A long-vacant former Circuit City headquarters building is coming back to life with its first tenant in three years.
Travelers Insurance inked a deal Thursday to occupy 71,800 square feet of Deep Run III in Western Henrico. The 383,000-square-foot building is owned by Markel | Eagle Partners and Diversified Realty Ventures.
“It gives our project a lot of momentum,” said Spilman Short, a principal at Diversified Realty Partners. “It shows the market that we’re for real.”
Travelers will downsize as it vacates Arboretum III on the Southside, where it occupies 99,000 square feet. That building, near the intersection of Powhite Parkway and Midlothian Turnpike, is owned by Brandywine Realty Trust. The firm will be moved in by September, Short said.
Deep Run III, located at 9954 Mayland Drive, went dark in April 2009 when Circuit City collapsed.
Markel | Eagle and Diversified Realty Partners bought the building in late 2011 for $12.4 million and have searched for a tenant since.
J.B. Gurley, a principal Markel | Eagle, said the landlords are in talks with other potential tenants to fill another 55,000 square feet of Deep Run III.
“I expect to have the building one-third leased by this summer,” he said
Gurley would not say how much his group had spent renovating the building but said, in all, it would be a “multimillion-dollar renovation.”
Those renovations include construction of a four-story, 66,800-square-foot parking deck attached the property.
Brokers Austin Newman and Mark Douglas of Cushman & Wakefield | Thalhimer represented Diversified Realty Ventures and Markel | Eagle in the deal.
Charlie Polk and Robert Ageloff of Jones Lang LaSalle represented Travelers.
Deep Run III’s neighboring building, the other former piece of Circuit City’s headquarters known as Deep Run I, is owned by DRCC Properties. DRCC bought the 300,000-square-foot property in 2010 for $5.75 million and leased the building to what is now Allianz Global Assistance six months later. Allianz was previously known as Mondial Assistance.
Travelers’ move to the northwest of Richmond is a big blow to the Southside office market. Vacancy in the southwest parts of the region has increased to more than 14 percent.
CBRE broker Will Bradley said that with Travelers’ move, the vacancy at Arboretum’s seven office buildings will reach almost 37 percent, unless someone else signs a lease there in the meantime.
Brandywine Realty Trust owns the majority of the Arboretum properties, which total of 500,000 square feet. Rent in the area averages about $16.30 per square foot, per year.
“Overall activity in the southwest has been slow,” Bradley said. “Technically, Innsbrook has higher vacancy, but it’s because of big empty blocks of space like Deep Run III. It’s a much more dynamic market.”
Bradley said the Innsbrook market has been leasing up more quickly because it has some natural advantages.