According to CoStar data based on active construction since the start of the year, Greater Richmond ranks #7 in the nation for the best growth of industrial real estate. The industrial real estate market in Greater Richmond has seen substantial development and demand despite leasing activity slowing down across the country.
“The industrial development cycle has just experienced its biggest output in history in an effort to meet a surge in onshoring requirements and changing macro forces in the economy,” said Brian Jenkins, President – Development, of Richmond-based Hourigan. Jenkins knows firsthand: The LEGO Group recently named Gray|Hourigan as the general contractor for the toymaker’s $1 billion manufacturing facility in Chesterfield, Va. — adding 1.7 million square feet to the region’s output.
In the Richmond Region, there are currently 5.9 million square feet of industrial space under construction and, just a few months ago, the metro was one of the top locations in the nation with 10 million square feet under way.
“While industrial spec development may be slowing down a little, it’s not stopping,” said Jenkins. Across the nation, tenants requiring spaces of 300,000 square feet and more have reduced their demand, resulting in fewer leases for large spaces.
“In select markets like Greater Richmond, there is still opportunity to develop speculatively,” says Jenkins. “But one’s conviction will be tested now more than in the recent past as the music is slowing. Capital markets are always attuned to what is happening, and this time is no different.”
Industrial development in the Richmond Region was at an all-time high as of 2022 with more than 13 million square feet of industrial space and even more under construction. Spec Development
The Richmond Region was primed for the reshoring-fueled demand. According to the previous data, industrial development in the region was at an all-time high as of 2022 with more than 13 million square feet of industrial space and even more under construction. Both building costs and electric rates are significantly lower than national averages, making Greater Richmond a prime location. Thus, corporate decision-makers and site location consultants both find value in Greater Richmond’s speculative development.
“Stabilization in supply/demand in key markets has caused industrial rents to lag behind compared to vacancy and spec development starts,” said Jenkins. This creates an opportunity for companies to swoop in on available sites. Electrical distributor CEEUS, Inc. will invest $37 million to establish a 187,000-square-foot warehouse and distribution facility in Hanover County. ABB also opened a new $6 million manufacturing, distribution, and repair facility, which includes more than 65,000 square feet of operational space and will employ nearly 100 people when at scale.
Another example is Hanover’s East Coast Commerce Center. Originally built as a 1.1- million-square-foot spec building in Hanover, SanMar Corporation snatched up the building and will invest at least $50 million to establish a distribution operation. The building, minutes from Interstate 95, will become the garment and apparel company’s largest operation and flagship center for its East Coast distributions. SanMar plans to employ 1,000 people from the region’s skilled and diverse workforce of over 680,000.
The region benefits from its strategic location which provides access to Interstates 95, 64, and 85 as well as nearly 45 percent of the U.S. population within a day’s delivery drive, Richmond International Airport, and river access to The Port of Virginia.
“Port of Virginia continues to impress and drive demand in this region,” noted Jenkins. Just 95 miles up the historic James River from the Port of Virginia, you’ll find a 121-acre Richmond Marine Terminal able to handle up to 60,000 TEUs. Nearly a decade ago, the Port of Virginia signed a lease to operate the terminal. Since that time, combined with technological investment at the Port, Richmond barge service increased.
Just on the other side of Interstate 95 from the terminal is Deepwater Industrial Park, the 110-acre site that boasts Lowe’s 1.2-million-square-foot distribution facility. The once underutilized site was home to undersized warehouses with low ceiling heights.
However, nontraditional industrial space is also tapping into Greater Richmond’s locational advantages. Local data centers connect to the world’s fastest Internet thanks to several transcontinental fiber cables that run through Greater Richmond on their way to Northern Virginia’s data center ally. In Henrico County’s White Oak Technology Park, Meta constructed a 130-acre campus adjacent to a QTS collocated data facility that spans 1.3 million square feet. Major advantages to data center development in the region include more affordable parcels, abundant water for cooling, and partners such as Dominion Energy to consult on energy delivery.
Developers and business owners are choosing Greater Richmond, Va., to start and expand their industrial projects thanks to the mid-market region’s extensive business advantages. Contact Jennifer Wakefield, President and CEO of the Greater Richmond Partnership, to learn how your company can expand to Richmond, Virginia, capital of one of the top states for business: jennifer@grpva.com.