Report examines suburban office parks
A recent report on Richmond’s top suburban office parks compares how quickly they recovered from the 2007-09 recession.
The report, released by Cushman & Wakefield | Thalhimer, notes that historically the area has four top-performing suburban office parks. Two of those parks, Innsbrook Corporate Center and the Glen Forest Office Park, are in the Northwest Quadrant and the other two, the Arboretum and Boulders Office parks, are in the Southwest Quadrant.
While all of these office parks were hit hard by the recession, the firm notes, those in the Northwest recovered faster. The Southwest Quadrant has taken longer to recover, the report says, but is now experiencing a recovery as the area’s suburban office supply is limited.
Three years prior to the start of the recession, in December 2007, overall vacancy in these four parks was 5.6 percent, with none having a higher rate than 9.5 percent.
The bankruptcies of Land America Title and Circuit City and Wachovia Securities’ move to St. Louis as part of a merger with A.G. Edwards in 2008 resulted in large-scale vacancies in Innsbrook that eventually trickled down to other areas of the Richmond suburban office market, the report said.
Innsbrook’s vacancy rate peaked at more than 25 percent late in the recession, the report says. Glen Forest was not hit as hard but still topped out at a 19 percent vacancy rate in 2009. Innsbrook and Glen Forest began to stabilize in the 2010-2013 period and were fully stabilized with vacancy rates back under 10 percent last year, the report said.
Meanwhile in the southwest, the 2010-2013 period showed little improvement for Arboretum and Boulders, according to the report. The vacancy rate remained in the 18 percent range, while absorption was flat. Historically across the metropolitan area, 1 percent of the available inventory is absorbed in any given year. Arboretum had a 12 percent absorption rate in 2014 and 8 percent last year , with overall vacancy now sitting at 2.6 percent.
As the only other class A office park south of the James River, Boulders appears poised to be next to recover, the report says. Absorption last year was 3.5 percent of inventory and is trending up. The vacancy rate also dropped 270 basis points from 2014 to 2015.
“With mid-size and large block space at a premium in the Innsbrook submarket, we are starting to see tenants with an increased interest in the Arboretum and Boulders office parks,” Brian Berkey, a senior vice president at Cushman & Wakefield | Thalhimer and leader of its tenant advisory practice group, said in statement.