Richmond’s office vacancy falls to new five-year low

Richmond’s overall office vacancy rate fell to a new five-year low of 13.6 percent in the second quarter, after absorbing 91,467 square feet of space, according to a market report from CBRE|Richmond.

Much of the activity came in Richmond’s Northwest quadrant, which reclaimed the lowest vacancy rate in Richmond, 12.6 percent, from downtown Richmond’s Central Business District (CBD), which stood at 13.2 percent.

While relocations made up the bulk of first-quarter activity, new firms to the market and a number of expansions led to significant absorption last quarter. As Richmond’s office fundamentals return to prerecession levels, development began to pick up, with three new buildings breaking ground and another under construction.

The 180,000-square-foot Medarva complex at West Creek Medical Park in eastern Goochland County broke ground on the first of three 60,000-square–foot medical office buildings with expected delivery in early 2015.

Gumenick Properties has started construction on its first mixed-use building at Libbie Mill in Henrico County totaling 44,378 square feet (21,760 of which is office space). Completion is expected by October.
The 321,500-square-foot Gateway Plaza in downtown Richmond and the 37,658-square-foot Reynolds Commons building in Henrico are well underway and scheduled to open in the first half of next year.

Overall there were no deliveries in in the second quarter, but a total of 440,418 square feet was under construction, with medical office space the biggest driver in the market.

Overall, the asking office rental rate was $19.34 per square foot,  with the rate slightly higher for Class A product at $22 per square foot.