The two triangular lots between Eight, Ninth, Cary and Canal streets are closed. (Image via Google Earth)
Two of the city’s most valuable surface parking lots have been shut down to make way for downtown’s newest office tower.
Chicago-based developer Clayco is under contract to purchase the lots for the planned $110 million Gateway Plaza building at Eighth and Cary streets.
The two triangular lots between Eight, Ninth, Cary and Canal streets are owned by Dominion Resources and were closed last week in preparation for the sale. It’s the latest and most visible step toward the development of the proposed 16-story, 275,000-square-foot tower.
Larry Chapman
“We’re hoping that we can start actually doing construction in the early part of July,” said Larry Chapman, a partner at Clayco. It’s aiming to have anchor tenant McGuireWoods in the new building by the second quarter of 2015.
Clayco isn’t going it alone. The Richmond City Council voted unanimously Monday to put up a $14 million to pay for a portion of the parking garage that will be part of the development and for an incentive grant for the developer.
When Clayco announced its plans for the tower in January, the developer did not publicly indicate a need for city involvement.
It has since said the project couldn’t happen without the city stepping in.
“That’s a critical part of the development. It was always part of the plan,” Chapman said. “We always talked about the need to structure some financing for the public portion of the parking garage.”
The $14 million includes $11.25 million in city bonds that will pay for 326 spots in the project’s 506-space parking garage.
Chapman said the numbers wouldn’t work otherwise.
“The rents in downtown aren’t adequate to pay for a new parking garage,” he said. “Unless you’re in a big market like Chicago, New York, Boston … this is just not possible right now.”
Part of the city-owned Eighth Street connector, which cuts between the two lots and is valued at $1.6 million, will be transferred to Clayco pending city council approval expected to be granted July 8, said Lee Downey, director of Richmond’s office economic and community development. Consideration for the $1.6 million will come back to the city in the form of infrastructure and traffic flow improvements that Clayco has agreed to. It will pay cash to make up any difference, Downey said.
McGuireWoods is taking about 205,000 square feet of the building. The remaining space is being offered at $28.50 per square foot per year.
Having the city on board also allows Clayco to finalize its deal with its construction lender, Chapman said. He would not name the lender, citing a confidentiality agreement.
Downey said the city’s involvement in a private development is part of business retention.
McGuireWoods, which employs about 220 lawyers plus staff, considered leaving its current office at One James Center when its lease ran out next year, Downey said.
“A major employer downtown was considering moving outside the city limits. We said, ‘what can we do for a project to help it stay in the city?’” Downey said.
Clayco is buying the lots from Dominion Resources. (Photo by Michael Schwartz)
To protect much of its investment, the city and Clayco agreed Monday night to a minimum assessment on the tower of $95 million. That would ensure enough real estate tax revenue from the property to cover the debt service on the parking garage bonds.
The $3 million in incentives will be paid out over time as Clayco meets certain criteria.
“We’re able to retain a strong business downtown,” Downey said. “And we’re able to do it by using new taxes for the city and working with the developer.”
McGuireWoods is the only tenant that has signed on to occupy Gateway Plaza. Its move will vacate 244,000 square feet at One James Center, more than half of the that building’s 420,000 square feet.
City Councilman Charles Samuels said the council looked favorably on the Clayco deal in part because of the minimum assessment.
“The debt service is guaranteed to be paid,” he said. “Of course, with anything above the minimum assessment, all of a sudden the thing gets paid off faster.”
Samuels led a push this year to change a law on a city tax that could help attract companies to downtown.
The Richmond City Council in February approved a measure to exempt new companies and businesses that relocate to the city from paying gross receipts taxes, also known as the BPOL tax, for their first two years of operation.
“We need to continue pushing for new businesses to come downtown,” Samuels said.
Clayco might tweak its plans and add a few floors if it can find another large tenant, Chapman said.
Neither Clayco nor Dominion would disclose the pending purchase price for the two parking lots. The lots total 1.1 acres and were most recently assessed at a combined $4.83 million, according to city records.
Chapman said Clayco would close on the property as soon as it has approval to take over the piece of 8th Street.
Clayco has its own in-house general contractor and architecture units working the project.
The two triangular lots between Eight, Ninth, Cary and Canal streets are closed. (Image via Google Earth)
Two of the city’s most valuable surface parking lots have been shut down to make way for downtown’s newest office tower.
Chicago-based developer Clayco is under contract to purchase the lots for the planned $110 million Gateway Plaza building at Eighth and Cary streets.
The two triangular lots between Eight, Ninth, Cary and Canal streets are owned by Dominion Resources and were closed last week in preparation for the sale. It’s the latest and most visible step toward the development of the proposed 16-story, 275,000-square-foot tower.
Larry Chapman
“We’re hoping that we can start actually doing construction in the early part of July,” said Larry Chapman, a partner at Clayco. It’s aiming to have anchor tenant McGuireWoods in the new building by the second quarter of 2015.
Clayco isn’t going it alone. The Richmond City Council voted unanimously Monday to put up a $14 million to pay for a portion of the parking garage that will be part of the development and for an incentive grant for the developer.
When Clayco announced its plans for the tower in January, the developer did not publicly indicate a need for city involvement.
It has since said the project couldn’t happen without the city stepping in.
“That’s a critical part of the development. It was always part of the plan,” Chapman said. “We always talked about the need to structure some financing for the public portion of the parking garage.”
The $14 million includes $11.25 million in city bonds that will pay for 326 spots in the project’s 506-space parking garage.
Chapman said the numbers wouldn’t work otherwise.
“The rents in downtown aren’t adequate to pay for a new parking garage,” he said. “Unless you’re in a big market like Chicago, New York, Boston … this is just not possible right now.”
Part of the city-owned Eighth Street connector, which cuts between the two lots and is valued at $1.6 million, will be transferred to Clayco pending city council approval expected to be granted July 8, said Lee Downey, director of Richmond’s office economic and community development. Consideration for the $1.6 million will come back to the city in the form of infrastructure and traffic flow improvements that Clayco has agreed to. It will pay cash to make up any difference, Downey said.
McGuireWoods is taking about 205,000 square feet of the building. The remaining space is being offered at $28.50 per square foot per year.
Having the city on board also allows Clayco to finalize its deal with its construction lender, Chapman said. He would not name the lender, citing a confidentiality agreement.
Downey said the city’s involvement in a private development is part of business retention.
McGuireWoods, which employs about 220 lawyers plus staff, considered leaving its current office at One James Center when its lease ran out next year, Downey said.
“A major employer downtown was considering moving outside the city limits. We said, ‘what can we do for a project to help it stay in the city?’” Downey said.
Clayco is buying the lots from Dominion Resources. (Photo by Michael Schwartz)
To protect much of its investment, the city and Clayco agreed Monday night to a minimum assessment on the tower of $95 million. That would ensure enough real estate tax revenue from the property to cover the debt service on the parking garage bonds.
The $3 million in incentives will be paid out over time as Clayco meets certain criteria.
“We’re able to retain a strong business downtown,” Downey said. “And we’re able to do it by using new taxes for the city and working with the developer.”
McGuireWoods is the only tenant that has signed on to occupy Gateway Plaza. Its move will vacate 244,000 square feet at One James Center, more than half of the that building’s 420,000 square feet.
City Councilman Charles Samuels said the council looked favorably on the Clayco deal in part because of the minimum assessment.
“The debt service is guaranteed to be paid,” he said. “Of course, with anything above the minimum assessment, all of a sudden the thing gets paid off faster.”
Samuels led a push this year to change a law on a city tax that could help attract companies to downtown.
The Richmond City Council in February approved a measure to exempt new companies and businesses that relocate to the city from paying gross receipts taxes, also known as the BPOL tax, for their first two years of operation.
“We need to continue pushing for new businesses to come downtown,” Samuels said.
Clayco might tweak its plans and add a few floors if it can find another large tenant, Chapman said.
Neither Clayco nor Dominion would disclose the pending purchase price for the two parking lots. The lots total 1.1 acres and were most recently assessed at a combined $4.83 million, according to city records.
Chapman said Clayco would close on the property as soon as it has approval to take over the piece of 8th Street.
Clayco has its own in-house general contractor and architecture units working the project.
I wish Richmond planners would look to other, better planned cities (or, in fact, better planned parts of downtown Richmond) to see that having an entire city block occupied by a single office tower and parking deck is really poor planning.
They only have to look next door at the Dominion tower to see why it’s such a bad idea. (But can also turn to the James Madison Building and the James Monroe Building, both just east of the State Capitol, for an example of what NOT to do.)
“The rents in downtown aren’t adequate to pay for a new parking garage,” developer Chapman said.
Because there is too much available office space as it is!
Disgusting to see the City put up $14 million in public funds for this project. Poor urban planning and shame on McGuireWoods for strongarming the City Council into this.
also make note of the fact that 3 surrounding parking decks in the photo are all seemingly empty from top view – for there being such a crucial need for parking – these decks sure are being under-utilized… but again, that couldn’t possibly have anything to do with the fact that there is already a large vacancy to fill in the CBD as it is…
Actually, there are at least five parking decks and a surface lot in this picture, some of which do look quite full. Plus, everone knows the absolute last place most people park is on the top floor since part of the beauty of being able to park in a deck is protection from the elements. Is downtown overparked? Perhaps. But that is always one of the first complaints (after crime) you hear from suburbanites. That aside I really wish the City could take some of the money and put it towards light rail or some other mass transit instead. In… Read more »
Look at what Charlotte has done (or what they’ve avoided doing… this is prime estate. It is a link to the river and Manchester, which has become one of Richmond’s hip, new places to live. Ground level retail and underground parking makes sense.
Lets not add to the canyon of decks that already exist….
If something’s it’s added then let it be more floors that would make for a truer signature tower. (And not such a boxy one either).
This does not seem consistent with the master plan or a functional urban district. It’s a shame the city is spending $14MM for a deck too when we can’t get new schools built. This office monolith will effectively close off the interaction with the river from any pedestrian traffic too.
On the other hand they are spending ~$300/sf to build something that would be much cheaper if they took the Capital One route and build in the suburbs. The profitability for this project is also questionable but at least it helps keep a large employer in the city.
16 floors is not a tower, much less a “signature tower” This building needs to be taller for such a prime piece of real estate. I really hope they look at all options for increasing its height.
Sadly, this will be just another “Box.” The bright side, is that is is a new large building downtown, I guess.
I for one am glad that McGuire Woods won’t be leaving for the burbs or a new city. That said, I wish something more in the vain of the MWV building could be built (architecturally interesting). Also, we should be looking at how to use Kanawha Park in conjunction with these sites to create some sort of greeway/ pedestrian garden. I also have to wonder, it seems to me the bridge to Manchester here is highly underutilized (though I use it myself occasionally). I have to wondered the cost in upkeep per year vs. the benefit. The 14th street/ Mayo… Read more »
this is all about retaining jobs , I think for me obtaining Leed gold is a huge plus , size wise , I think a little taller would be nice within reason , we are not the only city with height issues DC anyone, besides a ladder truck can only reach so far . it is all about scale and cost , we are a mid sized city with a huge corporate base , we all should be proud .the main thing is that they do move to another city. remember we lost Richmond braves , who had been here… Read more »
I can’t believe the city is financing part of this development. This will create more vacant space and no additional solid retail. The tower is uninspiring and certainly not what should fit in such a prominent location. Make it a mixed-use building, add 20 more floors and a unique architectural element like a spire. Charlotte’s Nations Bank tower drew other businesses to the city center and created a signature skyline. Richmond needs to build upward and can afford to do it through an innovative project. People are finally moving into the city, so let’s capitalize on it now. I suggest… Read more »
one more note . if you go to gateway plaza Richmond website . the building is 20 stories according to design , they may be able to squeeze a few more floors on there . maybe lumber liquidators or union first market could use a little extra space , who knows . main thing is surface parking is gone finally. all surface parking in Richmond needs developing. this is a real eyesore to the ones who have lived here our entire lives
I can’t believe all the negative reactions! Who said there won’t be retail? Who said the building will look like a box?
In order for projects like to the happen, it takes public investment, and frankly, the city is not taking a huge risk on this one. The two parking lots are currently assessed under $5 million. After the building, the property will be assessed for AT LEAST $95 million! That is increasing the tax base twenty-fold! FOREVER! I wish that the city made MORE investments like this.
Actually, it was the developer who said (and showed) that it would look like a box.
I’m fine with the investment by the City because they have protected themselves (as much as they can) by setting a minimum value to the building, but I really do hope the renderings that have been shown previously are just place holders and something more interesting than a glass box is done. It would also be great if like the James Center and their nods to the canals that used to be there some sort of interpretation of the history of the site could be done. I believe it was a railyard at some point. Also wish (and I know… Read more »
venture Richmond just made a 2013 update to some of the projects going on. this one included , pretty interesting , but of course some missing that we would all like to see , new coliseum or update , new multi-purpose baseball stadium, why would you want a 50 million dollar investment. probably more, just for baseball . nice investments in the area though . despite all of our problems and all city’s have problems , we have a amazing city , one of the most historic in the country . we should never feel envious of any city