Richmond’s industrial market has experienced steady supply growth over the course of this cycle, with average annual deliveries at more than 990,000 SF from 2012–17. Richmond’s industrial market had several notable deliveries over the past five years, but strong demand helped vacancies maintain a downward trend. With little available space in Richmond, the metro is not able to accommodate large tenants unless they complete a build-to-suit. As of the third quarter, there were only 10 buildings in the metro with more than 150,000 SF available.
Vacancies peaked at about 12% in 2011 but have recovered to below 5%. Richmond experienced an influx of supply from 2014–17, but many of these deliveries were build-to-suit. More recently, the construction pipeline has slowed but has far from stalled—as of mid-September, more than 2 million SF was under construction. Six of the 15 properties built since 2010 that are at least 250,000 SF are in or near Meadowville, part of the I-95 S/I-295 S/Rt 10 Submarket (the third largest in Richmond). They account for about 2.4 million SF, more than one-third of deliveries since 2010. Demand has more than kept pace, creating a constant decline in vacancy since the peak in 2010.
Amazon has established a foothold with two large fulfillment centers in Chesterfield and Dinwiddie, and the e-commerce giant recently announced that it leased an additional 320,000 SF in Ashland. Rents have experienced strong growth since 2014 and surpassed their pre-recession peak in 2015. With about 40% of the U.S. population within one day’s trucking drive (500 miles), the metro ranks in the top 10 of the major 54 markets for its accessibility to the nation’s population base. It is conveniently situated on I-95 and within reach of both the Northeast’s Boston-Washington corridor and the Southeast’s I-85 corridor through Georgia and North Carolina.