Henrico launches office buildings incentive program

During the pandemic, the office industry was “hit hard and quick,” says Jane DuFrane, senior vice president and Richmond market leader of Highwoods Properties, the Richmond area’s biggest landlord. But because office lease contracts last several years, “we didn’t feel the pain of COVID until those office leases started to expire,” she says.

And that time has come. Leases of hundreds of millions of square feet of office space in the U.S. are set to expire during the next several years, according to real estate analytics firm Cred IQ. But Henrico County is aiming to buck that trend with a new benefits program.

Launched in November 2024, Henrico Tomorrow offers incentives for landlords to renovate office buildings to attract more businesses to extend their leases — and encourage more workers to return to office. DuFrane and Anthony Romanello, executive director of the Henrico Economic Development Authority, call this effort making offices “commute-worthy.”

“The idea is to make sure that we are positioning businesses that are here to continue to succeed,” Romanello says. It will also help “create a differentiator as we work to attract additional corporate headquarters and corporate services offices to Henrico.”

The renovation incentive program provides reimbursement grants of up to $500,000 to spruce up existing office buildings. Improvements could include plans to renovate lobby spaces, add outdoor seating and lounge areas, or even add amenities like a gym or game room, DuFrane says. Henrico Tomorrow will also offer grants up to $25,000 for architectural services related to redesign or reuse of existing office buildings.

Workers are “more incentivized to get off their couch and work in the office if the office space looks nice, feels nice, and a landlord has amenities in their buildings,” she says.

As part of the Henrico Tomorrow program, Henrico is also expanding existing benefits in the Innsbrook Technology Zone, which surrounds the Innsbrook mixed-use development in Glen Allen. It’s also changing the tax abatement program by reducing the minimum building age to 20 years, extending the tax exemption period to 15 years and reducing the property’s minimum assessment increase to 30%. But like any new program, the key to success will be being agile.

“We’ve created this program to try to be as flexible and as helpful as we can to our private sector partners, knowing that we just can’t see the future,” Romanello says.