When CoStar Group CEO Andrew Florance began a year ago considering where to make an $8.1 million investment to expand the commercial real estate research firm, Richmond’s food scene helped keep the city at the top of his list.
“You have the best restaurants in the United States,” Florance quipped Monday, when asked what attracted the publicly traded company to Richmond.
A healthy portion of state and local incentives probably didn’t hurt either.
To help lure CoStar to bring hundreds of jobs downtown and lease a total of 130,000 square feet on the top three floors of the WestRock building at 501 S. Fifth St., the state and the city are providing grants and incentives valued at a combined $8 million.
Gov. Terry McAuliffe approved a $4 million grant from the Commonwealth’s Opportunity Fund to the City of Richmond. Grants from the fund are awarded on a matching basis, a requirement Richmond is meeting not with cash but in-kind incentives such as a two-year exemption on the Business Professional Occupational License (BPOL) tax, job training and recruitment, and improvement in the city’s transportation network.
“Essentially, a lot of the things we’ve been doing as part of our business growth strategy are part of this deal,” Tammy Hawley, press secretary for Mayor Dwight Jones, said. “It’s in line with our efforts to bring new jobs to the city. We’re not giving gifts to multi-million dollar companies. We’re leveraging our assets.”
For its part, Washington, D.C.-based CoStar is making Richmond the headquarters for its research division. It plans to eventually hire 732 employees for its Richmond office. Twenty jobs in Richmond are expected to be filled by the end of the week and 200 positions are planned to be filled by the end of 2016.
Charlie Colligan, CoStar’s treasurer, said the company is investing $8 million of its own funds in addition to the state and local incentives that were announced. He said CoStar’s investment will be used for outfitting its new office along with paying for hardware and software.
BizSense first reported Monday morning that CoStar had plans to make a move to the WestRock building. An official announcement was made yesterday afternoon on the third floor of the state capitol building.
Florance said Richmond was whittled down from a list of 22 cities that included Charlotte. He said in addition to the local food scene, CoStar was attracted to Virginia’s higher education system and Richmond’s quality of life.
“We like to partner with these institutions,” Florance said of Virginia’s universities. “This city stands out for its art scene.”
Fresh off a weekend visit to the recently minted Blue Bee Cider facility in Scott’s Addition, McAuliffe touted the state’s workforce in attracting CoStar to Virginia.
“They knew we had the technology workers,” McAuliffe said, before handing Florance a Virginia state flag.
The top floors of the WestRock building went on the market for sublease in March, after the company consolidated its offices in the building following its formation last year through the merger of Atlanta-based Rock-Tenn Co. and fellow packaging giant MeadWestvaco.
Colliers International handles the leasing for the WestRock building. Broker Ken Campbell said with CoStar moving in the nine-story property is now fully occupied.
Cushman & Wakefield | Thalhimer brokers Brian Berkey and Amy Broderick represented CoStar in the deal.
CoStar was founded in 1987 and has about 750 workers at its Washington, D.C. headquarters.
The company entered the Richmond market last month with a small West End office at 1800 Bayberry Court, where it houses seven or eight employees.
CoStar’s core product is its searchable online database of commercial real estate properties used by developers, lenders, brokers, appraisers and vendors. CoStar owns LoopNet, a listing and advertising site for properties, and Apartments.com, a rental listing site.