Schilling's 38 Studios signs lease at One Empire Plaza

By William Hamilton
PBN Staff Writer

PROVIDENCE – Curt Schilling’s video game company 38 Studios is moving into an office building on Empire and Washington streets that was once owned and occupied by Blue Cross & Blue Shield of Rhode Island.

The Maynard, Mass.-based company announced Thursday that it has signed a lease to relocate its headquarters to the building, known as One Empire Plaza.

Denise Kaigler, chief marketing officer for 38 Studios, told Providence Business News that a relocation date has not been finalized. And she said the company is still working out how much space it will rent in the six-story, 104,000 square-foot building.

In a statement Thursday, 38 Studios said it had chosen the location to “initiate and create a Rhode Island video game cluster.”

“The staff at 38 Studios is incredibly excited about our relocation to Providence and we expect to be the first of many relocating knowledge-economy companies that will take advantage of the opportunities Rhode Island provides,” Jen MacLean, 38 Studios’ CEO, said in a statement. “Providence has some of the best students in the nation, a vibrant arts community, and a dynamic urban environment with easy access to public transportation. We look forward to working closely with the Rhode Island Economic Development Corporation and local businesses in the months ahead to plan how our company's growth can also benefit the state of Rhode Island.”

The property is owned by Berkeley Investments Inc., a Boston-based real estate firm that told PBN in December that it had purchased the building and an adjacent plaza, plus an office building at 15 LaSalle Square -- both sites were owned by Blue Cross -- for $26.7 million in April 2008.

A real estate listing earlier this month indicated that the asking price for rent for One Empire Plaza's class B+ space was $21 a square foot.

The office building is located across the street from AS220, the well-known nonprofit arts organization, and the company said it was attracted to the neighborhood’s “vibrant mix of office buildings, restaurants and entertainment venues and its proximity to multiple universities rich with talent such as the University of Rhode Island, Johnson & Wales University, Brown University, and the Rhode Island School of Design.”

Keith Stokes, executive director of the R.I. Economic Development Corporation, called the announcement a “major milestone.”

The pending relocation of 38 Studios has not been without controversy.

The EDC’s $75 million loan guarantee has drawn criticism from some quarters, and has become a focal point of the gubernatorial election. Frontrunners Democrat Frank T. Caprio and independent Lincoln Chafee both have warned that such a guarantee is risky.

As part of the guarantee, 38 Studios has pledged to create 450 jobs over the next few years.

The company will not receive the entire loan allotment at once, but on a staggered basis when certain milestones are reached.

For example, the company will receive $15 million upon the loan closing, expected some time next month; another $10 million is due when a relocation date is announced, expected by Nov. 30.

The company will receive $5 million by Aug. 31, 2011, when 45 full-time jobs must be created; and $5 million by Nov. 30, 2011, when the company must have a satisfactory distribution agreement for its major product, a massively multiplayer online game code-named Copernicus now in production.

“I commend 38 Studios for quickly securing a location for the company's new headquarters in Rhode Island,” Gov. Donald L. Carcieri said in a statement. “38 Studios presents Rhode Island with a tremendous economic development opportunity. This investment creates 450 high-paying jobs, provides job opportunities for our college graduates in a fast growing industry, and will attract other interactive and entertainment companies to Rhode Island. Located in the heart of the capital city and surrounded by our universities and strong arts community, I am confident that 38 Studios will serve as a touchstone for growth in the interactive entertainment and digital media industry.”

“The new location of 38 Studios will be a significant economic boost to downtown, the city and the state,” said Daniel Baudouin, executive director of The Providence Foundation. “In addition to the high paying jobs and disposable income that 38 Studios will produce, their downtown location should result in the development of a strong, growing cluster of businesses in digital media and design, two potential targets of growth for downtown and the state.”