Highland Corporate Park addition seeks tenants

At a time when the state’s commercial real estate market remains soft, a leading developer of office and industrial parks in northern Rhode Island is pushing to fill out its newest and highest-end development with a growing cluster of biotech and retail companies.
The Rhode Island Economic Development Foundation recently completed construction of a new, adaptable 20,000-square-foot building in the Highland Corporate Park which it will begin marketing to tenants this winter.
Highland is the newest of four business parks in the nonprofit’s portfolio built over the past 50 years and may be the last for awhile as the organization looks to diversify into smaller, faster-moving projects.
Located on the Woonsocket-Cumberland line, Highland Corporate Park is home to CVS Caremark Corp.’s headquarters and the foundation is trading on the benefits of proximity to the health care giant to attract new tenants.
“Demand across the region is still very soft, but in general the strongest areas have been in biotech or in companies that provide sales service or accounts for CVS,” said foundation Vice President Marcel Valois. “There is actually a little micro-market here with a number of major manufacturers or retailers that like to be close to CVS.”
If the foundation can attract new tenants to the 20,000-square-foot building, which cost approximately $2 million to build, only two of the 27 lots in the 235-acre park will remain undeveloped.
Those other two lots could be sold to companies looking to construct their own buildings or the foundation could build structures similar to the recently completed “flex” building, which can be customized to fit the needs of the tenant. The only use the park does not allow is warehousing and distribution.
The Rhode Island Economic Development Foundation was formed through the 2005 merger of three other nonprofit groups – the Blackstone Valley Development Foundation, the Industrial Foundation of Rhode Island and the Woonsocket Industrial Development Foundation – that had been creating business parks in the state since the 1960s.
The older projects include the 1960s-era North Central Industrial Air Park in Lincoln, 1970s-era Westerly Industrial Air Park and 1980s-era North Central/Interstate-295 Industrial and Office Park in Lincoln, which is home to Amica Insurance.
The first phase of the Highland Park started in the 1990s and the development has slowly but steadily grown since. Highland got a big boost three years ago when CVS Caremark built its Caremark call center and new financial offices on the newer Cumberland side of the park. In total, CVS has eight buildings in the park.
In addition to CVS, Highland tenants include Tiffany & Co., Neurotech Pharmaceuticals Inc., Precision Dermatology Inc., Pfizer, MedCure, Numark Industries, Proctor & Gamble and Johnson & Johnson. According to Valois, aside from the new building, Highland has 100 percent occupancy.
In its most recent strategic plan, the economic-development foundation lists filling out Highland as a primary objective.
But other goals make it clear that the organization is looking beyond its traditional role in building office parks to a more diverse set of projects tailored to the more challenging current commercial real estate market.
“We have not started our next project yet, but our strategic plan includes not just office parks, but smaller infill projects in urban areas and brownfields,” Valois said. “We are not solely an office-park builder.”
Suitable land has become more expensive and harder to find, while tying up capital on projects that could take decades to complete can limit the organization’s ability to do other things.
In addition to looking at smaller projects, the organization’s strategy also includes stretching its reach to other areas of the state. The organization also provides real estate consulting services to companies and groups.
Despite the park’s relative health, the foundation faces a difficult market in which to fill out Highland.
In its third-quarter report on the market for office space in greater Providence, CresaPartners predicted “limited leasing activity” due to poor economic conditions that would result in landlords offering generous incentives to keep or attract tenants.
The foundation’s other office parks are all doing fairly well, Valois said, with vacancy rates of less than 20 percent.
As for where the foundation will focus its resources once Highland is built, Valois said it could be anywhere in the state and in any number of project types.
“We will be looking at a broad array of types of projects to invest in and we would develop anywhere in Rhode Island,” Valois said. “With lots of buildings built in the 50s and 60s and brownfields, there are plenty of opportunities.” •

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