Richmond is thriving and the office market is following suit. The office market, like the broader Richmond region, benefits from Richmond’s diverse economy, high-quality of life at a reasonable cost of living and the steadily growing, highly educated workforce. These attributes make Richmond an attractive option for large employers evaluating cities for operations. Recent entrants to Richmond include CoStar Group, ICMA-RC and Owens & Minor. The CEO of CoStar pointed to Richmond’s educated workforce, affordability and excellent quality of life as the reasons Richmond recently beat out several other Southeast U.S. cities as the new home for the company’s global research headquarters. Growth from within Richmond is also driving the market with new developments of over $1 billion in the pipeline or currently under construction from two of Richmond’s largest employers: Virginia Commonwealth University Health System and Dominion Energy. Their developments in downtown Richmond are accompanied by a wide array of creative office developments in the formerly industrial Scott’s Addition micro-market located near the convergence of Interstates 64 and 95. The city of Richmond continues to be the recipient of most new office development with suburban development being limited and mainly healthcare centric, led by Bon Secours Health System and …
While there has been a strong demand for investment properties in Richmond, there remains a limited availability of both freestanding facilities and portfolio deals. In recent investment activity, the Byrd Corporate Park in eastern Henrico County sold to a joint venture between Dreyfuss Investments and Wells Holding Group for $31.3 million after previously transferring in 2011 for $26.3 million. The 10-building flex complex spans 475,783 square feet and was 80 percent leased at the time for sale. The three-building Interport Business Center, also located in eastern Henrico, sold at the end of 2017 to MDH Partners, adding to its Richmond International Airport area holdings. Containing 620,296 square feet total, the complex sold for $29 million and is now fully leased. Leasing Buoys Occupancy Local expansion has remained strong, a trend consistent with the Richmond market, and regional and national companies with an existing presence in the area have also announced expansions. The metro area has also seen the introduction of new manufacturers with large industrial footprints, further evidencing the benefits of the area’s location and infrastructure. At the mid-year mark, the Richmond area’s industrial market has continued to strengthen, closing with an overall occupancy rate of 94 percent in the …
December of this year will mark the 30th anniversary of the movie “Wall Street” and the introduction of the antihero, Gordon Gekko. In that movie, Gordon delivers the iconic “Greed is Good” speech to the shareholders of a besieged paper company. While things in the end did not turn out well for Gekko due in large part to his greed, the undertones of that speech are uncontentious: Performance and adaptation will come about when there are strong incentives to evolve. The evolutionary spirit of retail real estate is taking shape here in Hampton Roads and great things are happening. Grocers Take Battle Positions The Hampton Roads grocery industry has evolved over the years in large part due to fierce competition from Aldi and Lidl. These two German-based competitors will collectively bring over 20 new locations to the region, and bring with them a new no-frills experience with staple grocery items at a lower price point. Additional grocer announcements in the market include the first Wegmans that committed to a site near Town Center of Virginia Beach, Kroger’s four new developments throughout the region (although a recent freeze in capital projects have stalled those) and Walmart’s recently opened store in Virginia …
The Richmond retail market continues to be strong. Overall vacancy rates are slightly higher than usual, hovering around 7 percent with negative absorption, due to all types of new products coming online in the first half of 2017. The market is adding millennials at double the pace of any other generation and has been recently named in multiple media outlets as one of the top living destinations for millennials nationwide. With this influx, multifamily development in Richmond is robust, which in turn is attracting all types of urban retail and chef-driven restaurants. The most popular submarkets for new urban retail are the Central Business District, Shockoe Bottom and the white-hot Scott’s Addition, with many developers taking advantage of Richmond’s Historic Tax Credit program. Richmond’s famous grocery wars continue with major players jockeying for the best positions. Kroger has historically positioned themselves well in the market with 18 stores, many of which have gone through recent expansions to the Marketplace concept. It recently scrapped plans for the development of two new relocation positions in Mechanicsville and Colonial Heights. The most recent grocery news has been Martin’s Food Markets exiting and Publix entering the market. Martin’s peaked at 19 stores, most of …
Over the past 12 months, a surge in out-of-market activity has stabilized Richmond’s downtown office market, which had faced a seemingly insurmountable glut of space just last year. For years, Richmond’s Central Business District (CBD) struggled to retain tenants as many sought more affordable locations in the suburbs, while other tenants shed space as they optimized their footprints. However, with a steady flow of high-profile inbound operations into Richmond’s CBD, the momentum has since shifted and the re-urbanization trend, an established facet of many of the nation’s major markets, has now taken hold in Richmond. Out-of-Market Demand Swells After five consecutive quarters of securing a sizable new-to-market operation, the cumulative direct impact of this inflow climbed to over 300,000 square feet. This surge in inbound activity played a pivotal role in stabilizing the CBD, which captured 94 percent of these inbound operations. Much of this activity has been driven by the explosive 14.9 percent growth in Richmond’s millennial population from 2010 to 2015, per a recent study by the Urban Land Institute for Time magazine. According to the study, Richmond is the second fastest growing city for millennials in the country, only behind Hampton Roads. Similarly, Virginia shot up in …
At the mid-year mark, the Richmond industrial market has continued to strengthen, closing with an overall occupancy rate of 91 percent in the categories being tracked — Class A, B and C vacant and investor-owned product with a minimum of 40,000 square feet of total rentable building area (RBA). Class A occupancy decreased slightly from 96 percent at the end of the first quarter to 95 percent at the end of the second quarter, and Class B occupancy has remained steady at 92 percent. The year-to-date net absorption is in excess of 1.5 million square feet, in part due to lower reported vacancies in the Class C former tobacco storage complex located south of downtown Richmond. The inventory of quality, freestanding facilities available for owner/users to purchase remains in short supply, with central locations in even greater demand and experiencing a shorter shelf life. CoStar reports overall industrial occupancy at 95 percent for products of all sizes, including investor-owned facilities, but excluding flex space (minimum 50 percent office). Richmond’s strategic Mid-Atlantic location along Interstate 95 provides access to 55 percent of the nation’s consumers within two days delivery by truck. In addition to being the northernmost right-to-work state on the …
Millennials are the largest and fastest-growing retail consumer segment in the nation. In Hampton Roads, this demographic represents 30 percent of a total population in excess of 1.7 million people. This tech-savvy and largely transient group spends approximately $3.4 billion on retail and dining every year in the local economy. It is widely acknowledged that Millennials are changing the retail industry. Developers and retailers alike, faced with rapidly changing spending patterns, more than ever must focus on the shopping, living and working trends of these consumers in order to ensure that future developments meet the needs and expectations of this demographic. The well-established, nationwide trend of shoppers migrating to walkable, mixed-use environments has led to the proliferation of multi-faceted, pedestrian-friendly developments that feature specialty retail as an integral part of a live/work/play theme in a more or less urban setting. Hampton Roads is no exception to this movement. This explains the growth of lifestyle centers in Hampton Roads, as well as the successful repositioning of some traditional malls in the region. The combination of these upscale projects and the purchasing power of the large population base has finally caught the attention of many upscale national retailers that heretofore had considered …
Greater Richmond’s industrial market is as strong as it has been in a generation. Given the overall growth of the economy, including industrial employment and investment, it appears that the engines driving industrial economic growth will remain steady and the need for industrial real estate will continue to be steady. Greater Richmond’s industrial market is moving fast and on most cylinders, with the only laggard being pure speculative development of high-bay large block industrial and small incubation flex product. All other cylinders are pumping, including industrial and flex leasing, design build-to-suits, land sales, freestanding occupier building sales and investment sales. Absorption and general growth activity is coming not only from local existing companies and start-ups, but also by companies outside of the area looking to relocate or open additional facilities here. The flavor of the demand has been relatively diverse reflecting the Greater Richmond area’s stable economy and Mid-Atlantic location with its superior logistic opportunities. Economic Trends Greater Richmond’s population is nearly 1.3 million people, and total employment is more than 650,000 in the Richmond metro area. The diverse economy includes 10 Fortune 1000 headquarters; pharmaceutical, chemical, biotech and other 21st century manufacturers; financial and information technology services; Fifth District …
This year is shaping up to be very exciting and productive for the Richmond retail market. The Richmond retail market has started at a brisk pace for the first half of 2015, similar to the end of 2014 as it absorbed 111,889 square feet. The vacancy rate has continued to decline over the past 12 months as well. The overall retail vacancy rate in Richmond tightened to 6.6 percent, a 50 basis point improvement over last year. The main drivers of retail activity throughout the Richmond MSA continue to be grocery stores, fitness centers and restaurants. Early this year we saw the commencement of construction at two Wegmans-anchored developments in Richmond, one in Short Pump and another in Midlothian. The Midlothian Wegmans will anchor the new Stonehenge Village and is on pace to open in early 2016. The Short Pump Wegmans will join Cabela’s in the new West Broad Marketplace, a 400,000-square-foot development on the western edge of Short Pump. There has also been solid activity in the market from several other grocers, including Walmart Neighborhood Market and Aldi. Each of these concepts has opened four new stores in the market. Another grocer poised to enter the market is LIDL, …
The Richmond metropolitan area, with a population of 1.3 million, is bursting with multifamily development. The growing MSA contains more than 72,000 apartments units (45 percent Class A) and has 2,018 units under construction with another 5,826 in various stages of pre-development. On top of all this activity, the overall market occupancy remains at 96 percent. The fuel for these conditions comes from the many amenities in the market, from the University of Richmond and a robust sports scene to the proximity to Atlanta, the Atlantic coast and Washington, D.C., as well as the encouraging employment picture. The city’s unemployment stands at 5 percent compared to the U.S. average of 6.3 percent; since 2000 the city’s population has grown by nearly 15 percent. These conditions allow property owners to leverage this diverse and sustainable market for multifamily investments. Richmond development also benefits from the attractive interest rates, which remain low despite having climbed 80 basis points since late January. Along with monitoring this upward trend, news earlier this month from the Federal Reserve of a rate hike will serve as a caution sign for investors. Whether we see this hike in the next couple of months, or not until 2016, …