At the end of last year, local development firm Hunt Investments LLC and Virginia Beach-based Armada Hoffler together purchased the building at 700 E. Franklin St. for $7.2 million.
Ron Hunt, managing partner of Hunt Investments, said the building became available after the New Mexico-based REIT that owned it defaulted on its loan.
“It was an opportunity to pick up a valuable asset at a good price,” Hunt said.
The property is assessed by the city at more than $8 million.
Hunt said he and Armada Hoffler are planning on converting the 12-story building into 115 units made up of studios and one- and two- bedroom apartments. The building was originally built in 1912.
Hunt said that their target demographic will be people working downtown, including young professionals.
The project is expected to cost about $24 million and will be funded by a combination of bank financing, historic tax credits and new market tax credits, Hunt said.
The property also includes an attached five-story annex that was added in the 1950s. Hunt said the top three stories of the annex will be converted to apartments, while the bottom two floors will continue to be office space. The building has 10 commercial tenants.
“Ideally we’d like to move the existing tenants into the annex, which we’ll renovate with all new stuff and make it real pretty,” Hunt said.
Both buildings combined cover more than 175,000 square feet.
Hunt said the developers plan to start work in August and will likely take two years to complete the project.
The endeavor will be Armada Hoffler’s second major project in Richmond, following the new Williams Mullen tower that was constructed last year. Armada is majority partner on the 700 Centre building.
Tony Nero, president of Armada, said his firm hopes to pursue more projects in the Richmond area.
“We’ve obviously developed a lot of relationships in Richmond, and we want to be part of the resurgence occurring downtown,” Nero said. “Our hope is to continue to grow our business in Richmond and the surrounding area.”
In addition to development, the company also does construction work and is looking to bid on projects in the area.
Having just finished a brand new office tower downtown, Nero said that the 700 Centre tower is better suited for an alternative use.
“That building is outdated for current office requirements. It has very small floor plans, so it lent itself better to apartments than office in the current environment,” Nero said.
Nero said the market for apartments downtown is growing, noting the conversion of the John Marshall Hotel as an example.