Will Coronavirus Pandemic Kill Fane Tower and Rehab of Superman Building?

Monday, July 20, 2020

GoLocalProv Business Team

 

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Fane Tower and Superman Building

The redevelopment of the Superman building and the construction of the proposed 46-story Fane Tower in Providence are on life-support due to the coronavirus.

Neither project was moving at the speed of light before the global pandemic hit.

Combined, the two projects would mean $400 to $500 million in development and construction jobs for thousands of workers for three to four years. The Fane Tower is expected to create 1,200 to 1,500 construction jobs.

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The economy is just one of the issues.

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The coronavirus and concerns about how it transfers in highrise and high-density buildings may be a more significant challenge. In the SARS epidemic eight years earlier, the spread of the virus was linked to highrise buildings -- specifically, via plumbing systems, according to a study conducted by the World Health Organization.

 

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Superman Building PHOTO: Will Morgan

Superman Building - Seven Years of Vacancy

The Superman Building -- which is what the current owners refer to the Industrial National Bank Building at 111 Westminster Street -- has been vacant for seven long years and despite a number of potential tenants negotiating for the building, it remains vacant and decaying.

The 93-year-old building is in need of an estimated $100 million in rehab regardless if the building is used for residential, commercial office space, or a combination of the two.

A review of the impact of the virus on commercial real estate by McKinsey & Company finds, "Physical distancing has directly changed the way people inhabit and interact with physical space, and the knock-on effects of the virus outbreak have made the demand for many types of space go down, perhaps for the first time in modern memory. This has created an unprecedented crisis for the real estate industry. Beyond the immediate challenge, the longer this crisis persists, the more likely we are to see transformative and lasting changes in behavior."

Many employers have sent their office workers home to work and the future of traditional office space is unknown.

The Superman building's future was tenuous at best prior to the pandemic. Both the interior and exterior the building needs a complete transformation. And, questions have begun to emerge about the condition of the building.

A GoLocal investigation 18-months ago that included drone footage shot of the exterior condition of the vacant Superman building raises questions about the state of Rhode Island’s tallest building. The footage shows hundreds of cracks, crevices, and chipping of the limestone exterior. The decay appears to have dramatically increased over the past two-plus years.

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In February of 2019, a spokesman for the owner of the building -- High Rock Development of Newtown, MA -- told GoLocal that the building is well-maintained.

“111 Westminster Street was constructed like a fortress in 1920s. It has survived significant weather-related events over the decades with no impact to the structural integrity of the building. The owners maintain a robust maintenance and inspection schedule of the building’s exterior to ensure water damage does not occur. Licensed professionals literally rappel off the top of the building to identify any impacted areas of the exterior that need to be removed or repaired,” said Bill Fischer spokesman.

Nearly every aspect of the building’s infrastructure and mechanicals need to be replaced.

 

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Proposed Fane Tower

Fane Tower - Will There Be a Market Demand for Tower Living?

In May, one of Fane’s attorneys wrote to the I-195 Redevelopment District Commission asking that the deadlines for the project be suspended. “Our economy is in a rapidly worsening major depression and [deadlines] are no longer attainable," they wrote. 

The commission agreed to allow Fane to push two payments totaling $125,000 until July 31. 

Since the project was first proposed in 2017, many have questioned the financial viability of the project.

In September of 2019, one of the top residential real estate experts, Sally Lapides, CEO of Residential Properties, told GoLocal that she worries that the project is too big, too many units. “I think it is too many units for the demand whether it is condos or rentals.”

Since the onset of the pandemic, there has been a significant shift in the residential real estate market for homeowners to live in single-family homes and leave dense, tower-style living. 

“I think it’s the beginning of a secular shift in household behavior,” said Ken Leon, director of equity research at research firm CFRA told NBC News. “These are residents of high-rise living, in mostly urban markets, who are more actively looking for the suburbs for single-family homes — both for growing families because the millennials are aging and also for safety in terms of COVID-19.”

In November, Fane’s team paid the City of Providence a non-returnable check to the city of Providence for $205,575. The documents for the cost estimates of the project were prepared by Gilbane — one of the largest privately held, family-owned construction and real estate development firms in America.

The controversial project has repeatedly delayed by Providence Mayor Jorge Elorza and the project has drawn the ire of the Providence Preservation Society.

In contrast, trade unions have been strongly pushing for the tower.

Documents submitted to the city in November unveil that the project is planned for 550 feet tall and has grown to 500 units -- a height difference of 55 feet.

Now, in the midst of the record cases of coronavirus cases hitting the United States, a chilling effect of commercial office space, and a move away from tower living -- both these projects are highly questionable.

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GRAPHIC: Fane

 

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