An out-of-town developer just shed its last piece of Richmond office space.
Charlotte-based Childress Klein, the original developer of the Arboretum Office Park in Chesterfield County, sold Arboretum IX for $6.75 million in a deal that closed Nov. 25. It was the company’s lone remaining asset in the park and its last office building in the local market.
The buyer was locally based Dominion Realty Partners, whose other projects include the redevelopment of the John Marshall building downtown.
Eric Robison, a broker with Cushman & Wakefield | Thalhimer who represented Childress Klein in the sale, said the three-story, 75,000-square-foot building at 9201 Arboretum Parkway went on the market in October.
“There are certainly appetites for opportunities like Arboretum IX in the market right now,” Robison said.
Arboretum IX is part of the 600,000-square-foot Arboretum Office Park developed by Childress Klein in the mid-1990s. Brandywine Realty Trust owns the other eight buildings in the park, having bought a chunk of them in a $36 million deal in 1999, county records show.
Arboretum IX is 77 percent leased, and its tenant list includes Philip Morris International, JMT engineering firm and IBM.
Michael Campbell, a principal with Dominion Realty Partners, said the opportunity to lease more space to new tenants was part of the appeal in its purchase.
“It has leasing room in it, so there was room for some upside opportunity, and we felt that, while the building is in a great, established park – probably one of the premier parks in the Southside – it could use capital improvements to some of the physical attributes of the building,” Campbell said.
In addition to the John Marshall, Dominion developed the 188-unit Manchester Place project in Manchester and the Riverside on the James. Campbell said this was the firm’s first foray into Chesterfield County.
He said the company decided to branch out into acquisitions last year. This is its third purchase in the last six months, with one in Virginia Beach and another in Durham, North Carolina.
“The suburban office market has been improving over the last few years, and I think there is some room for some growth and leasing upside with these projects, so that’s really where we’re focused,” Campbell said.
CBRE | Richmond will be handling leasing for Dominion Realty as it takes over Arboretum IX.
Data from CBRE shows about 85,000 square feet of vacant space in the Arboretum submarket, which includes a few additional buildings outside of Arboretums I-IX. That amounts to vacancy rate of 9.5 percent, as of the end of the third quarter. That’s down from 22.8 percent a year ago.
The average asking lease rate around the park is $17.82 per square foot, CBRE found.
Clarification: Arboretum IX was Childress Klein’s last office building in Richmond, but the real estate firm continues to own some industrial properties in the area, as well as land on Patterson Avenue near the Henrico and Goochland county line.