Many of the hottest spots in the region for new office space and apartments are in the city of Richmond.
Charles M. Louthan, one of the founders of the Scott’s Addition Boulevard Association in 2001, has watched that neighborhood transition from a warehouse and industrial district to a neighborhood filled with residents, restaurants, breweries, recreational spots and other small businesses.
“There is sense of place here now that is very attractive to millennials,” said Louthan, also a senior vice president with commercial real estate brokerage Colliers International.
“It’s live/work/recreate within one sphere. It’s become the place to be,” Louthan said.
Head east to Shockoe Bottom or south across the James River to the Manchester area of South Richmond, and there’s a similar vibe. New construction and renovations that take older buildings from “vacant to vibrant” are everywhere you go, said Venture Richmond’s Lucy B. Meade.
“Manchester and Shockoe Bottom have just been on a roll for a decade or so,” said Meade, director of economic development and community relations for Venture Richmond, which periodically updates a report on downtown development.
“They are wonderful residential neighborhoods that weren’t residential neighborhoods [before], that weren’t mixed-use neighborhoods. ... Last time I checked, we had 22,000 people living downtown,” she said.
“It’s really exciting. When we are out doing beautification, planting seasonal flowers and are out at 6 in the morning, you can see downtown wake up. You see folks walking their dog, or families biking down maybe from the Fan to have breakfast at one of the restaurants on Grace Street or Broad Street or in the Bottom,” Meade said.
Office space also is in demand. Of the approximately 2 million square feet of new office space that opened up in the Richmond market in the past five years, the submarkets of Richmond’s Central Business District, Jackson Ward and the Tuckahoe area in Richmond’s Far West End had the most growth, according to data provided by CoStar Group Inc. market analyst Rachel Silverio.
Washington-based CoStar found Richmond attractive, too, moving its research and operations center to downtown Richmond two years ago.
Multiple factors are driving the trends.
“The biggest thing we did as an association, around 2003 to 2006 we spent $6,000 getting this declared as a historic district,” said Louthan, who attended the Scott’s Addition Business Association meeting last week at The Highpoint, a renovated office, meeting and gallery space.
With the growth, the area has to deal with such issues as a shortage of parking, which the city is studying.
“Tax credit programs have helped our region preserve a lot of our existing character and at the same time provided rejuvenated public infrastructure,” said Jeffrey P. Geiger, partner and attorney on the real estate team at the Hirschler law firm.
Another incentive program is the federal opportunity zones that were created in last year’s tax overhaul. The zones can lure investors and developers with tax breaks that could attract more investment and keep the city’s rejuvenation momentum going, he said.
By the numbers, submarkets that saw the most apartment development during the past five years are Manchester with 1,045 new apartment units, followed by Scott’s Addition with 1,014 new units, according to CoStar data provided by Silverio.
Richmond’s central business district didn’t do too bad either, with 966 units.
There are currently about 2,300 multifamily units under construction in the Richmond market, which includes the city and the surrounding suburban counties.
“Zoning shifts may have a positive impact on construction volume,” Silverio explained. Richmond officials in September 2017 created a new TOD-1 zoning district in Scott’s Addition, freeing up developers from having to get a special-use permit for projects in the area that previously was mostly zoned light industrial.
“In essence, these changes allow for increased density — building height — and more regulatory ease in rezoning parking lots to permit construction,” Silverio said.
Louthan estimates that he and colleague Jason Hetherington have brokered about 45 sales or leases of properties in Scott’s Addition in the past 12 years.
“I don’t know what the future is, but you can see the buildings” going up or being renovated, he said.