Commercial Real Estate Brokers Remain Optimistic About Richmond
Based on statistics, the commercial property market of Richmond, Virginia is actually in worse shape during the first few months of 2010 than it was a year ago. However, commercial real estate brokers have expressed optimism that this particular segment is on its way to recovery.
According to brokers, statistics have yet to demonstrate it, but the commercial market of Richmond is actually recording increased activities and prices of commercial structures are starting to stabilize. They stated that the signs of recovery are being felt in all types of commercial properties such as retail, industrial and office buildings. They added that comments from people on the street and from various businesses operating in the commercial property industry are mostly positive compared with last year’s mood.
With regards to the retail property sector, vacancy rate in the city has risen to 6.9% in the first quarter of 2010. This is slightly higher than previous year’s first quarter figures of 6.2%. However, most market observers believe that 6.9 is still a pretty good situation to be in. They argued that what the market is experiencing is more a softening in rents rather than actual excessive vacancy rates.
At the office building sector, one prevalent trend that commercial property analysts are seeing is tenants taking advantage of the soft market by moving into better office spaces and paying the same rates they paid for their old headquarters. More prospective office renters are also showing interest on big spaces at the western Henrico area, a place where vacancy rate used to be as high as 25%.
Empty office spaces in the city are mostly created by the failure of two major businesses, market analysts have revealed. The demise of LandAmerica Financial Group and Circuit City Stores Inc. created a lot of vacant office spaces in the area and analysts are predicting that the impact of the loss of these two major businesses will be felt by the city for years.
Meanwhile, commercial real estate brokers also see some reason for optimism in the industrial property market which, according to them, is at least not getting any worse. Most brokers admitted that demand for industrial space is still low, but at the very least, it is not expected to get any lower.
The closing of computer memory chip manufacturer Qimonda in 2009 is being seen as a major contributing factor, not only to the poor condition of the industrial property market, but also to the overall economic condition of Richmond. The former factory of Qimonda has been purchased by Quality Technology Services at a price of $12 million; a figure that is way below the real assessed value of the industrial structure.
The loss of the chip maker resulted in more job losses for the city, contributing further to the economic problems of the area and to the poor performance of the industrial market. Analysts have added that the industrial building sector was also hurt by low inventories from retailers and manufacturers not producing as much as they should.
Although the commercial property market of Richmond is recording poor numbers, commercial real estate brokers believe that the sector is on its way to recovery and improvements will become more evident in the coming months.
