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Arcade to Change Hands Again

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Downtown landmark to change hands

After nearly a decade of owning the Arcade, Johnson & Wales decides the shopping center is too costly to run.

BY PAUL GRIMALDI

Journal Staff Writer | Thursday, June 24, 2004

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Journal photo / Andrew Dickerman

The Arcade's front steps are a gathering place yesterday during lunch hour. The building's unique layout, however, has made it difficult to find tenants for the upper floors.

PROVIDENCE -- The Arcade will have a new owner in February when Johnson & Wales University gives up its lease on the 176-year-old building.

A Johnson & Wales official informed tenants of the college's intentions in a June 14 letter. The letter notes that the Arcade's ownership will transfer to the landowner, 130 Westminster Street Associates LLC.

Johnson & Wales owns the building but leases the land on which it sits from 130 Westminster Street Associates. That lease expires Jan. 31, and with its expiration the building's ownership will transfer to 130 Westminster.

Merlin A. De Conti Jr., the university's senior vice president of facilities management, said yesterday that the Arcade -- the oldest indoor shopping center in the country -- is costing too much to run. Johnson & Wales loses about $200,000 a year on the building's security and maintenance.

In a phone interview from his Charlotte, N.C. office, De Conti said, "We continue to write it off as a community service. We've lost money on it every year."

A succession of owners and managers have struggled to make the building turn a profit.

Opened in 1828, the structure was bought by the Rhode Island Association for the Blind in 1944 to block its demolition. The association had offices in the building at that time.

The association, now known as INSIGHT, sold the three-floor building to Gilbane Building Co. in 1979. The association retained ownership of the land.

Gilbane spent $3 million renovating the downtown landmark, only to give up on it after it continued to lose money.

In February 1995, Johnson & Wales paid $76,000 for the Arcade. The land was not included in that deal.

Under the 45-year lease agreement, Johnson & Wales had a three-year option to buy the land for $600,000. It did not exercise the option.

Instead, INSIGHT sold the land about three years ago, said Judith T. Smith, the organization's president. Smith said an INSIGHT board member arranged the deal. It's unclear whether that buyer is the current landowner.

Smith said it's not surprising that Johnson & Wales had difficulty running the Arcade. The building's tight spaces and unique layout make it difficult to adapt to modern-day uses.

"ONE OF THE PROBLEMS with the Arcade, no matter who owns it, is it's a historic building . . . there are lots of restrictions on it," Smith said.

De Conti said the university tried a number of ways to keep up activity in the structure, included allowing a number of nonprofit groups to use space on the upper floors and putting in two of its student-training retail operations -- Johansson's Bakery & Cafe and Gladdings clothing store.

"The first floor was never a problem -- the second and third floors have always been tough," De Conti said.

Office spaces on the upper floors are as small as 250 square feet, too restrictive for many businesses. Also, fledgling companies often shy away from the building because of parking costs.

Ultimately, the university decided it could put its money to better uses.

"We wanted to be a caretaker for it," De Conti said. "I think we've been very gracious owners."

In his letter to the tenants, De Conti said it's time for the university to give someone better suited to running a commercial building a chance to make it work.

"Representatives of the university recently met with representatives of 130 Westminster Street Associates LLC and believe that they have the experience and the ability to continue to operate the Arcade as a first-class facility in a manner that is sensitive to both the historic character of the Arcade and to its importance to the City of Providence."

De Conti referred questions about the building's future to a lawyer for 130 Westminster who did not return phone calls yesterday.

From The Providence Journal

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Citing costs, J&W selling the Arcade

By John Persinos, contributing writer | 01/29/2005

The Arcade, an iconic landmark in Providence, is changing hands.

This week, Johnson & Wales University will relinquish ownership of the three-story building, giving it to a real estate partnership that already owns the land.

The university, which bought the building in 1995, said it has lost between $100,000 to $250,000 each year on the Arcade, with last year being one of its worst losses.

The new owners will be 130 Westminster Street Associates LLC.

Ownership will be transferred Feb. 1 when the school

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CITYWATCH

Is a more restrictive Arcade good for downtown?

BY IAN DONNIS | February 18, 2005

The Arcade, the circa-1820s downtown Providence landmark well known for its distinctive neo-classical exterior columns, has long been a popular spot to grab a quick bite or pause during the workday. Considering the casual ambiance associated with the historic mall, some downtown denizens were concerned when a new management team implemented a series of changes in early February, including restrictions on access to public restrooms, the removal of distribution racks bearing such publications as the Phoenix, and an effort to discourage loitering in the building.

The differences included the posting of entrance signs announcing, "No public restrooms" and "No loitering." For some observers, the historic Arcade has changed from a cozy gathering spot into a less welcoming place casting its lot with a more upscale crowd.

The changes came after oversight of the indoor mall reverted from Johnson & Wales University to 130 Westminster Street Associates LLC, which owns the land where the Arcade is located. Merlin DeConti, J&W

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