Mixed results to encouraging signs
A first-quarter report on commercial real estate in the Richmond by Colliers International found mixed results for downtown office space but encouraging signs for the market’s industrial and retail sectors.
The Q1 2016 Colliers Market Report for Richmond noted that the city’s office market began this year with the closing of a number of major central business district office building sales first reported in fourth quarter of 2015.
Average asking rents for downtown Class A office space remained at $24.34 per square foot while concessions increased.
Average rents for suburban office space increased slightly to $18.85 per square foot with fewer concessions. Vacancy increased in both Downtown and the Northwest Quadrant, and decreased in the Southwest Quadrant.
The Richmond industrial market meanwhile had a solid first quarter, with a number of new deals and renewals. Seventeen of 18 sales in the first quarter involved buildings of more than 10,000 square feet, and six out of 10 of the largest sales were investments. Absorption was positive, and overall vacancy remained at 8.2 percent, which has been steadily decreasing since 2014.
In the retail area, grocers, food shops and fitness centers continue to be the active tenants in the Richmond retail market. The market saw more than 120 retail leases involving less than 5,000 square feet, some deals adding new national brands to the area. Unanchored retail strip centers were popular investment sales. Absorption was positive, rising to 28,843 square feet at the end of the fourth quarter 2015. Vacancy has remained flat, and rents have stayed the same or have had a slight increase in new construction.
New retail hotspots such as Scott’s Addition have seen high rental increases because of the transformation of properties from industrial to retail product. Colliers says it is beginning to see the influence of millennials on retail, from advancements in retail technology to new shopping habits.