A Chicago-based developer that wants to add some sparkle to the Richmond skyline has an anchor tenant and an aggressive timeline.
But it also has a hefty to-do list before it starts on a proposed $110 million, 275,000-square-foot tower on East Cary Street to be anchored by law firm McGuireWoods.
The developer, Clayco Inc., has to get its plan of development for the 15-story building approved, take possession of the portion of Eighth Street that divides the property diagonally in two (a move that would almost certainly require City Council approval), close on financing and buy the piece of land from Dominion — all before its planned groundbreaking in the spring and expected opening in 2015.
Larry Chapman, a principal at Clayco, said his firm’s recent work on the Amazon distribution center in Dinwiddie County showed that it is up to the challenge.
“We’ve built a 1.1 million-square-foot distribution center in three months,” Chapman said of the Amazon project. “We do everything on an aggressive timeline, because time kills all deals. We’re not ones to let a deal drag out.”
The firm is working with several lenders to finance the tower, to be called Gateway Plaza, but nothing has been finalized, Chapman said. Clayco wants to buy the land from Dominion by early May and break ground that month.
Chapman would not say what Dominion is asking for the land, which is currently a parking lot, but the city most recently assessed it at about $5 million.
If the building were determined by the city’s land-use office to be within the parcel’s current zoning, the city’s director of planning and development review would most likely approve the plans. If not, the developer could face a potentially lengthy special-use permit process.
Chapman said that he’s confident Clayco’s plan meets zoning requirements and that conversations with the city had led him to think Richmond was going to play ball on relinquishing its portion of Eighth Street.
Plans for the tower call for 261,000 square feet of office space, 10,000 square feet of ground-floor retail and 520 parking spots. McGuireWoods will occupy all but two floors of the building.
Colliers International, the leasing agent for the project, is looking for tenants to fill the new skyscraper. If enough tenants are lined up, the building could grow to 18 or 20 stories, Chapman said.
“We can’t put a lot of spec space on the market right now,” he said. “But there are a number of prospects looking in the area, and we are hoping to get some of them to join McGuireWoods at Gateway Plaza.”
Chapman said one reason Clayco announced the plan so early was to court those prospects.
“We wanted to put this out to the market to let people know that this is a serious project,” he said. “It’s a real deal, and we are moving forward.”
Asking price on the rent is $28.50 per square foot, per year, Chapman said. He would not discuss what McGuireWoods agreed to pay for its 217,000-square-foot lease.
BizSense reported this month that McGuireWoods was eyeing the parcel for a new office tower. Details of the firm’s commitment to the tower were reported Wednesday by the Richmond Times-Dispatch.
The deal for Richmond’s latest skyline fixture has been more than a year in the making.
William Allcott, an attorney with McGuireWoods, said the firm began assessing a potential move in late 2011 with its lease expiring in 2015at One James Center, a building the firm had occupied since it was built in 1985.
“We began exploring our options and came to the conclusion that this was the best route for our firm,” Alcott said.
According to Chapman, McGuireWoods sought bids for the tower project last year, and Clayco came out on top.
McGuireWoods occupies 244,000 square feet in One James Center, which is owned by New York City-based JEMB Realty. That accounts for more than half of the building’s 420,000 square feet.
Evan Magrill, a broker for Cushman & Wakefield | Thalhimer who represents One James Center, said he’s not sweating just yet.
“We rarely have large blocks of space available at James Center, but when it happens, companies tend to quickly seize on the opportunity,” he said. “When Williams Mullen moved out of more than 100,000 square feet into a new building, there was a tremendous level of interest in their space.
“We anticipate a very similar response this time around, and are confident that this upcoming vacancy will not be on the market for long.”
Swedish Match, the Martin Agency and Union First Market filled the space in Two James Center when Williams Mullen vacated, he said.