SOUTHEAST SNAPSHOT, JUNE 2007

Richmond, Virginia Retail Market

The Richmond retail market is seeing solid growth with the continued development of power centers along major retail corridors. This is primarily due to the fast growing residential markets of western Henrico and western Chesterfield County. Among the development buzz in the Richmond market are southwest Chesterfield County’s Westchester Commons, a Zaremba development with more than 900,000 square feet at Route 288 and Midlothian Turnpike; and Hancock Village, a 500,000-square-foot project being developed by EDCO on Hull Street Road; and in the northwest quadrant along West Broad Street, Breeden’s Towne Center West, Archon’s Corner at Short Pump, and Unicorp’s West Broad Village will be adding approximately 800,000 square feet of retail space with residential and office developments in a New Urbanism format. 

In addition, east Richmond, currently an underserved market, is heating up with huge residential and commercial projects under construction and in the pipeline. A number of Richmond’s finest residential developers have acquired large tracts of agricultural land and have announced major residential communities. As a result, more than 1 million square feet of retail development is under construction in the northeast quadrant of Richmond, including Forest City’s White Oak Village, a 900,000-square-foot project, located at Laburnum Avenue and I-64.

The southwest quadrant, including the Hull Street corridor and Midlothian corridor around Route 288, will continue to see major retail growth due to massive residential development and high growth/high income demographics. In the northwest quadrant, development in Short Pump will continue to expand west due to changing shopping and commuting patterns that have occurred with the connection of the southwest and northwest quadrants through Route 288.

While West Broad Street, Midlothian Turnpike and Hull Street Road are the primary sites of retail growth, there will be ample opportunity for new retail development due to large tracts of land at West Creek (NWQ) and CenterPoint (SWQ). The same dynamics that fueled the retail growth of Short Pump, Midlothian Turnpike and Hull Street Road promise to impact other development areas along Route 288.

Amid the increased competition from newer retail projects and residential areas, the remaking of older malls and retail centers is another trend in Richmond’s retail market. Examples of these revitalization programs include the upcoming plans to demolish the virtually empty Cloverleaf Mall in central Chesterfield County. Crosland, a North Carolina-based developer, and Chesterfield County are in partnership to replace it with an 80-acre mixed-use development to be known as Chippenham Place. 

Other revitalization efforts taking place include the addition of a lifestyle component to Chesterfield Towne Center; the recent renovation and de-malling of Willow Lawn in the mid-Broad Street corridor, an area also enjoying major redevelopment of its older housing stock; and the resurgence of the Regency Mall submarket with the addition of Wal-Mart and Fresh Market in previously empty big boxes.

Richmond is also experiencing urban area redevelopment plans for both housing and retail near the Virginia Commonwealth University/Medical College of Virginia campus and along North Boulevard in downtown Richmond.

The Richmond retail market continues to enjoy a vacancy rate of approximately 7.5 percent, a rate that has remained constant for the past 3 years despite the continued fast pace of development throughout the metropolitan statistical area. Asking rents for small shop space are pushing the $40 per square foot mark in the “hot” development areas – primarily due to high land acquisition and development costs.

Some of the retailers new to the market that are taking advantage of Richmond’s development include Petco, Rue21, Ross Dress For Less, Fresh Market, West Elm, The Original Mattress Factory, Texas de Brazil, California Tortilla, Bluepointe Fish Club and K&G Menswear.

With a great deal of activity and new product in the future, the Richmond market promises even more opportunities for retailers. Submarkets and corridors to watch are North Richmond from Virginia Center Commons all the way to Ashland. Announcements have been made that sporting goods giants Cabellas and Bass Pro have procured sites and Gander Mountain is under construction. Continued retail demand is anticipated for northwestern and southwestern quadrants along the Route 288 corridor due to large residential projects in the pipeline.

Richmond’s stable employment base and an influx of Fortune 500 companies locating their headquarters in Richmond assures a definite continued growth of the market.

— Brett Womack and Debbie Wake are senior vice presidents in the Richmond, Virginia, office of Divaris Real Estate, Inc.


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