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.
Martin Blum, Colliers International
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 which were from the buyout of the local, family-owned Ukrop’s chain, including its first ground-up store in Edens’ Charter Colony development in Midlothian.
In July of last year, Publix announced plans to buy 10 of the Richmond-area stores that Martin’s parent company, Ahold, bought from Ukrop’s six years earlier. Ahold chose to sell its Richmond area stores after its merger with Delhaize Group, and focus on its Food Lions in the market. Rumors are that Publix will look to stabilize, then move forward with additional locations. Two of the ground-up opportunities that have been announced by Publix are in Brandy Creek Commons in Mechanicsville, which is being developed by Morgan Property Group, and Peterson Cos.’ Nuckols Place development in Glen Allen, which is now open.
Other recent grocery entries are two Wegmans stores, the 115,000-square-foot store in Stonehenge Village in Chesterfield County, and the 120,000-square-foot West Broad Marketplace location, about a mile west of Short Pump Town Center, in western Henrico County. Plans are also under review for a new Whole Foods Market that will be part of an urban infill redevelopment near the Scott’s Addition submarket.
The German discount duo, Aldi and Lidl, continue to search throughout the MSA for high-visibility sites in well-trafficked corridors. Aldi currently has 11 stores planned and is under construction on a 500,000-square-foot divisional headquarters and distribution center near Amazon’s 1-million-square-foot fulfillment center in Dinwiddie. This is one of two similarly sized Amazon facilities in the area. Not to be outdone, Lidl is in position to have at least eight new stores open in the market in the next year, with three opening in the next month.
On the leasing side, the market has seen a handful of big box activity. Burlington and Tuesday Morning have leased space at Hancock Village in Chesterfield, while AC Moore has signed on for just over 20,000 square feet in West Broad Marketplace. Two former Martin’s supermarkets that were not claimed by Publix have found new tenants; Hobby Lobby will open at Hanover Square Shopping Center, and Goldfish Swim School will take one third of the old Martin’s space at Gayton Crossing Center. The region’s second New Grand Mart international grocery store will take over a vacant Food Lion space at West Broad Commons.
In the Near West End, joint owners Thalhimer and Rebkee have received approval from Henrico County to begin work on the $30 million renovation of Regency Square Mall. As part of the redesign, Regal Cinemas will replace one of two Macy’s as one of the new anchors. The developer’s redesign excludes the existing Sears, JC Penney and Firestone buildings.
Multiple new retail centers are in various stages of development. One of the most interesting is the walkable, architecturally appealing, 70-acre Greengate development near Short Pump Town Center. The mixed-use property boasts 100,000 square feet of local restaurants, fitness and personal service uses; 90,000 square feet of office space; single-family homes and townhomes; and a new Lidl store.
Large shopping center sales have also been a trend of late, with the sales of Chesterfield Crossing to the Peterson Cos.; West Broad Marketplace, a newly developed 400,000 square foot Wegman’s- and Cabela’s-anchored center, to MCP West Broad Marketplace, an entity tied to Washington, D.C.-based MetLife Real Estate Investors; and The Shops at Arboretum, which sold to Mishorim Gold Richmond LP, a private equity fund out of Newport News.
— Martin Blum, Vice President, Colliers International. This article was originally published in the August 2017 issue of Southeast Real Estate Business.