on a $60 million renovation of the insurer’s former headquarters, which it hopes to turn into a modern suburban office complex capable of luring firms from across the region.
Called Northwoods, Hobbs Brook’s project instantly became the largest active construction site in the state.
When complete, Northwoods will add 338,600 square feet of new office space into a Rhode Island market that real estate observers still consider depressed.
“We are not afraid to be a contrarian,” said Donald Oldmixon, vice president of Hobbs Brook. “We think [the market] will turn eventually and want to be ahead of the curve. We want to be in a position to take advantage of it when it does.”
Built in 1973, the building at 1301 Atwood Ave. in Johnston served as FM Global’s headquarters until 2009, when the insurer moved into a new four-story, 340,000-square-foot glass and steel complex across the street.
In addition to its current headquarters, FM Global owns the old building and 100-acre lot it sits on. In 1984, the company sold the building to New York Real Estate Investment Trust called Caplease under a leaseback agreement that expired in 2009.
Caplease tried to block the construction of FM Global’s new headquarters, but when that failed the two sides came to an agreement for the insurer to buy it back.
The building has been vacant since FM Global moved out.