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CRE Rehash: A year’s worth of deals and developments

J. Elias O'Neal December 28, 2016 1

Scott’s Addition stayed hot. Downtown began to heat back up. Broad Street continued its transformation. And the boundaries of Short Pump pushed ever westward.

Those were some of the noteworthy themes that played out in the local commercial real estate market in 2016.

Downtown

The Williams Mullen Center sold for $78 million in January.

The Williams Mullen Center sold for $78 million in January.

The year began with what would prove to be the market’s largest single deal for 2016, with the $78 million sale in January of the 15-story Williams Mullen Center at 200 S. 10th St.

That was followed a month later by the $42 million sale of the 24-story, 508,000-square-foot Bank of America Center a few blocks over.

Downtown’s lingering high vacancy and low rental rates for office space did lead to several big leases during the year. City and state economic officials announced CoStar Group’s plans to move into about 130,000 square feet on the top three floors of the WestRock building at 501 S. Fifth St. and bring hundreds of jobs with it.

Over on the canal, CarMax set off what could become a trend of companies from the Richmond suburbs looking for satellite space downtown in attempt to lure younger talent. It opened a 26,000-square-foot office in the Lady Byrd Hat factory building at 140 Virginia St.

Utility giant Dominion Resources – also driven by the desire to attract and retain talent – broke ground on a 20-story, 908,000-square-foot office tower that will rise over the next two years at 111 S. Sixth St. A separate, new sister tower could eventually join it on the site of the company’s current downtown headquarters.

The biggest pending transaction going into the new year is the James Center complex – a trio of downtown towers at 901, 1021 and 1051 E. Cary St. encompassing nearly 1 million square feet that is under contract to an unidentified buyer.

Broad Street

The 23-story Central National Bank tower.

The 23-story Central National Bank tower.

Over in Jackson Ward and along the Broad Street Arts District downtown, a steady stream of new tenants and development transformed the neighborhood bit by bit over the year, particularly along the 10-block stretch on Broad between Belvidere Street and the Richmond Convention Center.

Since July, six properties have sold on the 100, 200 and 300 blocks of E. Broad St. for a combined $3.1 million, according to city records, their new owners undoubtedly planning to redevelop their old storefronts into office, retail or apartment space, or perhaps go vertical with new construction. They include the sales of 209, 315, 313, 311, 309 E. Broad St.

The long-anticipated 23-story, 240,000-square-foot Deco at CNB apartments in the renovated former Central National Bank building opened and began adding new renters to the neighborhood.

New shops and boutiques began sprouting up, including Ledbury’s flagship store at 315 W. Broad St. and Chocolates By Kelly at 414 W. Broad St.

A former city-owned 0.75-acre surface parking lot at 200 E. Marshall St. was purchased for $2 million by an affiliate of Philadelphia-based Parkway Corp., which says it is pondering what sort of new development would work best for the site.

A block west, an affiliate of Richmond-based Genesis Properties purchased 0 W. Marshall St., giving the development company control of five contiguous lots – 0, 2, 4, 6, 8 W. Marshall St. – that total about an acre. The company said it is still making plans for the properties.

And city officials punted a vote into the new year on the proposed the sale of a city-owned parcel between East Grace and Franklin streets and North Sixth and Seventh streets to a development group that’s eyeing an $86 million mixed-use tower on the site. The deferral will give mayor-elect Levar Stoney a high-profile decision to reside over in his first city council meeting.

The Suburbs

Site work is underway on Saunders Station Townes, within the residential portion of Broad Hill Centre.

Site work is underway on Saunders Station Townes, within the residential portion of Broad Hill Centre.

Outside the urban core, several suburban office parks changed hands in some of the year’s largest sales, including the Forest Office Park and Windsor Business Park in western Henrico County.

The Richmond grocery wars continued to make headlines during the year, as the region welcomed Wegman’s, which set up two large stores in Short Pump and Midlothian. And Publix made a splash with its deal to take over 10 of the 19 Martin’s locations across the area.

West of Short Pump Town Center, construction is underway on the commercial and residential components of the GreenGate and Broad Hill mixed-use developments.

New retail tenants are signing on to West Broad Marketplace, following the opening of its anchor tenants, Cabela’s and Wegman’s.

Scott’s Addition and the Westhampton Theater

The Handcraft building is transforming from an industrial laundry facility to a multi-tenant building.

The Handcraft building is transforming from an industrial laundry facility to a multi-tenant building.

Scott’s Addition’s momentum carried over into 2016, with investors pouring in for prime parcels and existing buildings.

Developers Louis Salomonsky and David White solidified plans this year for two six-story residential towers that will take shape on the western edge of the fast-developing district, dubbed Scott’s View.

One of the neighborhood’s most eye-catching structures – the HandCraft building at 1501 Roseneath Road – hit a hot streak of tenant deals during the year, signing on a local electric car charger startup, a fledgling brewery and other tenants.

A group led by Yogi Singh paid around $2.5 million for 3122, 3113 and 3015 W. Marshall St., a cluster of two-story office buildings built in the ’60s and ’70s. They also bought 3115 Clay St. Those properties will look to fill demand for modern office space in the industrial neighborhood.

Local coworking brand Gather opened a location in Scott’s Addition – its second in the city – in 17,000 square feet at 2920 W. Broad St.

Demand for office also drove Roseleigh Partners LLC to pay $3.46 million for 1408 Roseneath Road, a property that’s home to three buildings totaling about 50,000 square feet on 1.8 acres.

The Better Housing Coalition jumped into Scott’s Addition by paying $5.9 million for the Quality Inn & Suites building at 3200 W. Broad St. Its plans for the building include mixed-income apartments and commercial space.

The neighborhood’s momentum, along with the GRTC Pulse rapid bus system in early stages of construction along Broad, has the city considering changes to zoning rules that would ease the path for certain types of projects, such as multifamily residential and pedestrian-oriented commercial uses such as breweries, retail, office and restaurants and potentially allow taller building heights – 12 stories maximum – and no parking requirements. That’s an issue that will continue to play out in 2017.

Not to be outdone by Scott’s Addition, the Westhampton area drew plenty of attention. Few projects were as controversial among neighborhood residents as the Westhampton at Grove, which will look to transform the dormant Westhampton Theater and a neighboring building into a mixed-use project.

Read more

It’s nearly impossible to fit all the year’s commercial real estate news into one post, so catch up on all of BizSense’s coverage of the industry here.

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One Comment »

  1. Bruce Milam December 28, 2016 at 8:05 am - Reply

    The city seems to be growing in every direction. This article failed to mention the expansions to the south–Manchester–and to the northside and Church Hill. ManChester is the most obvious opportunity for growth in the city’s future. It has the most
    easily developable land and there is so much of it. I look forward to a special article dedicated to the district.

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