City could attract researchers

This could be the year that Providence realizes its strengths in businesses that are part of the “knowledge-based” economy and attracts more researchers and “geeks” to the Ocean State, says Richard Seline, CEO and principal of New Economy Strategies, a Washington, D.C.-based consultant.

Seline made the prediction at the 2008 Economic Outlook Breakfast, held by the Greater Providence Chamber of Commerce and Sovereign Bank on Feb. 27. He has been compiling an economic-outlook study for the Chamber during the last three months. That report is due out within about 45 days, he said.

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“What you now have is a part of the economy that is emerging and is actually somewhat resilient to some of this (economic) up-and-down,” Seline said. He cited Rhode Island’s industrial design and engineering community – which is strong even with the state’s manufacturing jobs leaving to go overseas – as the base of what could be grown into a “knowledge economy.”

The economic vitality of the state as a whole this year will depend on the increasingly important role of its hospitals, said Constance A. Howes, president and CEO of Women & Infants Hospital.

Providence’s importance as a regional hub for research and care could be furthered by this year’s proposed merger between Care New England and Lifespan, she said. That merger would attract research facilities to the state, she told the about 500 business leaders in attendance.

“With the school of medicine here at Brown University we’ve been able to attract a tremendous number of very highly qualified, smart, cutting-edge physician providers,” Howes said. “And those people have actually given us the capacity to serve and be as renowned as those health care providers to our north.”

While all the elements are in Rhode Island, it might be a struggle to find space for them, said Charles T. Francis, president and partner of CB Richard Ellis/New England.

“Again, we need a very large research building,” he said. “We need a 400,000-square-foot building in this city that would attract research and development.”

Francis said the commercial real estate market hasn’t been much affected by the residential market’s downturn.

An annual Sovereign Bank survey – one of 11 regional surveys that the bank administers throughout New England – showed that average household income in Providence is on the rise, at an annual 12-percent rate and should, by 2012, reach $74,531.

Business owners and consumers both ranked “Overall Quality of Life” as the Ocean State’s top strength for 2008. The cost of oil is consumers’ top concern and taxes are the largest business concern, according to the surveys.

The state budget deficit – projected at $379 million during the coming fiscal year – will affect businesses this year, predicted Peter Mezei, a principal with Providence-based accounting firm Lefkowitz, Garfinkel Champ & DeRienzo.

“I think over the last five years or ten years – depending on how you want to measure it – we have been living beyond our means,” Mezei said. “Now, special sources of money have dried up and we’re faced with reality.”

That reality is cutting spending, he said.

At the federal level, economists this year will have to keep interest rates at levels that boost the national economy, but keep inflation low, said Steve Andrews, vice president of Sovereign Bank Capital Markets Group.

“We expect rates to … maybe trend down over the next quarter or so,” Andrews said. “Hopefully they will correct when the economy starts to get better in the second half of the year.” •