The 20th century also witnessed the arrival of state institutions in Preston. In 1904, Norwich State Hospital was established on a large tract of land, part of which was in the Laurel Hill area of Norwich, the rest in Preston. Ironically, most of the State Hospital grounds are in Preston. Norwich State Hospital quickly grew to a large institution with several thousand inmates. A self-contained facility, the hospital had relatively little impact on the town, although staff and service personnel often established their place of residence in Preston.
Presently, this area, now known as Preston Riverwalk, is owned by the town of Preston and a Development Agency is working to market the property.