Return to Virginia Business - March 2003

Is the tide finally rising for the riverfront?
Several new projects may finally kick start Richmond’s efforts

by Holly M. Rodriguez
for Virginia Business
March 2003

Along Richmond’s riverfront today, weeds block much of what is arguably one of the most spectacular urban whitewater settings in the country. Instead of waves crashing dramatically over boulders before a gleaming skyline, much of the shore is dotted with ugly industrial buildings, grain elevators and rusting storage tanks. While other Virginia cities, such as Norfolk and Alexandria, have transformed their waterfronts into gleaming tourist destinations, Richmond has remained a laggard.

That might be about to change. Several projects seem to be coming together that could finally take advantage of the city’s natural attributes and dress it up with shops, restaurants, entertainment, arts and cultural outlets and new residents with cash in their pockets. The transformation could take five or 10 years, but it seems to be gathering momentum.

All in all, Richmond’s riverfront development project extends more than 24 blocks, from an $80 million corporate expansion at utility giant Dominion Resources on the west side to a $250 million proposed project called Rocketts Landing at the eastern end. In between are plans for other projects that include lofts, condominiums, new office buildings, new eateries such as a Morton’s of Chicago steakhouse, museums and exhibits. The city has reserved a portion of land for public use — concerts and walking trails — that’s not open to commercial development. William Abeloff, who’s developing the 50-acre Rocketts Landing community, says the pending makeover is a fundamental one. “Not too long ago people thought the river was a trash can,” he says. “Finally, we woke up and ... realized we’d pollute everything, and now there is a newfound respect and regard for this natural resource.”

Yet, that vision, if it does come true, has been a long time in coming. For much of the 20th century, the river wasn’t a major attraction for redevelopment. Like cities all over the country, Richmond focused its efforts on the center of downtown. Then in the 1980s a metropolitan trend toward riverfront development brought new attention to waterways in America’s larger cities. “Pretty much any city of any size picked up the idea of riverfront development,” says David Lanegran, a professor of geography at Macalester College in St. Paul, Minn., who has researched redevelopment projects all over the country. “It became an aspirin — your city has a problem, this is what you do.” The trend slowly made its way to Richmond, and today hundreds of millions of dollars are slated for investment in commercial development along the city’s waterfront, from expansion projects to structures built from the ground up.

The variety of projects along with the different ways of investing will help. “The exciting thing is you’ve got a mix of all of these different projects…There is mostly private investment, and some public and some nonprofit,” says John Woodward, Richmond’s director of economic development. Rocketts Landing, for instance, is a privately funded project with 19 investors from the Richmond area. While he wouldn’t name names, Abeloff says investors include experienced real estate developers and established business owners. The Rocketts site, which straddles Richmond and Henrico County, was formerly a home for coal yards and oil storage tanks and must undergo an environmental clean up before it can be fully developed. Abeloff wants to build 1,500 residential units, 450,000 square feet of office space and approximately 175,000 square feet of retail space. He estimates a 10-year time frame for completion and says the project would create $6 million annually in tax revenue for Richmond and Henrico County. The first phase of construction — 400 residential units, 50,000 square feet of retail space and 20,000 square feet of office — is scheduled to begin in 2004. Since the project is in the preliminary planning stages, Abeloff says the search for tenants has not started.

Despite a struggling economy and soft commercial real estate market, he and other riverfront developers remain confident that their goals are feasible. Riverside Village, a 700,000-square-foot development on the eastern side of Brown’s Island, should break ground in the next six to eight weeks. Daniel Corp., a Birmingham, Ala.-based developer that designed downtown Richmond’s Riverfront Plaza in 1991, has partnered with Baltimore-based Cordish Co. for the $80 million project that would put shops, restaurants and offices on the picturesque island, located across from the main waterfront. Troutman Sanders, an Atlanta-based law firm with offices in Richmond, has committed to leasing more than 100,000 square feet of the project’s 225,000 square feet of office space.

Across from Brown’s Island and next to the waterfront’s newly refurbished Turning Basin, Highwoods Properties Inc. wants to build Canal Landing, a $50 million, 16-story, 440,000-square-foot office tower. The eight-sided brick and granite building would offer striking views of the river along with two floors for retail, more than 300 parking spaces on four levels, eight floors of offices and possibly two stories of residential space, all capped by a distinctive dome. Highwoods, a Raleigh-based real estate investment trust, owns many of the prime office buildings at Innsbrook Corporate Center and The Martin Agency building in nearby Shockoe Slip. If tenants sign leases, it plans to begin construction on Canal Landing in 2004.

Interest in the prime waterside location is strong, says Ned Roberts, a senior director at Advantis Real Estate Services Co. in Richmond which is assisting Highwoods with the project. “We’ve had some fairly serious conversations with companies that are exclusively located in the suburbs right now,” he says. Initially, though, companies that already have a downtown address will be the prime marketing target, adds Paul Kreckman, manager of Highwoods’ Richmond division. Later on, when the economy improves, he thinks the development will help draw outside companies who want a Richmond location. Kreckman anticipates the building will be 75 percent leased by the time it is tenant-ready in 2005.

Despite the optimism, Lanegran says plans for riverfront development must be carefully executed. “The key is to give the riverfront a new image,” he says. “You’ve got to create something to bring people downtown, whether it’s an aquarium, which is a very popular trend right now, or a football game.” These types of attractions get suburbanites downtown to see that the area is safe, changing perceptions about what currently exists. Even if this is achieved, the investment risk of riverfront development does not end there. Competition is also a major factor.

“I can take you to hundreds of cities where the riverfront failed,” says Lanegran. “You still have to have the fundamentals of the market — things people want to buy, sold at a rate that people will pay.” Lanegran, who served on the Board of Directors for the St. Paul Riverfront Development Corp. in Minnesota, points to another Minnesota city as an example of what can go wrong. Initial efforts to develop the Minneapolis waterfront were undermined by boutique-style retail that didn’t appeal to residents, despite a significant initial capital investment—a mistake that took the city 15 years to turn around.

The seeds for the current commercial development have been 15 years in the making, says Woodward. Growth has been moving toward the river for at least the past decade; yet only recently has there been renewed interest in the Richmond riverfront. Earlier in the city’s history, the James River was an active port essential to the transportation of goods in and out of Richmond, including slaves. But in 1888, the Canal was sold to Allegheny Railroad, now CSX. And that was the beginning of the riverfront’s decline.

By the end of World War II, Richmond’s port traffic moved further downstream, and the river was no longer vital to the city’s economy. Plus, problems with flooding thwarted development of the riverfront. Woodward points to two major catalysts that have made revitalization possible: the floodwall and the Canal Walk. Construction of the flood wall in the mid 1990s encouraged development near Main Street Station, an area that had been vulnerable to flooding. And in 1999, the 1.25 mile Canal Walk was completed to attract Richmonders back to the riverfront.

Even though the evolution of Richmond’s riverfront has been slow, it hasn’t stopped companies from locating there, with several companies operating profitable businesses beside the water for years. La Difference, a 23-year old international furniture retailer, moved its Richmond office from 22nd Street to 14th and Dock streets on the canal four years ago. Baskervill & Son, a Richmond-based architectural firm, moved from the 2300 block of West Cary Street to Virginia and Canal streets in 1985. In the summer of 2004, the company plans to move again to a 29,000-square-foot office space located at Canal Crossing, a commercial development planned at the corner of Cary Street and 15th Street.

Baskervill & Son has remained on the waterfront because it has proven to be a prime location — close to downtown clients and giving suburban clients an opportunity to visit downtown. “Right now, I am looking out of my window and I can see the canal, and there is a train going down the trestle,” says principal Brent Farmer. “It is a very vibrant part of town — it just feels alive down here.” If all the developers’ plans come true, he’ll have plenty of company soon.

Return to Virginia Business - March 2003