What’s new in commercial real estate in our area? Are there some exciting new shops, restaurants or theatres coming to town? What can we expect in 2012?
Nationwide, commercial real estate, like its residential counterpart, has suffered during the down market of the last several years, but things may be looking up. Recently National Real Estate Investor, an organization that follows trends in commercial real estate, conducted its annual Borrowers Trends Survey. Based on responses from 185 commercial buyers and 136 lenders, they concluded that, while nationally things continue to be slow compared to the hot market of a few years ago, there is reason to be hopeful in 2012. Both borrowers and lenders expressed optimism about business in 2012 with 56-percent of the lenders and 44-percent of the buyers predicting an easing of the credit crunch that has slowed investment in recent years.
Like the people in the survey, Charlottesville’s commercial agents and developers are expressing confidence in our local market and looking forward to a profitable 2012. Commercial activity is evident on Pantops around the new Martha Jefferson Hospital, as well as on Route 29 North with businesses coming to Stonefield, the Hollymead Town Center area and Rivanna Plaza. In addition, a number of existing companies such as Whole Foods and Super Shoes have relocated or are planning to do so, making space for others to move in and creating speculation about who the newcomers may be.
Hollymead Town Center
One of our more active areas is the section of 29 North near Hollymead Town Center where a number of both local and national firms soon will be moving in. Why is this such an attractive area?
“People are beginning to realize that this part of the county is where the action is,” said Wendell Wood of United Land Corporation. He stressed that the driving force behind all the activity is the jobs generated by a combination of NGIC/DIA ,GE and University Research Park making this the largest employment base outside of the University itself. In addition, he added, it is nice to have Kohls, Target and Harris Teeter already in place as strong anchor tenants. Wood also emphasized the accessibility of this area via the by-pass as a feature that makes it attractive to prospective tenants.
Wood said his company is busy with lots of activity and many inquiries. They have 52,000 square feet under construction near Kohls in the Hollymead Town Center area, and over half of it is pre-leased. While the identity of the new tenants is still a closely guarded secret, as their move in dates approach there definitely will be signs out front announcing who they are and letting us know when they will be open for business. While some of the new tenants are smaller companies, United Land is negotiating with a number of larger firms of which most are national and one is local. The first of the new tenants should be open for business sometime in April or May.
Robin Amato, an agent with Real Estate III Commercial Properties, explained that many larger national franchises are attracted by Charlottesville area demographics, which offer a profitable combination of life style, income and population density. It also helps that Route 29 connects Charlottesville with Greene and Madison counties, she said. Amato agrees the market is improving. “There is definitely an uptick across the board, everything from retail leases to office space. There is more confidence and a more positive attitude amongst commercial property users,” she said.
Mason Graham, an agent with CB Richard Ellis, also has noticed the market picking up lately. She said that her phone is ringing more and that lots of people are out looking for space to rent. “Things are definitely improving,” she said, and added that many office users are looking to expand into this market.
One of her recent leases is a trendy new sandwich shop called Which Wich now open for business in Hollymead Town Center near Harris Teeter. This is a local franchise with 50 different varieties of subs that can be customized to suit consumer’s tastes. Buyers have a choice of a variety of different sandwich types. They choose a pre-printed bag and mark their sandwich choices with a red sharpie. Artistic (or brave) diners can draw on the bag when they are finished with their lunch and hang their artwork on a special wall where it can be admired by other members of the community. On a recent visit Graham said the line of customers extended out the door.
The nearby Hollymead Professional Center on 29 North, which is managed by Virginia Land Company, will also have some new tenants in 2012. Property manager Steve Melton said they are now working on an office build out to accommodate both a government contractor and a non-profit organization.
Graham also represents Rivanna Plaza, a strip center on 29 North in front of Kegler’s Bowling Alley. A major new tenant there will be the Kiddie Academy, which offers day care services with a little extra. A national company, Kiddie Academy is known for providing educationally focused day care with curriculum that is developmentally appropriate for the children in its care.
Rivanna Plaza also will feature Dunkin’ Donuts and soon will have another restaurant, the identity of which is still a secret, as is that of a national retailer that will move into a currently vacant 6,000 square foot space in the same strip. Ragazzi’s fans will be glad to find it will reopen at Rivanna Plaza after leaving its long time home at Shopper’s World at the end of last year.
Work at Stonefield is moving along and at least one agent ventured a guess that the first commercial tenants will be moving in sometime between July and September. Stonefield will be a walkable, mixed use development featuring a combination of townhomes and apartments plus retail shops, a hotel and office space located at the intersection of 29N and Hydraulic Road. When fully built it will surround Northrup Grummon on three sides.
Pier 1 will soon be moving into its new home in Stonefield, along with a 14 screen IMAX theatre and a boutique hotel by Hyatt. Stonefield also brings the much anticipated Trader Joe’s to the Charlottesville market for the first time. If you haven’t shopped at a Trader Joe’s, it is a specialty grocery store that started in California back in the 1950s. Originally a chain of convenience stores called Pronto Markets, today Trader Joe’s is a national organization and known for seeking out interesting and innovative foods which they buy in large quantities passing on the savings to customers.
A big new addition to Pantops is the recently relocated Martha Jefferson Hospital. According to Graham, one result is that the Pantops market is very active as doctors and medical support services look for space to allow them to be near the hospital. Amato cautioned, however, that retail space in Pantops is limited because there is not a lot of land to build anything new. One bright spot is the strip center near Wells Fargo Bank where she is working on a lease for a new business that will be going in next to the AT & T store.
Another new addition to Pantops is a MedExpress that will occupy the building that was formerly the Ponderosa Steak House. MedExpress is an urgent care center that is open 12 hours a day 7 days a week. They treat emergencies, such as broken bones or burns, as well as common illnesses such as colds and flu and do routine physicals, medical evaluations and immunizations. There is always a full medical team in house including a physician. Melton said the 7,000 square foot facility should be up and running in about 45 days.
There are a number of trends noted by the agents and developers. For example, Amato has noticed what appears to be an increase in local people opening businesses. This is in part, she said, the result of people losing jobs in the current economy and looking for alternatives. While it is still difficult to find financing, she explained that some local banks such as First Citizens are now making business loans.
Amato also referenced another trend, which is office type businesses going into retail locations. She cited the example of Kelly Services, which is now located on Gardens Boulevard near the Carmike Six Theatre just off Route 29.
Rumors and Speculation
Most commercial deals are shrouded in secrecy until the contracts are finalized. As a result, there are many rumors and much speculation about what may be happening in any given center. A good example is Shoppers World where last year a number of major tenants such as Whole Foods and Super Shoes moved out as did two restaurants Ragazzi’s and China King Buffet. Two other businesses, Massage Envy and Advance Auto Parts moved to other locations within the center.
There is much speculation, but little actual information, about what the developer has planned for Shoppers World. For example, will a well-known deli move into Ragazzi’s old spot? And will Staples still be there this time next year? A call to the developer revealed they are not able to share that information with us at this time.
Bill Howard, with Real Estate III Commercial Properties, explained that big developers typically sign anchor tenants before they allow local REALTORS® to facilitate leases for smaller customers. Consequently, local agents are as much in the dark about what is planned for the big shopping centers as is the general public until the big leases are finalized.
One persistent rumor is the possibility of a Cracker Barrel on 5th Street Extended. While at least one agent told me it may still be a possibility, several others said with authority that the deal was definitely dead. This means if you want to eat at Cracker Barrel you must still travel to Waynesboro, although at least one person suggested the possibility you may soon see one at Zion Crossroads. What if anything will open on 5th Street Extended instead? Apparently that is one of many closely held secrets and the answer is, wait and see.
Celeste Smucker is a writer, editor and author of Sold on Me, Daily Inspiration for Real Estate Agents. She lives near Charlottesville.