The office market giveth, and the office market taketh away.
Magellan Health Services has signed a lease for the fifth floor of the WestMark II office building, which has been vacant since MeadWestvaco moved downtown last summer.
But Magellan is downsizing, not expanding, which means that the 110,000 square feet they occupied at 4240 Cox Road and 4300 Cox Road is now looking for a tenant.
“Unfortunately, in this market, a lot of the leasing we’re doing is making companies smaller,” said Jeff Cooke of Cushman and Wakefield | Thalhimer, who brokered the deal for WestMark II owner RER/New Boston West Broad Street LLC.
The lease, signed in late June, marked the second big tenant to commit to WestMark II in recent weeks. SunTrust leased 84,000 square feet on the second and third floors of the building in June.
Cooke said that he is drawing up several proposals for prospective tenants for the final two floors and that inking the deal with SunTrust made securing tenants for the rest of the space a little easier.
“There is a psychology to it,” he said. “Nobody wants to be first. After SunTrust signed, things started to move quicker.”
Magellan will vacate its Cox road office, owned by Banks Brothers Corp., in September. Thalhimer broker Evan Magrill, who represents the Bank Brothers buildings, said that he had shown the space several times in the past month but that there were no leases to announce.
Magellan entered the Richmond market in 2009, when it acquired First Health Services from Coventry Health Care for $110 million.
Company spokesman Chris Pearsall said the Magellan wasn’t downsizing because of layoffs. He said that when Magellan inherited the leases from Coventry, there were still Coventry employees in one of the buildings. The lease at WestMark II “more accurately reflects” Magellan’s space needs, Pearsall said.
The vacancy rate at Innsbrook has been falling steadily over the past few months. Will Bradley, an analyst at CBRE, said in June that the vacancy rate after the first quarter was about 24 percent but that the number should be closer to 10 percent once major tenants such as SunTrust and Allianz (formerly Mondial), which recently leased up Deep Run I, move in. (CBRE’s number counts buildings that are occupied, not leased.)