Expansion of Grocery Stores Sets Tone for Richmond Retail Market
The first half of 2014 has produced a tremendous amount of activity in the Richmond retail market. The vacancy and unemployment rates have both seen a reduction within the past 12 months. The overall vacancy rate for retail in Richmond is 8.3 percent, down from 8.6 percent this time last year, and unemployment is down 70 basis points to 5.6 percent for the same period.
The main drivers of activity throughout the Richmond MSA are grocery stores. The most impactful announcement is Wegmans committing to open two stores in the market, one in Short Pump and one in Midlothian. Another newcomer to the market is A Southern Season, a gourmet food emporium based in Chapel Hill, North Carolina. A Southern Season will open a 53,000-square-foot gourmet food emporium in the new Libbie Mill at MidTown development. The grocer’s offerings include cooking classes, a restaurant, gift baskets, accessories, cookware, and a large selection of specialty food items. Libbie Mill is a mixed-use project that Gumenick Properties LLC is developing on Staples Mill Road near Willow Lawn.
Kroger has also been active in Richmond with two new Marketplace format stores in the last 12 months and a third to-be-built in Colonial Heights. In addition, Kroger is currently expanding three existing stores including Rutland Commons, The Village at Swift Creek and Ivymont Square to bring them in line with its Marketplace footprint. Not to be outdone, Martins, a subsidiary of Ahold, is currently under construction to build a 70,000-square-foot store at Charter Colony in the Village of Midlothian, a project developed by Edens. This store is Martins first new ground-up development since acquiring locally based Ukrops supermarkets four years ago. Similar to Kroger, Martins is also adding fueling centers and undertaking numerous store expansion projects in Richmond.
Another player in the grocery store arena, Wal-Mart Stores Inc. announced plans to build a Neighborhood Market concept at Meadowbrook Square Shopping Center. The 40,000-square-foot grocery store will be at the location of a former A&P at Chippenham Parkway and Hopkins Road. Wal-Mart Stores has also announced plans to build four other Neighborhood Markets as well as a Supercenter in the area. The Walmart Supercenter will anchor the redevelopment of Eastgate Towne Center on Laburnum Avenue at Nine Mile Road in Richmond’s east end.
Finally, two German grocers have identified Richmond as a growth area. Aldi and LIDL are both at various levels of site selection. Aldi is working on two new sites in the market having acquired a closed Topekas Steakhouse on Parham Road and a property on Temple Avenue in Colonial Heights. LIDL has yet to commit to a distribution network in the mid-Atlantic so its entry into Richmond will likely be delayed to 2018.
Another active category in the market is restaurants. At Short Pump Towne Center, Coopers Hawk Winery is nearing completion of a brand new restaurant at the main entrance to the mall, and Rock Bottom Brewery recently opened inside the mall.
Other active groups are BJ’s Brewhouse and Mission Barbecue, as well as a number of fast casual restaurants including Zoes Kitchen, Noodles & Co, Pie Five, Potbelly Sandwich Works, Which Wich and Café Rio Mexican Grill. Celebrity chef Mike Isabella is bringing his highly successful Graffiato restaurant into the city of Richmond as well. Additionally, several highly respected local chefs are adding to their restaurant counts with locations in Richmond and the suburbs.
The most significant investment sale occurred in December when Macerich sold Chesterfield Town Center to Rouse Properties. The 1 million-square-foot enclosed mall was built in the early 1980s and is the No. 2 mall in the market, but it is in need of some new energy. Rouse has had an immediate impact creating an excellent merchandising plan to bring in several high-quality tenants, including a 22,000-square-foot deal with H&M, as well as Tillys and Buckle. Rouse is also analyzing ways to build new stores that are accessible from both the street and within the enclosed mall.
Interestingly, one of the main political issues being debated within the city of Richmond is centered around real estate. The Richmond mayor has presented a plan to construct a baseball complex for the Richmond Flying Squirrels AA baseball team within a new mixed-use development in an historic area of downtown known as Shockoe Bottom. Local developers have presented a competing, privately financed plan to locate a new stadium and mixed-use development next to the current baseball stadium on the Boulevard. Building a new stadium at either site will be a catalyst for tremendous redevelopment and investment within the city, which will most likely include a new grocery store, and a restaurant or two.
— By Kevin South, Vice President of CBRE, and David Crawford, Assistant Vice President of CBRE. This article originally appeared in the August 2014 issue of Southeast Real Estate Business.