Richmond’s office market stands out as a resilient post-pandemic performer, with strong relocation activity, a notably low vacancy rate driven by steady return-to-office trends and dynamic development, including office-to-residential conversions that are reshaping both the office and retail landscapes.
Relocations have outpaced renewals in 2025, accounting for 78 percent of leases signed so far this year — the highest ratio of new leases to renewals since before 2019. This marks an increase even over the past few years, which were already remarkably healthy.
Richmond’s overall leasing activity remains stable, escaping the post-pandemic decline that crippled many other markets. The region has also recorded positive absorption for four consecutive quarters, signaling steadily increasing demand following occupancy losses from 2021 through 2023.
Return-to-office initiatives have reignited space needs that have been put on hold for months, or even years. As a result, average daily employee attendance in downtown Richmond has risen from 2,200 in 2022 to more than 3,000 in 2025, according to Placer.ai data, analyzed by CBRE Research. While this still trails pre-COVID levels by about 43 percent, it reflects progress toward restoring a balanced office market.
Class A and B properties have repeatedly shown positive net absorption when broken down by building class, while Class C continues to lose occupancy. This trend reflects Richmond tenants’ growing preference for higher quality spaces, despite the premium price tag, as well as a desire for more modern, updated environments. This shift in user preference has rendered many older office buildings obsolete. In response, the market has seen a reduction in inventory and availability, as vacant buildings are sold off to rid the supply pool of non-productive offices.
Many of these defunct office buildings have been acquired by new owners hoping to capitalize on conversions rather than building from the ground up in a land-constrained market. For example, Dominion Energy sold its 20-story office tower at the corner of Eighth and Main streets to Douglas Development, a Washington, D.C.-based firm that plans to convert the office building into 200 hotel rooms and 290 luxury apartments. Douglas is just one of several multifamily developers buying office space in downtown Richmond for conversion, a trend that is encouraged by federal and state tax credits for redeveloping historic buildings and properties in designated opportunity zones.
A joint venture between RPC Realty Capital and Kalyan Hospitality is spearheading the conversion of the vacant Wytestone Plaza office building and was one such recipient of historic preservation tax credits. The 280,000-square-foot building dates to the 1960s, making it eligible for both state and federal tax credits. The multifamily conversion project is currently under construction and will add 300 units to the market. According to the Partnership for Housing Affordability (PHA), the Richmond metro area continues to face a significant housing shortage, making the adaptive reuse of underutilized office space into residential units a trend that is likely to continue.
Mixed-use projects that combine office, multifamily and retail components are also capturing demand in the Richmond market, creating opportunities for new office space outside the constraints of the crowded downtown core. To circumvent the lack of space available in Richmond’s central business district, many tenants are relocating to suburban submarkets such as Innsbrook to the northwest and Midlothian to the south. The advantages of more affordable living, less traffic congestion and building amenities such as attached parking and complementary gyms are drawing users and developers out of the city center.
The Diamond District redevelopment project in Richmond’s northwest quadrant is one of the largest upcoming mixed-use developments, totaling 67 acres. The project officially broke ground in April 2025. In addition to a new Minor League Baseball stadium for the Richmond Flying Squirrels, CarMax Park, the project will include residential, retail, public infrastructure and more than 900,000 square feet of office space.
Similarly, the Genworth redevelopment project in the Glenside area is revamping 46 acres into a mixed-use development that includes both renovated and new office space. Ongoing projects like these will help revitalize the market’s inventory and add more in-demand Class A space.
The market fundamentals in Richmond are strong, with stable demand and a development pipeline that supports the growing need for newer, more modern office space. Leasing activity is steady as more companies return to in-person work, and the overall vacancy rate sits at just 11.5 percent.
Conversions are taking underutilized space off the market and redirecting it toward multifamily and retail uses, while new office developments are being designed to fit evolving tenant preferences. Richmond’s office market is a shining example of how a smaller city’s adaptability not only carried it through the pandemic, but also continues to shape its future.
— By Katrina Subick, Research Analyst, CBRE. This article was originally published in the August 2025 issue of Southeast Real Estate Business.