Economy: Regional Growth Drivers Accelerate
Richmond continues to strengthen its position as one of the mid-Atlantic’s most dynamic growth markets, backed by major economic development wins, infrastructure investments, and expanding talent attraction. Richmond International Airport (RIC) was recognized as North America’s most efficient airport serving fewer than 5 million passengers, while LinkedIn ranked the region second as the fastest-growing metro area for jobs and new talent. Pharmaceutical giant Eli Lilly closed on the purchase of 227 acres in Goochland County in a step closer toward breaking ground on its $5 billion manufacturing campus in West Creek Business Park. Colonial Heights approved a $180 million sports and entertainment complex with a mix of hospitality and retail components, and VCU Medical Center was named the top hospital in Virginia by U.S. News & World Report.
Supply And Demand: Vacancy Tight Amid Healthy Demand
Overall vacancy closed the quarter at 3.4%, down 10 basis points (bps) quarter-over-quarter and up 30 bps year-over-year, remaining at or below 4.0% mid-2021. Leasing activity has topped 1.3 million square feet (msf) since the start of the year, and year-to-date (YTD) net absorption had topped 240,000 square feet (sf) with sustained demand from both new-to-market and expanding concepts. The pipeline is limited to 379,000 sf with preleasing in place in 74.3% of those new projects.
Grocery segment expansion continues with Kroger set to build a 120,000-sf location in Hanover County as the anchor for the planned Telegraph Commons center, set to begin construction in mid-2027. In Chesterfield, Publix announced plans for a 50,000-sf store in the planned Shoppes at Old Hundred, making it the chain’s 17th store in the region. Nordstrom is set to re-enter the Richmond market with a new Nordstrom Rack location planned for fall 2027 at Westpark Shopping Center, occupying the former 30,000-sf Painted Tree Boutiques anchor space. Makers Union Pub signed a lease for its first Richmond market location in the Diamond District anchored by CarMax Park.
Pricing: Investment Market Active
Quoted rates continue to trend upward, with a significant portion of new construction and second-generation offerings unpriced. YTD sales volume has topped $340 million including the third-quarter transfer of Ross-anchored Chesterfield Towne Center Plaza for $11.5 million. JRE Partners sold the 63,000-sf strip center to Ross Realty Investors less than a year after acquiring it as part of its $80 million purchase of the adjoining Chesterfield Towne Center mall.
