Projects Reflect Confidence in Cville’s Commercial Real Estate Market

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Projects Reflect Confidence in Cville’s Commercial Real Estate Market

News about commercial real estate both nationally and locally continues to be positive.  The Urban Land Institute’s 2014 annual report entitled Emerging Trends in Real Estate (based on interviews with 1,000 experts in the field) states that respondents “expect growth to be sufficient to generate consistent and growing demand for commercial real estate across all property types.”

Our local agents also describe an improving commercial market citing very low vacancy rates in the office and retail sectors and a continuing demand for space.  Along with the good news about existing space comes that of anticipated new activity from Costco on 29 North to Wegmans on the south side, to some significant new developments downtown.

Residential Growth Supports Commercial Expansion

Our strong residential market positively impacts commercial development, and the news there continues to be good.  CAAR reported 10 percent growth in yearly home sales in 2013. In the first quarter of this year, the median number of days on the market declined by 18 and the average sales price increased by 20 percent.

This kind of residential market strength is good news for developers of retail properties like Costco, Wegmans and the new Pantops area Starbucks.

Ed Brownfield, with Real Estate III Commercial Properties, looks forward to the opening of Costco.  He explained that having a Charlottesville store will keep dollars in our local economy and bring new jobs to the area.  “Costco has a reputation of being a wonderful employer,” he continued and “people who work there love it.”

Brownfield also anticipates the 2015 opening of Wegmans, the upscale grocery store coming to the south end of town at Fifth Street Station.  This should cut down on the number of people traveling north on Route 29, he explained, adding that things will  “be more balanced which will help with congestion.”  Wegmans also has a good reputation, ranking 12th in Fortune’s 100 Best Companies to Work For in 2014.

Next year will also see the opening of the new Pantops Plaza which, Brownfield said, will be the new home of the Pantops’ area Starbucks.  This 10,500-foot development will also house a Chipotle Mexican Grill and Jersey Mike’s Subs.  Rumor has it the Starbucks will feature a drive through window, the first in our area.

Commercial Growth Reflects Strength of Local Economy

Commercial investors like markets with a strong economy, as reflected in part by the number of major employers. In recent years we have seen the growth at NGIC and UVA Research Park.  These and other commercial establishments north of town, such as GE, Kohl’s and now Gander Mountain, generate as much as 50 percent of Albemarle’s total tax revenues and attract other commercial development, said United Land’s Wendell Wood.

While growth and expansion is happening all over our area, there is significant activity in and around downtown.  The former Martha Jefferson Hospital building is now home to the CFA Institute, which occupies 100,000 square feet, said Mark Mascotte, Principal Broker at the Jefferson Real Estate Group.  The Institute’s newly renovated space includes green features such as solar panels and a grey water reuse system.

The former Cardwell Building at the old hospital site is also home to some smaller, though still substantial 20,000 square foot tenants.  It’s hard to find space for companies with this kind of large footprint, Mascotte added.

HemoShear, one of these new tenants, is a bio tech company described on their website as the “leading developer of human relevant systems for drug development and discovery.”  Senator Mark Warner recently stopped to admire the company’s new headquarters and spoke of their importance for creating jobs in our area.

Another major new downtown development is the 925 Market Street project, featuring views of Carter Mountain and Monticello, said Mason Graham with CBRE Charlottesville.  This is a mixed-use project that will have 18,000 square feet of Class A office space available for sale and high-end residential apartments for lease. The seven story building will be walking distance from the downtown mall, the new CFA offices and Court Square.   Delivery of the office space is anticipated for late 2015.

The new building will help meet the demand for Class A office space downtown for which the vacancy rate is currently very low, just one percent, Graham said.

Real estate suitable for a medical office building is also in short supply, according to Michael Johnson, President of PMI Charlottesville, who currently has a multi-million dollar client looking for just such a property.

Overall, the commercial market is doing well, and, Graham said it is “very competitive. ”  While this poses its own set challenges, it is good news for our area and especially for a market that has just come through a serious recession.  It also makes for a lot of excitement about all the new developments coming on line over the next two years.

Celeste Smucker is a writer, blogger and author.  She lives near Charlottesville.

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