Grocery and fitness sectors dominate Richmond’s retail market
The growing grocery and fitness sectors continued to dominate Richmond’s retail market in the third quarter, according to the Richmond office of CBRE.
CBRE said in a market report that these two sectors have become consistent drivers, fueling both new construction and the absorption of big box space that has long sat dark.
In the third quarter, fitness companies inked 132,000 square feet of space and drove much of the absorption of existing big box vacancies. Planet Fitness and Crunch Fitness were the most active of the brands, with each company adding two gyms to their lineups. You Fit Fitness went north of the James River to open its fourth location in the area , and Anytime Fitness leased space at Old Towne Shopping Center off West Broad Street in Richmond.
Meanwhile, grocery store chains are fueling lots of new construction. Grocery stores accounted for 46.2 percent of the quarter’s 148,873-square-feet of net absorption (rate at which rentable space is filled) as two Walmart Neighborhood Market stores and a new Aldi store opened. Altogether, the Richmond area has 976,956 square feet of new retail development in the pipeline, with 26 percent of that coming from grocery stores. Aldi, Lindl and Wegmans are all planning new stores.
However, the report noted that if the announced merger between Food Lion (Delhaize) and Giant/Martins (Royal Ahold) is finalized, Richmond will likely see a number of grocery store closures as the two companies eliminate overlapping stores.
Another big retail development is the start of construction on the 310,000-square-foot Eastgate Towne Center, on the former site of the Fairfield Commons Mall in Henrico County, which will be anchored by a Walmart super center.
The quarter’s more than 140,000 square feet of absorption helped drive the retail vacancy rate down to 6.5 percent. Yet, the region’s asking rental rate also fell 2.4 percent for the third quarter to $14.37 per square foot as little quality space remains on the market as a result of robust leasing by the fitness sector.