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Tag: industrial real estate

Powhatan approves $2.7B data center campus

Powhatan County has approved an estimated $2.7 billion data center campus on 119.9 acres partly bordering Chesterfield County.

The county’s board of supervisors voted 3-2 during its Oct. 28 meeting for a rezoning and a conditional use permit allowing the proposed development to move forward.

The developer, Newport Beach, California–based Province Group, estimates that its capital investment at full real estate buildout would be $3 billion, but county staff estimates the full investment would be $2.7 billion based on Richmond region square footage values. The project buildout is expected to take five years at minimum.

The data center campus, located at 1318 Page Road, would have three detached data centers with a combined 1.525 million in floor area square footage, as well as six supporting structures. About 20% of the property — roughly 24 acres — will be designated open space.

The conditional use permit that the board approved will allow the developer to build structures up to 75 feet high, rather than being capped at a height of 45 feet.

The development would create 150 to 200 on-site jobs and up to 600 indirect jobs, according to a presentation from the applicant during the board meeting, although a Mangum Economics study projects it would create 165 direct jobs.

Based on the Mangum study, data centers on the property would directly pay $17 million in taxes to the county by 2034, and the county’s total annual tax revenue, including indirect taxes from activity the data centers support, would be $21.5 million.

Harold L. Ellis III and Christina W. Ellis own the land. They previously proposed a mixed-use development including up to 249 residential units for the property, which the county board of supervisors rejected in 2019.

The Powhatan Planning Commission held a work session for the data center campus proposal in May. It recommended denying the rezoning and conditional use permit in its Sept. 3 meeting.

Several county residents who spoke during the public hearing period and a supervisor said they were concerned that the project had no end user and has a provision for numerous possible other uses.

In its proffer, the developer outlined an 18-month period during which the only approved land use would be the data center campus, but after that period, the property could be used for data centers or for one or more of the 45 permitted uses it listed.

To secure an end user, “we need to go to market,” Province Group CEO Mark Kerslake said to the county board. “In order to go to market, we need our zoning approval. The users — occupiers, as we call them — have many sites being thrown at them. They won’t engage unless we have zoning approval.”

In response, Powhatan Supervisor Mark Kinney said the $17 million tax revenue projection depends on the project being fully built out.

“The $17 million is projected, and that’s if all three buildings are built out, they get a user that wants all three [and] all three buildings are packed to capacity with servers. Well, you know what comes after ‘if’ — ‘but,’” he said. “But what if they get a smaller user and there’s only one building, and [the user] only uses half the server capacity of that current building? Well, then your revenue goes down.”

In Northern Virginia, around 300 data centers are sprawled across Loudoun, Prince William and Fairfax counties, with the majority in Loudoun. The Ashburn area in Loudoun is home to the world’s largest concentration of data centers, a zone known as Data Center Alley, through which passes more than 70% of the world’s internet traffic. The Prince William Digital Gateway, if completed as planned, would be the largest data center complex in the world.

Central Virginia, though, is also seeing increased data center development. Henrico County is home to QTS Data Centers’ network access point, as well as Meta data centers. QTS also purchased 622 acres from Hourigan after the land was rezoned to light industrial.

Data center opponents argue the centers strain the state’s electric grid. Dominion Energy has previously estimated that Virginia data centers’ demand for electricity will jump from the 2.8 gigawatts it was in 2023 to 13 gigawatts by 2038.

The approved Powhatan data centers would use an anticipated 300 megawatts of electricity at full capacity. Dominion Energy will supply the facility, which will require building a substation.

According to a Dominion letter to the county’s economic development manager, the Fortune 500 utility expects distribution line upgrades to take about 18 months, for an expansion and upgrade of the existing substation to take about three years and for the construction of a new substation and transmission line to take about four years.

Earlier this month, Dominion Energy Virginia and Amazon.com announced they’d entered into an agreement to explore potential development of small modular nuclear reactors at North Anna Power Plant in Louisa County that could bring “at least 300 megawatts of power to the Virginia region.”

Dropping anchor

LS GreenLink USA spent two years on site selection, scouring much of the East Coast for the right location to build a 750,000-square-foot factory to manufacture subsea cables for offshore wind farms.

Then it landed on Chesapeake.

Patrick Shim, LS GreenLink’s managing director, cited several reasons for the company’s decision: access to the Port of Virginia, the approximately 15,000 veterans who enter the civilian workforce each year in the region, and the state, regional and local economic development support for companies like his.

“I’ve never seen anything like it in any other region out there,” Shim says.

In July, LS GreenLink, a U.S. subsidiary of South Korea’s LS Cable & System, announced it would build the United States’ first offshore wind subsea cable factory at the Deep Water Terminal Site in Chesapeake, creating an estimated 381 jobs and investing $681 million. 

The port has remained a large attraction for retailers and developers looking to invest in Hampton Roads. Industrial real estate had a 2.3% vacancy rate for the second quarter of 2023, which slipped to 3.6% for the second quarter of 2024, according to Cushman & Wakefield | Thalhimer. But that’s still well below the national rate of 6.6%, according to real estate company JLL.

A national slowdown in imports and rising interest rates are to blame for some of that increase, says Geoff Poston, senior vice president of Cushman & Wakefield | Thalhimer’s industrial group. But it’s not all doom and gloom.

Hampton Roads lagged behind other markets, like Savannah, Georgia, in spec building before the pandemic, but that’s changed in recent years, and more spec buildings are coming online. This contributes to the boost in the region’s vacancy rate, but Poston notes that Hampton Roads remains “in a much healthier position than most other industrial markets.”

That includes Savannah, which posted a 7.9% industrial vacancy rate for the second quarter of 2024.

“We’ve just got through an all-time record historical industrial market, and so this is a little more normal, although the developers, you know, they’d love to have more activity,” Poston says.

The port’s draw

The Port of Virginia’s shipping channel opened to two-way traffic for ultra-large container vessels in March, reducing turnaround time by 15%, according to the port. A central rail expansion that will allow it to handle an extra 455,000 20-foot-equivalent containers (TEUs) a year, bringing the total rail capacity to 1.8 million TEUs annually, was finished in early August.

The port processed 3.5 million TEUs in fiscal 2024, a 2% increase over 2023 and the second best year in its history.

Lang Williams, an executive vice president and principal with Colliers International Virginia and vice president of the Virginia Maritime Association, says trends are reversing, and cargo is beginning to again flow more freely. Coupled with the port’s improvements, he expects the more recent lag in vacancies “will start to go away.”

That could be good news for large projects underway, including more than 3.6 million square feet spread across 11 spec buildings that are either being constructed or anticipated, Colliers reported. That’s on top of four such buildings, totaling more than 1.4 million square feet, completed last year.

Developers Matan and the Rockefeller Group are planning a 5 million-square-foot industrial park on 500 acres in Suffolk, with five spec buildings, two of which are set to be completed by the end of 2025.

“They’re having really good activity for those buildings, and maybe some other activity as well,” Deputy City Manager Kevin Hughes says. Gov. Glenn Youngkin announced in July that the City of Suffolk would receive $30.1 million to widen a 2.3-mile stretch of Route 460 to support the development.

Other high-profile projects are also continuing. Amazon.com is on track to complete a 219,000-square-foot delivery station in Virginia Beach in time for the 2024 holiday season, and a robotics fulfillment center, in an adjacent space, is set to be complete in late 2025, company spokesperson Sam Fisher says.

Also in August, the City of Chesapeake received a $35 million grant from the state’s Virginia Business Ready Sites Program to help extend utility infrastructure to the 1,400-acre Coastal Virginia Commerce Park, according to Steven Wright, the city’s economic development director. The state has looked to the megasite as a possible location for a semiconductor or microchip manufacturer. While Chesapeake is continuing to look for funding for development, Wright says it is close to reaching Tier 4 status.

“Everyone that calls is curious about what is the status of the infrastructure to support the property,” Wright says.

  

ACI doubles its Chesterfield HQ

Commercial and industrial contractor Atlantic Constructors Inc. (ACI) is doubling its headquarters in Chesterfield County, a roughly $25 million project.

The contractor, which provides mechanical, electrical, plumbing and fire protection products and services, plans to open a second 170,000-square-foot building on 18 acres beside its existing building, which sits on 25 acres, in early November. The facility will be primarily used for warehouse and manufacturing space, with some office space.

“Since so much of our work is non-office-based, that’s how we set up our facilities. They’re a large manufacturing center, along with some office that supports it,” said ACI CEO Evan Shriver.

The company will create modular construction components in the new facility, expanding its production.

“We’re dedicating that space to building some structural steel components that we can then put the main piping systems, electrical systems, plumbing systems and fire protection systems together on, and then ship them all across the country to then build the buildings in sections like that,” Shriver said.

“But it’s mainly achieved by building it here in our factory in Richmond,” he added, “as opposed to having to find skilled tradesmen across the country and move those people around. It’s much easier to just build it in a controlled environment and then ship it out there.”

ACI currently has 1,200 employees and plans to hire up to 100 people to work in the second headquarters building, likely within the first two years of its opening, Shriver said. The company expects to have about 50 people working in the facility when it opens.

As of Aug. 30, the exterior of the new building was complete. Over September, the company is working on final landscaping and the paving of parking lots and roads. Interior drywall and paint finishes are ongoing.

ACI began planning the expansion in 2019, Shriver said, and physical construction started in early 2023.

“This is part of the strategic vision of the company … to maximize offsite construction through modular building, and that increases safety, quality and productivity and helps remove geographic barriers so we can then pursue projects all across the country,” he said.

While a construction site has factors outside of a contractor’s control, a controlled environment like a manufacturing facility reduces safety risks and has the advantage of automated machinery, Shriver added.

ACI works on large commercial buildings for health care, advanced manufacturing, data centers, higher education, chemicals manufacturers and other industries. In addition to its Chesterfield County facilities, the contractor has offices in Roanoke, Sterling and Suffolk, as well as in Wilmington, North Carolina. In 2022, the company expanded its presence in Roanoke and Hampton Roads.

QTS finishes $137M purchase of rezoned Henrico tech park land

QTS Data Centers has secured ownership of all 622 acres of the recently rezoned site for the White Oak Technology Park II project in Henrico County’s Sandston area for approximately $137 million.

On June 28, a limited liability company belonging to QTS bought the remaining portion of the site that it hadn’t yet acquired — about 397 acres — for $118.8 million from a limited liability company belonging to Richmond development company Hourigan, county records show. Hourigan shepherded the land through its county rezoning process to light industrial.

The LLC owned by Hourigan purchased the land that day, buying about 223 acres for $38.05 million from Atlantic Crossing and 174 acres from Vienna Finance for $20.5 million.

“[QTS] came to us with a vision and a plan for eastern Henrico that allowed them to have complete control of that entire site,” said Hourigan founder and CEO Mark Hourigan, “and in evaluating all the options and ways that we might be able to consider moving forward with that, we thought that was the best long-term outcome for the county and for that site, is to have someone with a proven track record [and] the capital behind them to be able to make that kind of investment.”

QTS previously acquired the other approximately 225 acres of the site and some 4 outlying acres from Harmon Properties, Brenda H. Sargent and John C. Harmon in several December 2023 transactions totaling $18 million.

The Kansas-based company already has a data center campus in the original, adjacent White Oak Technology Park and announced in 2022 plans for a 1.5 million-square-foot expansion. Also in that park is QTS’ network access point, which connects, through Virginia Beach landing stations, to three subsea internet cables originating in Europe and South America.

A company spokesperson said QTS was unable to share details of its project plans at this time.

Hourigan said, “It is a fabulous opportunity for Henrico County and to drive this region forward, and allows QTS to continue their business plan, and I think a great solution for everyone that was involved.”

Project past and future

During the rezoning process, which began with initial filings in late 2023, county residents raised concerns about environmental impacts and losing part of a Civil War battlefield. Ultimately, the county planning commission recommended approving the rezoning in April.

The Henrico County Board of Supervisors voted to rezone the site on May 14. On May 16, the board announced the county was establishing a $60 million affordable housing trust fund that would be funded by unbudgeted local tax revenue from data centers.

“We are incredibly excited about the industrial development that is happening and that will be happening in eastern Henrico,” said Anthony Romanello, executive director of the Henrico Economic Development Authority. With the establishment of the affordable housing trust fund, “developments like what’s happening in White Oak, like what QTS is doing, are really helping to make Henrico an even greater community.”

Now that the site has been rezoned, Romanello said, next steps include installing infrastructure such as water, sewer and power lines at the site by 2026. According to county documents, Hourigan will install sewer infrastructure for the project, while the county will handle water infrastructure.

Dominion Energy had to apply to the State Corporation Commission for approval to install two 230-kilovolt power lines to the site and expand its existing White Oak substation. In October 2023 testimony, a Hourigan representative referred to the proposed project, then consisting of about 320 acres, as the VAH Data Center Campus, referring to the property owners at the time: Vienna Finance, Atlantic Crossing and Hourigan. The SCC approved Dominion Energy’s application in March.

“I think we’ve had a very strong industrial base in Henrico — and I’m including data centers in industrial — and it’s getting a whole lot stronger with the investment that Hourigan and QTS are making,” Romanello said.

Brent Godwin contributed to this article.

Rockbridge tent manufacturer to expand, add 60 jobs

Natural Bridge-based fabric shelter systems manufacturer XFactor Solutions Global has leased 34,000 square feet to expand in Rockbridge County, with plans to create 60 jobs, Cushman & Wakefield | Thalhimer announced Thursday.

The company, which acquired the assets of Creative Tent International in October, will use the industrial space at 70 Douglas Way in Natural Bridge Station for light manufacturing and warehousing of large commercial-grade tents, according to Carmen Elliott with Cushman & Wakefield | Thalhimer, who handled the lease negotiations on behalf of XFS Global.

The new facility offers an expanded footprint and enhanced capabilities including large format welding, fabric sewing and cutting, metal, weld and fabrication and the ability to kit products for customer requirements according to XFS’ website.

The 60 jobs will include welders, sewers and general assembly workers. XFS Global has a 10-year lease on the industrial space.

XFS Global moved Creative Tent International manufacturing from Las Vegas to Natural Bridge Station.

“Our new Virginia headquarters brings us much closer to our customers, and our new facility will greatly enhance our manufacturing capabilities,” Paul Wilcox, vice president of business development and market growth, said in a statement. “Being strategically located near our customers means reduced lead times, improved service team response times and further alignment with our strategic partners, ultimately leading to new product offerings, operational efficiencies and increased value for our commercial customers and their businesses.”

XFS Global serves military, government, commercial and industrial clients.

Cushman & Wakefield | Thalhimer hire Richmond VP

Brian Felton has joined Cushman & Wakefield | Thalhimer’s Richmond office as a first vice president focused on industrial sales and leasing, the real estate firm announced Tuesday.

Felton was previously a senior leasing manager with San Francisco-based Prologis, where he oversaw a 3.6 million-square-foot portfolio of industrial buildings in Richmond, Norfolk and Fredericksburg. According to his LinkedIn profile, he was based in Richmond.

“We are pleased to have Brian join our team,” Eric Robison, an executive vice president with Thalhimer, said in a statement. “His wealth of experience both in the Richmond market and working with institutional industrial owners will benefit our clients.”

Before joining Prologis, Felton worked for 14 years as senior director of leasing and development at Liberty Property Trust, which was acquired by Prologis in 2020. Felton has negotiated leases or contracts with various companies, including Home Depot, Amazon.com and Tredegar, according to a news release.

Felton has a bachelor’s degree in physical geography and minored in business administration and management at East Carolina University.

Hampton Roads warehouses sell for $8.4M

A portfolio of three warehouses in Hampton Roads sold for $8.4 million in mid-May.

Tidewater Fleet Supply, an independent distributor of fleet, truck, trailer and heavy equipment parts, leases the properties.

Located at 3666 Progress Road, the Norfolk warehouse sold for $6.03 million, according to city property records. The parcel is approximately 4.82 acres. At 1324 Lindale Drive in Chesapeake, the approximately 1.6-acre property sold for almost $1.8 million, property records show. The warehouse in Hampton on 2502 58th St. is on roughly 0.51 acres.

B&D Acquisitions LLC bought the properties from Parrott Properties LLC. Ricky Anderson and Chamie Burroughs with Colliers International represented the buyer.

Chesterfield distribution center sells for $37.5M

A distribution center in Chesterfield County’s Meadowville Technology Park sold for $37.5 million in mid-March, according to county property records.

Located at 1400 Digital Drive in Chester, the 353,044-square-foot distribution center is fully leased to one tenant — CCBCC Operations LLC, a wholly owned subsidiary of Coca-Cola Consolidated Inc. — according to a Cushman & Wakefield | Thalhimer news release. Based in Charlotte, North Carolina, Coca-Cola Consolidated is the nation’s largest independent Coca-Cola bottling company.

A joint venture between funds managed by Red Rock Developments and Westport Capital Partners sold the 54.3-acre property to Bailard Real Estate Fund, which also bought Charter Colony Shopping Center in Midlothian, according to a news release. Property records show the center sold for $23.85 million in March 2022.

Eric Robison and Bo McKown with Cushman & Wakefield | Thalhimer’s Capital Markets Group and Jonathan Carpenter and Graham Savage with Cushman & Wakefield’s Industrial Advisory Group handled the sale.

Cushman & Wakefield will manage the property for Bailard. Jason Crowder, a senior portfolio manager with Cushman & Wakefield | Thalhimer’s Commercial Property Services Group, will lead the property management team.

Ups and downs

Compared with the previous two years, 2022 was less of a roller coaster for the housing market in Virginia, but it still presented challenges for many would-be first-time homebuyers.

As inflation rates grew, peaking at a 40-year high of 9.1% in June 2022, the Federal Reserve increased interest rates rapidly. Inflation fell to 6.5% in December 2022, but the higher rates put the brakes on the housing market in Virginia with an abrupt screech.

Over the course of 2022, 123,000 homes sold statewide, about 20% less than in 2021 but closer to pre-pandemic activity, according to Virginia Realtors. The sharpest declines were seen in Northern and Central Virginia. Bidding wars were less common last year than during the height of the pandemic, but it still wasn’t a great market for buyers, as the state’s median sales price jumped about $25,000 to $375,000 in December 2022, compared with December 2021.

However, in February, mortgage rates started to decline, prompting renewed demand. According to a Wall Street Journal report, the average 30-year home loan rate has come down by nearly a full percentage point from a 20-year high above 7% in November 2022 — although that’s still double the 3% rates from November 2021. 

On the commercial side, many large-scale projects are now in the works across the state. In Richmond, the ball is rolling on the $2.44 billion Diamond District mixed-use development centered around a new baseball stadium for the Richmond Flying Squirrels, set to be completed in time for the 2025 baseball season.

At the end of 2022, the Richmond Economic Development Authority and the Greater Richmond Convention Center Authority received five proposals from developers to redevelop the City Center Innovation District, a 9.4-acre downtown area that includes the closed Richmond Coliseum, which the city wants demolished. A 10-person evaluation panel is scheduled to narrow the group of five during the first quarter of this year.

In Hampton Roads, two of famed entertainer and Virginia Beach native Pharrell Williams’ larger projects made progress in 2022: the $1.1 billion redevelopment of Military Circle Mall in Norfolk and the $350 million Atlantic Park project in Virginia Beach.

Negotiations started last year, but as of late January, Williams’ Wellness Circle team had not yet officially signed documents to redevelop Military Circle Mall, which would include 1,100 residential units, a 200-room hotel and a 16,000-seat arena. In November 2022, the music superstar prodded Norfolk leaders to move forward with the project, saying “The ball’s in their court.”

Meanwhile, the Oceanfront-based Atlantic Park, Williams’ surf park project with Virginia Beach-based Venture Realty Group, secured pending financing in January and is getting closer to groundbreaking, with completion set for summer 2024. The first phase includes 120,000 square feet of retail, 310,000 square feet of residential and 15,000 square feet of office space.

Northern Virginia is seeing massive development along the Silver Line’s Loudoun County extension, which opened in November 2022 after an eight-year delay. Reston Town Center, which has 5.1 million square feet of office space, is set to add 700,000 to 800,000 square feet more in the next few years, part of a $3 billion investment by Boston Properties Inc., and developer Comstock Inc. is busy building 7 million square feet of offices and residential space at Reston Station. The company has plans for 2.5 million square feet of multiuse space at Loudoun Station in Ashburn.

In Danville, the long-awaited White Mill project broke ground in early 2023. The $100 million public-private redevelopment of the 550,000-square-foot former textile mill, now known as Dan River Falls, is a joint venture between the city’s industrial development authority and The Alexander Co. It will have 147,000 square feet of commercial space and 150 apartments geared toward employees of the forthcoming Caesars Virginia casino.  

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Warehouse portfolio with two Va. properties sells for $21.86M

Seven warehouses leased to Lansing Building Products, including two in Virginia, sold for $21.86 million, Cushman & Wakefield | Thalhimer announced Friday.

The portfolio of warehouses totals 209,883 square feet, and the properties range from 20,000 to almost 50,000 square feet each. On average, 89% of each property is warehouse, and 11% is office space. The tenant, Lansing Building Products, supplies exterior building products to contractors and has more than 2,000 employees.

The two Virginia properties are in Newport News and Norfolk. The 47,664-square-foot warehouse in Newport News is located at 12661 McManus Blvd. The 40,050-square-foot Norfolk warehouse is located at 3644 Village Ave.

New Jersey-based B&D Holdings bought the properties. Eric Robison with Cushman & Wakefield | Thalhimer’s Capital Markets Group and Rett Turner with Thalhimer’s Global Occupier Services Multi-Market Team represented the seller. Lansing entities owned the Virginia properties, property records show.

The other warehouses were in Statesville and Wilmington, North Carolina; Oklahoma City; Myrtle Beach, South Carolina; and Ogden, Utah.