Richmond suburban office sales on the rise
The suburban office investment sales market in the Richmond suburbs reached over $127 million in 2014, the highest investment dollar volume in the suburbs since 2011, according to research from JLL.
The Northwest quadrant, particularly the Innsbrook submarket, produced the largest number of transactions due to several large portfolio sales.
“All notable office dispositions of late have been in the suburbs,” Jimmy Appich, a senior vice president for JLL in Richmond, said in a statement. “There’s greater investor and asset diversity in the suburbs, single digit vacancy among true Class A buildings and there’s been no new class A office development over the past seven years making it attractive to both local and national investors.”
According to JLL, prices in the Richmond region remain attractive in comparison to tier 1 markets, and rent growth has been consistent over the past few years. “… Most of the dispositions have been portfolios making it opportunistic for new investors to take a quick foot hold in the market or to expand their footprint,” added Appich.
While several significant investment sales were pending in downtown Richmond, JLL’s research showed that transactions in 2014 were led by local developers purchasing historic, but functionally obsolete office properties with the intention of repurposing them for multifamily or hotel developments.
“With no new development on the horizon in the suburbs, you can expect to see a continuing tightening in the market. Additionally, there are a number of large block requirements for which there is not enough office space available so suburban office construction is inevitable,” Appich said.