Q1 2018 Office Market Snapshot

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The Richmond office market experienced a solid quarter, with vacancy at 7.1%, up from the previous quarter at 6.9% and average asking rents increased from last quarter, averaging $18.99 per square foot per year. Net absorption in the first quarter for the Richmond office market was negative 251,231 square feet, mostly due to Capital One vacating 68,000 square feet at East Shore II in Wyndham. Absorption could take another hit in the NWQ as SunTrust is expected to vacate 127,000 square feet at Franklin Street Commons in the back of Innsbrook. 

Downtown, the SunTrust downsize has left some large vacancies in SunTrust Center at 919 East Main Street.  Nearby, the Bank of America building has gone under contract to an out of town group. Across town, Scott's Addition remains a hotspot for office space, where The Community Foundation recently announced a lease of 15,000 square feet to relocate their headquarters from Chesterfield County to 3405 W. Moore Street.

Because of increasing demand for office space downtown and in the Broad & Glenside corridor, activity in the southwest quadrant has been sluggish throughout the quarter, and tenants can continue to see downward pressure on rents and upward pressure on concessions. 

In Henrico, the Southern States Building is under contract to an undisclosed local investor. Healthcare continues to drive office construction, particularly developments like Greengate in Short Pump, a 75-acre urban district that will include medical office, retail and residential uses. Markel|Eagle Partners has started construction on the speculative MOB I, which will total 45,000 square feet. The first floor has been pre-leased to Tuckahoe Orthopaedic, and a dental practice has leased 4,500 square feet on the 2nd floor. MOB II, which is the same size as MOB I, would come out of the ground once MOB I is largely leased. 

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Q1 2018 Office Market Snapshot

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