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Commercial
Real Estate Commentary
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Commercial
Real Estate
Commentary
from commercial real estate professionals from around
Virginia
Related
story:
Mall magic
RICHMOND
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Alex
B. (Andy) Andrews IV is Senior Executive Vice
President at Daniel Corp., the principal developer
in Richmond for Riverside on the James, an $82
million mixed-use project.
“As
a whole, the Richmond downtown is doing extremely
well, although it lacks a mixed-use urban project
and has very limited apartments for a second-tier
city. Considering the size of its downtown you
need what we call “rooftops” and we
thought that some rooftops with a great view of
the James River were appropriate. That led us
to undertake Riverside on the James.
“This
project represents a significant development in
downtown, taking advantage of the riverfront,
while encompassing approximately 230,000 square
feet of office space on seven floors of structured
parking (800 spaces) 122 high-end residential
apartments over nine levels of retail space, and
70,000 square feet of entertainment/retail space
on the first floor of the entire project. As primary
developer, Daniel Corp. is working along with
Cordish Co., who is developing the retail space.
Smallwoods Reynolds Stewart & Associates are
the architects, with financing being handled by
Wachovia, AmSouth and SunTrust. Construction began
on April 16 with an official ground breaking on
May 14 and completion expected in about 24 months.
“As
we looked for opportunities in downtown Richmond,
it helped to have a tenant in hand. The commitment
by Troutman and Sanders to remain in downtown
and to be involved with a Class A product is impressive.
They are expanding their presence from about 90,000
square feet in the Bank of America building to
about 140,000 square feet in Riverside on the
James. Having that commitment enabled us to move
forward with our investment. There were also some
other players who helped make this project a reality.
Dominion Resources, who owned the land, was with
us every step of the way.
“Obviously
the City of Richmond played an integral part with
new tax abatements and the fact that they donated
funds to build two new bridges to the island,
along with the investment they made in the canal.
Our neighbors at Alcoa granted us access, accommodating
the construction. And I don’t want to forget
the Richmond Riverfront Corp. and Richmond Renaissance.
They helped rally corporate and community leaders
to work through the process of getting this project
off the drawing boards. It took about a year and
a half to get this deal done, and we are grateful
for all the local support we have received.”
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Jane
C. Ferrara is Managing Director at Advantis Real Estate
Services Co. in Richmond.
“Due
to an abundance of available office space, concessions
are now increasingly common as landlords compete to
attract tenants. Asking rates are, for the most part,
holding steady in suburban Class A office buildings
but, with concessions, effective rates are averaging
around 15-20 percent below asking rates. It is expected
that concessions will be a continuing trend as landlords
compete with sublease space and as some of that sublease
space rolls in to primary vacancy. There is no speculative
office planned for construction in the suburban market.
“Capital One continues to return space to the market
as they move their operations to their West Creek campus.
Most of the buildings vacated have been Class B office
buildings. Circuit City recently placed one of its headquarters
buildings on the market for lease or sale. This 176,000-square-foot
Class A office building is located just outside of Innsbrook
Corporate Park.
“Downtown
development continues to revitalize the City of Richmond.
Most of the new development occurring in the region
is happening downtown. Highwoods is currently pre-leasing
a proposed new Class A office tower on the Riverfront
called Canal Landing. New Class A office projects like
the ones mentioned here often create a “move-up”
effect where tenants in Class B space move up into the
vacated Class A space because concessions equalize the
economics. Likewise, tenants in Class C space migrate
up to the B space, leaving Class C buildings open for
adaptive reuse projects. Located in Shockoe Bottom,
Watkins Cottrell and Canal Crossing are two examples
of historic properties being renovated for office and
retail use.
“The Broad Street corridor is poised to make a
comeback as new hotels, the Federal Courts Building,
and the performing arts center are planned. These significant
developments will all support the new convention center.
In conjunction with this revitalization, the city of
Richmond has designated a CDA, which is a special taxing
district, to fund additional infrastructure improvements
to include an extensive streetscape plan.”
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Grubb
& Ellis / Harrison & Bates Research is
a leading provider of real estate services in
the Richmond market.
“There
were several events impacting the Richmond office
market during the first quarter of 2003. The announcement
that Wachovia was buying Prudential Securities
and establishing its headquarters in Richmond
resulted in Wachovia immediately withdrawing 35,000
square feet of sublease space from the downtown
market. Job growth by the firm could help offset
losses from consolidation of Capital One employees
in their West Creek campus. And the sale of the
Heilig-Meyers headquarters in West Creek removed
a large block of space from the Northwest Quadrant
inventory without creating a vacancy elsewhere
in the market.
“Challenges
remain in leasing Class B downtown buildings and
5,000 – 10,000 square-foot spaces throughout
the suburbs. The bottom line is that Richmond
is finally beginning to see employment drivers
it has needed to turn the office market around.”
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Carlton
S. Jones is Senior Vice President at Trammell Crow Company
in Richmond.
“After
a sluggish year in 2002, the Richmond office market
experienced a rebound of sorts in the first quarter
of 2003, with developments and announcements taking
place that positively impact the local market. As mentioned
earlier, after standing vacant for a couple of years,
the former Heilig-Meyers headquarters building located
in the West Creek corporate park (210,000 square feet)
was purchased for $15 million by the Federal Reserve.
“Additionally,
it was announced that the headquarters function for
Philip Morris, U.S.A. will relocate to Richmond from
New York City later this year, and a fifteen-year lease
is being consummated for 243,000 square feet (entire
building) at the former Reynolds Metals headquarters
building located at 6601 West Broad Street. A positive
ripple effect has taken place as a result of the deal,
as mid-size office users (5,000 –30,000 square
feet) that had been interested in the building were
displaced and are leasing space elsewhere in the local
market.”
Return
to Virginia Business - June 2003
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