CoStar buying downtown riverfront office building that bears its name

CoStar is buying the downtown Richmond office building it shares with WestRock. (BizSense file)

CoStar Group is primed to gobble up more downtown Richmond real estate.

The commercial real estate data giant, which already spent $20 million this summer on four undeveloped acres along the riverfront, is under contract to purchase the neighboring nine-story, 310,000-square-foot office building at 501 S. 5th St., which it shares with packaging firm WestRock.

CoStar CEO Andy Florance announced the deal Tuesday during a virtual meeting with the company’s employees, according to multiple sources with knowledge of the announcement.

The sale has not yet been recorded on Richmond’s property records. However, on the same day as the meeting, the status of the building was listed as “under contract” on CoStar’s own real estate databases.

CoStar declined to comment for this story.

The building is owned by Office Properties Income Trust, a subsidiary of The RMR Group, a Massachusetts-based REIT. A predecessor of the company bought the property for $143.6 million in 2013. It was assessed by the city this year at $112.6 million.

A spokesperson for Georgia-based WestRock confirmed that it has been informed that RMR is planning to sell the building, and that the sale will not affect WestRock’s presence there.

RMR did not respond to requests for comment by press time.

CoStar has about 1,000 employees in the Richmond region. (BizSense file)

The deal would give CoStar control of the building and a total of seven acres along the river. In August it purchased an adjacent, undeveloped 4-acre parcel at 600 Tredegar St., upon which it is planning to develop a new office tower.

The seller in that deal was an entity to Richmond-based NewMarket Corp., a publicly traded petrochemical firm that had owned the land for decades. NewMarket also was the original developer of the WestRock/CoStar building before selling it in the 2013 deal.

CoStar has not announced or filed any plans for the site.

Since first arriving in Richmond in 2016, Washington, D.C.-based CoStar has continually grown its local presence. It now has around 1,000 employees in Richmond.

The publicly traded group has enjoyed a prosperous year despite the pandemic. The company posted a profit of $347 million in the third quarter of 2020, up from a profit of $281 million in the same period last year, per its latest earnings report filed with the Securities and Exchange Commission.

Its stock price also has been on an upswing this year, starting 2020 at $620 per share and closing Wednesday at $860.

While the company’s plans for the riverfront assemblage are unclear, it did hint last year at its desires for newer office space in the city when it said it wanted 400,000 square feet within the now-dead Navy Hill project.

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Shawn Harper
Shawn Harper
30 days ago

This is a very cool building, and a very valuable one. No surprise that a real-estate savvy firm would be interested in owning it. It was designed to be 25% more energy and water efficient than other buildings — and I don’t mean in some of the BS ways that LEED certification is determined — it is real, and it is a nice building too. Also smart to be buying up acreage around there. Prime RE, as long as they can build there cheaply enough. Also interesting is that this building sort of iconicizes what I see as business transition… Read more »