Real estate firms push into Fredericksburg
- June 1, 2008
by Donna C. Gregory
Fredericksburg is probably best known as a gateway to Washington, D.C. But this small city is quickly becoming a strategic commercial destination in its own right, as more people decide to forgo the stop-and-go gridlock along Interstate 95 and set up homes and businesses in Fredericksburg. Those changing demographics have caught the attention of commercial real estate firms such as Thalhimer/Cushman & Wakefield.
In March, Richmond-based Thalhimer bought Sullivan Properties, Fredericksburg’s largest commercial brokerage firm, for an undisclosed amount. The merger added more than 3 million square feet of leasable space to Thalhimer’s portfolio, bringing its total to more than 26 million square feet statewide. Thalhimer was already Richmond’s market leader. With offices in Newport News and Virginia Beach, it ranks No. 2 in Virginia in terms of leasable space, handling $786 billion in transactional volume in 2007.
While the Sullivan acquisition isn’t big enough to move Thalhimer past CB Richard Ellis as Virginia’s largest commercial real estate company, it does give Thalhimer a strong foothold in one of Virginia’s fastest-growing markets.
“So many people live there and commute into the city,” says Paul Silver, Thalhimer’s president and CEO. “A large number of subdivisions have been put there and what’s following residential is retail. We were already doing business up there … and have found it to be dynamic.”
The buyout came at the right time for Sullivan, a 17-year-old hometown firm that had been trying to keep pace with Fredericksburg’s changing retail market. For the past two years, Sullivan’s sales volume topped $114 million, encompassing about 355 transactions. Major transactions included the initial leasing of 156,000 square feet of space for two Capital One Financial Corp. buildings, the leasing of Frederickburg’s train station to Claiborne’s restaurant and the sale of a major estate to the Hylton Group.
“The region has grown substantially, and the commercial brokerage business has become much more sophisticated and competitive, both in terms of technology and national and global networking,” explains Neil Sullivan, Sullivan’s former president and now the manager of Thalhimer’s Fredericksburg office. “Our merger with Thalhimer will provide us with the platform and tools necessary for us to provide the best services to our clients. The well-known Thalhimer brand gives us a statewide exposure and the Cushman Wakefield affiliation provides us a national and global gateway.”
Thalhimer isn’t the only firm angling to cash in on Fredericksburg’s growth. “We’ve seen many brokerage firms from the D.C. and Richmond markets wanting to get in on the good fortune of Fredericksburg,” says Dawn Prince Hoover, vice president of commercial sales and leasing for the Silver Cos. The real estate development firm, based in Fredericksburg and Boca Raton, Fla., has been a key developer on some of Frederickburg’s largest projects. “It’s a good move on both of their parts,” adds Hoover. “It broadened the base for both of them, and it allowed Thalhimer to come into Fredericksburg with a local firm that has wonderful experience and contacts.”
GVA Advantis also opened an office in Fredericksburg last year. “It’s a growing market,” says Deborah Stearns, president of GVA Advantis’ Virginia and Washington, D.C., region. “For the Virginia region, Fredericksburg is an obvious connector between the Richmond and Washington offices. I fully expect over the next five to 10 years, more companies will set up their businesses in Fredericksburg as people decide that quality of life is worth more than traveling hours a day to go to and from work.”
Fredericksburg’s proximity to Washington and nearby military bases is expected to help the region weather the current slowing economy. “We’re never unaffected by downturns, but I think the D.C. influence provides a safety net,” says Sullivan. “One thing that has really helped our office is our proximity to Quantico and the other bases around. We are continuing to do a lot of work with the defense contractors who are doing business with those bases.”
Fredericksburg’s location is also a natural stopping point for businesses that want to be close to Washington while being able to minimize the traffic and hectic pace of doing business in the capital. Real estate prices — both residential and commercial — are much lower in the area. “I think Fredericksburg is going to continue to grow, [because] it’s more and more expensive to be in D.C., and there’s less opportunity to be there,” predicts Silver.