Richmond, VA

Richmond, VA
Multi-Family Market Summary & Activity Update
Fall 2014
RICHMOND
Contents
Introduction
Introduction2
3
Economic Overview
4
Sales Transactions
5
Development Pipeline
7
Why Choose Capstone?8
Ashton Square
2
State Capitol
Market Commentary
CAPSTONE APARTMENT PARTNERS prides itself on the continual value contributions we
are able to offer our industry; thus, we produce periodic Multifamily Market Summaries to
further inform the clients and industry we serve. Capstone believes this market snapshot will
be beneficial to current owners, operators, investors, and other industry professionals who are
active in the Richmond MSA, as well as others looking to break into this market.
Todd Conner
Jared Alcorn
Beau McIntosh
Brian Ford
Principal Broker
c 540.525.5521
o 800.746.3175 ext. 707
[email protected]
Investment Advisor
c 540.553.2210
o 800.746.3175 ext. 708
[email protected]
Managing Partner
c 704.877.5681
o 800.746.3175 ext. 703
[email protected]
Managing Partner
c 704.962.9462
o 800.746.3175 ext. 702
[email protected]
Central Virginia Office
Hampton Roads Office
Charlotte Office
4950 Brambleton Ave. | Suite B
Roanoke, VA 24018
158 Tidal Dr.
Newport News, VA 23602
(Capstone HQ)
1600 Camden Road | Suite 100
Charlotte, NC 28203
RICHMOND
Organic Development
Moreover, a Charlottesville-based online grocer is making a big
investment in its Richmond operations. Relay Foods offers local,
organic products as well as national brands. The company will invest
$710,000 to expand its distribution center in Scott’s Addition and create
75 jobs. The Richmond market is Relay Foods’ second biggest, with the
Washington, D.C. area being the first.
University Life
University students and recent graduates comprise a large portion of
the Richmond population, which has certainly assisted in growing the
rental market here. Virginia Commonwealth University alone boasts
a current enrollment of 31,445 students. In fact, the Shockoe Bottom
submarket in Richmond was voted the #23 “Best Neighborhood for
Young People” in the country by Yahoo Finance in April 2014. They
Class
Lease Up
A (1-5 Years in Age)
B (6-15 Years in Age)
C (16-30 Years in Age)
C- (30+ Years in Age)
Stabilized Averages
Totals/Averages
Units
1,632
4,044
11,938
16,479
31,990
64,451
66,083
Multi-Family Fundamentals
Demand in the Richmond MSA has slowed slightly in the last six months;
however, the vacancy rate remains very healthy at 6.2%, and 459 units
were positively absorbed during the last year. Developers remain
focused on building apartment units in the Central submarket, many
of which are adaptive re-use conversions from older, historic buildings.
Richmond currently provides beneficial tax credits to investors who
renovate existing properties. There are 3,372 units currently under
construction in the Richmond area, nearly half of which are located
in the Central submarket. The number of proposed units in the
metropolitan area rose to 3,914 over the past six months, and a fourth
of those units are in the Central submarket. Rental rates increased by
$20.21 or 2.2% over the past six months; thus, raising the average rent
to $933 per month. Capstone anticipates that demand in this market
will remain strong given its young, educated workforce and recent job
announcements. Although vacancy rates will likely rise slightly in the
coming 12-18 months as new product is delivered, rent growth will
remain positive during that timeframe given the steady tenant demand.
Apartment Comparison by Class
Vacancy Rate
Avg. Sq. Ft.
28.2%
863
10.2%
860
4.8%
1,003
4.4%
920
6.0%
891
5.6%
917
6.2%
916
Avg. Rent
$1,239
$1,201
$1,104
$948
$811
$925
$933
Avg. Rent/Sq. Ft.
$1.44
$1.40
$1.10
$1.03
$0.91
$1.01
$1.02
MARKET COMMENTARY
The Richmond area has recorded strong employment growth over
the past eighteen months, and the current unemployment rate is only
5.7%. Job announcements are on the rise with Chesterfield County
seeing the largest influx market-wide—for instance, a Chinese-owned
company, Shandong Tranlin Paper Co., Ltd., expects to create 2,000
jobs and will invest $2 billion over five years in order to establish its first
U.S. advanced manufacturing operation. The company will produce
organic, tree-free products made exclusively from agricultural field
waste such as wheat straw and corn stalks.
ranked the metro areas in the U.S. using a dozen factors, including
data from the U.S. Census, FBI crime rates, and Niche Ink user opinions
on the best places for life after graduation. 13% of Shockoe Bottom’s
population is between 25 to 34 years old. Its location just east of
downtown Richmond along the James River, as well as its nightlife,
dining, and entertainment options, earned it the 23rd spot.
3
RICHMOND
Employment
ECONOMIC OVERVIEW
Recent Employment Announcements
Relay Foods offers local, organic products as
well as national brands. The company will invest
$710,000 to expand its distribution center in
Scott’s Addition and create 75 jobs.
 Tranlin Inc., a Chinese pulp and paper company,
plans to establish its first U.S. manufacturing
facility at the James River Industrial Center located
in Chesterfield County creating 2,000 new jobs.
Teleperformance USA will open a customer
service call center in Henrico County creating 500
new jobs.
 Perdue Foods will hire 190 new employees at its
Mid -Atlantic Replenishment Center located in
Prince George County.
10 Largest Employers (non-government)
Company
Industry
Rank
Employment
1
Capital One Financial Corp.
Financial Services
11,309
2
VCU Health System
Healthcare
8,491
3
HCA Virginia Health System
Healthcare
7,051
4
Bon Secours Health System
Healthcare
6,646
5
Walmart
Retail
5,351
6
Dominion Resources Inc.
Electric Utility
5,220
7
SunTrust Banks Inc.
Banking
4,432
8
Food Lion
Retail
3,830
9
Altria Group Inc.
Tobacco
3,900
10
Amazon.com
Online Retail
3,127
Wages & Population
There are 606,070 employees in the Richmond MSA who earn a mean hourly wage of $22.36 and average annual income of $46,500. In comparison,
the state and national annual income averages are $50,120 and $46,440, respectively.
Historical Population
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Colonial Heights
17,434
17,515
17,802
17,707
17,689
17,823
17,383
17,440
17,479
17,634
Hopewell
22,309
22,511
22,744
23,081
23,206
23,123
22,651
22,580
22,348
22,163
Petersburg
32,684
32,395
32,728
33,005
33,111
32,986
32,553
32,326
31,973
32,538
Richmond
197,432
197,915
198,992
200,655
202,867
204,451
204,159
205,533
210,309
214,114
Richmond MSA
1,160,444
1,181,166
1,204,743
1,222,770
1,238,353
1,250,458
1,260,443
1,269,459
1,282,305
1,245,764
Virginia
7,475,600
7,577,100
7,673,700
7,751,000
7,833,500
7,925,900
8,024,600
8,096,600
8,185,867
8,260,405
Source: U.S. Census Bureau
4
The MSA’s unemployment rate remained steady over the last twelve months and was
a low 5.7% as of July 2014. The unemployment rate is on par with the state’s average of
5.3%, and considerably healthier than the national average of 6.2%.
RICHMOND
Community
Chesterfield Building
Stuart Court
Beaufont Oaks
Morningside
Lava Lofts
Courthouse Green
Laurel Springs
Graystone Place
Towns at River South
Timbercreek
The Haven at Celebrate (2ND PHASE)
Jefferson South of the James
Deering Manor
Chamberlayne Gardens
Colonial Village at Chase Gayton
Towers on Franklin
Fredericksburg (FORMERLY COLONIES AT GINTER PARK)
Village at the Arbors (FORMERLY NOELLE AT BROOK HILL)
River Road Terrace
Timbers
11 North at White Oak
Rollingwood
Station Square at Cosner's Corner
* Pricing Information Not Disclosed
YOC
City
Sale Date
Units
Sale Price
Price Per Unit
1903
1924
1982
1967
2011
1973
1972
1970
2003
1964
2013
1973
1966
1949
1985
1963
1970
1941
1960
1988
1965
1978
2012
Richmond
Richmond
Richmond
Richmond
Richmond
Chesterfield
Richmond
Richmond
Richmond
Richmond
Fredericksburg
Petersburg
Richmond
Richmond
Richmond
Richmond
Richmond
Richmond
Ettrick
Richmond
Richmond
Richmond
Fredericksburg
5/27/14
5/27/14
3/13/14
3/13/14
2/21/14
1/7/14
1/7/14
12/20/13
12/20/13
12/15/13
11/5/13
10/4/13
7/16/13
7/1/13
6/15/13
4/18/13
3/29/13
3/5/13
3/1/13
2/11/13
1/16/13
1/16/13
1/5/13
65
63
312
392
50
266
159
134
161
160
250
200
168
216
328
332
267
292
128
240
1184
278
260
N/A*
N/A*
$18,500,000
$17,750,000
$8,273,000
$23,036,798
$14,528,607
N/A*
N/A*
$3,500,000
$45,200,000
$1,555,000
$3,729,750
$5,500,000
N/A*
$23,800,000
N/A*
$11,680,000
$4,493,328
$20,000,000
$35,571,400
$9,488,500
$44,642,000
N/A*
N/A*
$59,295
$45,281
$165,460
$86,605
$91,375
N/A*
N/A*
$21,875
$180,800
$7,775
$22,201
$25,463
N/A*
$71,687
N/A*
$40,000
$35,104
$83,333
$30,043
$34,131
$171,700
SALES TRANSACTIONS
Sales Transactions: 2013 and 2014
5
RICHMOND
Average # of Units Per Transaction
284
300
Average Year of Construction
2020
272
257
250
SALES TRANSACTIONS
200
2010
2010
2000
180
Class A
1971
1970
Class C
100
Class A
1980
Class B
150
1987
1990
Class C
1960
1960
AVERAGE
Class B
AVERAGE
1950
50
1940
1930
0
Class A
Class B
Class C
Class A
AVERAGE
Class B
Class C
AVERAGE
Average Transaction Sales Price
Average Price Per Unit
$35,000,000 $32,705,000
$200,000
$180,000
$30,000,000
$172,653
$160,000
$25,000,000
$140,000
$20,000,000
$20,000,000
$17,132,258
$13,317,953
$15,000,000
$10,000,000
Class A
$120,000
Class B
$100,000
Class C
$80,000
AVERAGE
$60,000
Class A
Class B
$83,333
$68,949
Class C
AVERAGE
$43,910
$40,000
$5,000,000
$20,000
$0
$0
Class A
Class B
Class C
Class A
AVERAGE
Class B
Class C
AVERAGE
Class A represents properties built from 2000-2014, Class B includes properties constructed from 1985-1999, and Class C signifies properties constructed in 1984 or earlier.
6
RICHMOND
Developer
Developer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Historic Housing LLC
Douglas Development
Steve Leibovic
Hunt Investments
WVS Companies
Main Street Realty
Spy Rock Development
Genesis Properties
Lombady VU Realty
Khalsa Professional Associates
Miller & Associates
Hunt Investments
Fountainhead Properties
Property Results
Thalhimer
Robinson Development Group
Kotarides Company
Humanities Foundation
Breeden Company
3200 West Clay
Cedar Works II
GTR Cedar
Overbrook Lofts
Scott's Addition
Charleston Ridge
Reynolds South Plant
Abberly at Centerpointe
Alta Stony Point
Colony Village
Element at Stonebridge
Meadowville Town Center
Perry Street
Azalea Square
Atack Medical Park
100
156
120
173
300
172
250
270
282
122
600
300
115
200
320
3200 West Clay St.
Old Osborne Tpke.
1903 E. Marshall St.
Overlook Rd./Hermitage Rd.
Roseneath Rd./West Clay St.
Atlee Station Rd./Kings Acres Rd.
Bainbridge St./ W. 4th St.
Powhite Pkwy./Brandermill Pkwy.
Chippenham Pkwy./Cherokee Rd.
10250 Colony Village Way
Chippenham Pkwl./ Midlothian Turnpike
Meadowville Rd./North Enon Church Rd.
Brown St.
Brook Rd.
West Broad St./Cold Hill Ln.
Communities Under Construction (100 Units and Above)
Community
Units
Road/Intersection
1 Scott’s Addition
Central National Bank Building
Cookie Factory Lofts
Edison
The Locks
Lofts at River Falls
Preserve at Scott's Addition
Shockoe Valley View
Spectrum
The Square
800 Semmes
Hatcher Tobacco Flats
Miller Lofts at Plant Zero
Port RVA
Reynolds South Plant
Apartments at Centerpointe
Clairmont at Chesterfiled
Puddledock Place
Marshall Springs at Gayton West
112
200
178
174
55 (174 COMPLETE)
61 (69 COMPLETE)
194
31 (120 COMPLETE)
103
152
140
152
197
102
263
255
368
156
252 (168 COMPLETE)
3031 Norfolk St.
E. Broad/N. 2nd St.
900 Terminal Pl.
N. 7th St./E. Franklin St.
South 11th St.
1810 East Cary St.
Roseneath Rd./West Clay St.
Cedar St./18th St.
2007 Brook Rd.
West Grace St./Shafer St.
Commerce St.
W. Commerce Rd./Porter St.
500 Stockton St.
Hull St.
Bainbridge St./ W. 4th St.
Charter Colony Parkway/I-288
N. Mall Dr./Old Farm Rd.
Fine St./ Puddledock Rd.
Bacova Dr./N. Gayton Rd.
Submarket
Central
Central
Central
Central
Central
North
South-1
South-2
South-2
South-2
South-2
Tri-Cities
Tri-Cities
West-1
West-2
Submarket
Central
Central
Central
Central
Central
Central
Central
Central
Central
Central
South-1
South-1
South-1
South-1
South-1
South-2
South-2
South-2
South-2
DEVELOPMENT PIPELINE
1
Thalhimer
2
WVS Companies LLC
3 Marcellus Wright Cox Architects
4
Historic Housing LLC
5
Historic Housing LLC
6
Larry Shaia
7
Thalhimer
8
HH Hunt
9
Wood Partners
10
Emerson Construction
11
Boyd Homes
12
Emerson Builders
13 Franklin Development Group
14
Dewberry Capital
15
Atack Properties
Communities Proposed (100 Units and Above)
Community
Units
Road/Intersection
7
RICHMOND
Carolinas
Georgia
Virginia
Tennessee
Kentucky
Alabama
Florida
West Virginia
WHY CHOOSE CAPSTONE ?
The People Sell the Deal
Capstone’s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry
sector and respective region. We place client service above all else, and can guarantee that no one else will
work smarter and harder in achieving the highest level of results for our clients. We don’t rely on a logo to
sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work
ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day,
it’s the individuals that drive value and sell the deal, and we know the capabilities of our individual team
members are second to none.
Market Expertise & Product Niche
Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and
expertise in not just the primary markets of the Southeast & Mid-Atlantic, but also the secondary and tertiary markets within our region, identifies
us as the ideal candidate for such assignments. Capstone’s investment sales team has completed a multitude of transactions across the primary,
secondary, and tertiary markets of the Southeast & Mid-Atlantic, and our track record of success can be attributed to our comprehensive coverage
and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment.
National Exposure via Cutting Edge Technology
Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various
proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing
for optimal operational efficiency. This enables Capstone’s investment brokerage team to spend nearly all of its time servicing clients, interacting
with industry players and active asset traders, and promoting transactions.
Reputation and Results
Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The
firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm’s trusted relationships among the apartment
investment community continue to facilitate seamless, fluid, and successful sales transactions.
* Information in this report has been provided by the following: Richmond Real Data Report September 2014, Area Images Provided by Steven Faucette (cover), Taber Andrew Bain (pg. 2, 5) via
https://creativecommons.org/licenses/by/2.0/, REIS Report, Costar, Business Journals, LoopNet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts.
8