MARKETBEAT

MARKETBEAT

Industrial
Richmond,Snapshot
VA 3Q 2016
Richmond, VAQ3 2019
Industrial

RICHMOND, VA INDUSTRIAL
Economy
The Federal Reserve Bank cut interest rates by a quarter of a
Economic Indicators percentage point, citing concerns over slowing economic growth and
12-Month
Q3 18 Q3 19 the risk of a recession. In Richmond, the regional economy posted
Forecast
Richmond Employment 679.5k 686.2k steady job growth as the unemployment rate remains near cyclical
Richmond Unemployment 3.0% 3.0%
lows, at 3.0%. Employment increased by 6,700 jobs over the past 12
months, near the average pace of 6,900.
U.S. Unemployment 3.8% 3.7%

Several economic announcements during the quarter will contribute

Source: BLS, Moody’s Analytics. 2019 Q3 Data are based on latest available data.
to future employment growth in the Richmond area. Alphasonics
Market Indicators (Overall, All Property Types)
USA, a UK-based medical device company, will locate a sales office
12-Month
Q3 18 Q3 19 in Henrico County. Amazon plans to open a new fulfillment and
Forecast
Vacancy 4.2% 2.8% delivery facility in the Virginia I-95 Logistics Center.
Net Absorption 1.1M 14k

Under Construction** 1.4M 3.5M Market Overview

Net Average Asking Rent* $4.89 $4.86
Steady absorption of recently delivered inventory continues to
compress the overall industrial vacancy rate in Richmond. New
*Rental rates reflect net asking $psf/year
**Under Construction does not reflect US MarketBeat tables
inventory remains highly sought after and is giving speculative
developers confidence to continue to build. Approximately 99.8% of
Net Absorption/Asking Rent
the 7.5 million square feet (msf) of inventory added since the start of
4-QTR TRAILING AVERAGE
2012 is occupied. Phase II of Panattoni’s Virginia I-95 Logistics
1,000,000 $5.50
Center delivered in the quarter. Amazon leased the entire 461,700
$5.00 square foot (sf) building. Three large spaces are expected to become
750,000
available after Premier Fixtures announced its closure. The company
$4.50 already vacated a 120,000-sf warehouse space at 3910 Technology
500,000 Ct, has a 216,000-sf lease in Becknell’s Airport Distribution Center,
$4.00
and owns the 229,829-sf manufacturing building at 4650 Oakleys Ln.
250,000
$3.50
Despite strong demand, rent growth has not followed but is near an
0 $3.00 all-time high. More than 680,000 sf of industrial space has been
2013 2014 2015 2016 2017 2018 2019
absorbed year to date, dropping the overall vacancy rate to 2.8%.
Net Absorption, SF Asking Rent, $ PSF The overall asking rate stayed flat over the past twelve months and
remains at $4.86 per square foot (psf). Competition among
developers and large-scale developments may explain the lack of
Overall Vacancy
rent growth. Twelve warehouse/distribution buildings larger than
12.5%
150,000 sf are either currently under construction or proposed. Over
the past five years, sixteen similar buildings were completed.
10.0%

7.5% Outlook
Access to one of the largest east coast ports and major highways
5.0% continue to benefit Richmond’s industrial market. Steady demand is
Five-Year Average = 5.6%
expected to drive further development activity and new deliveries are
2.5%
anticipated to be quickly absorbed. Limited available supply will
provide upward pressure on rents, however an influx of new
0.0%
2013 2014 2015 2016 2017 2018 2019 deliveries may mute rent growth in the near term. Smaller sites will
achieve higher psf rental rates and contribute to more rent growth.
thalhimer.com
 MARKETBEAT

Richmond, VA
Industrial Q3 2019

OVERALL YTD NET OVERALL OVERALL OVERALL

YTD LEASING OVERALL UNDER
TOTAL INVENTORY AVAILABLE OVERALL WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
SUBMARKET ACTIVITY VACANCY CNSTR
BLDGS (SF)* VACANT ABSORPTION NET RENT NET RENT NET RENT
(SF)** RATE (SF)****
SPACE (SF) (SF) (MF)*** (OS)*** (W/D)***

Downtown 5 185,266 0 0 0.0% 0 0 N/A N/A N/A

Northeast 167 10,876,377 741,307 232,872 2.1% (224,291) 0 N/A $9.00 $5.90

Northwest 310 19,437,801 483,570 461,794 2.4% 223,145 410,000 $8.24 $10.24 $5.24

Southeast 150 20,275,369 201,157 897,349 4.4% (305,018) 2,716,760 $5.32 N/A $5.18

Southwest 408 41,356,282 1,254,110 950,601 2.3% 986,404 350,690 $3.24 $7.50 $4.53

Richmond, VA Totals 1,040 92,131,095 2,680,144 2,542,616 2.8% 680,240 3,477,450 $4.36 $10.16 $4.86

*Only includes buildings 20,000 SF and larger MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
**Includes renewals
***Rental rates reflect asking $ psf/year
****Under Construction does not reflect US MarketBeat tables

OVERALL YTD NET OVERALL OVERALL OVERALL

YTD LEASING OVERALL UNDER
TOTAL INVENTORY AVAILABLE OVERALL WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
PROPERTY TYPE ACTIVITY VACANCY CNSTR
BLDGS (SF)* VACANT ABSORPTION NET RENT NET RENT NET RENT
(SF)** RATE (SF)
SPACE (SF) (SF) (MF)*** (OS)*** (W/D)***

Warehouse/Distribution 738 62,189,267 2,292,482 1,712,136 2.8% 18,490 977,450 N/A N/A $4.86

Manufacturing 234 24,971,578 368,219 645,260 2.6% 12,486 30,000 $4.36 N/A N/A

Office Service/Flex 61 2,931,868 19,443 92,276 3.1% 649,264 0 N/A $10.16 N/A

Key Lease Transactions Q3 2019

PROPERTY SF TENANT PROPERTY TYPE SUBMARKET

Airport Logistics Center 246,760 Anord Mardix Warehouse Airport

Northlake Commerce Center 54,000 Wine & Beer Supply Warehouse I-95 N/Ashland

Northlake Commerce Center 53.680 UPS Warehouse I-95 N/Ashland

1120 Gordon Ave 50,746 Caritas Warehouse Jeff Davis Corridor

Key Sale Transactions Q3 2019

PROPERTY SF SELLER / BUYER PRICE / $ PSF SUBMARKET

Virginia Gateway Logistics Center 798,786 Ace Hardware / Ashley Capital $21.7 M / $27 Prince George

3008 Mechanicsville Tpke 90,250 PepsiCo / SilverCap Partners $3.2 M / $35 Laburnum / Rte 360

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