Local agents look forward to an active commercial real estate market with robust activity continuing throughout 2017. Look for high occupancy rates in the downtown market along with the growing popularity of adjacent areas as expanding businesses scramble to find space and still remain close-in. South of town, the recent opening of 5th Street Station is already contributing to demand for nearby residential properties and impacting commercial investment from apartment complexes and strip centers to new subdivisions. And these are just a few examples of activity in our area.
National Association of REALTORS® Chief Economist, Lawrence Yun speaking at NAR’s 2016 national convention last November cautioned that in 2017 “the likelihood of a rising interest rate environment” introduces some uncertainty into the situation. However, overall he
“expressed confidence that commercial real estate activity should remain on an upward trajectory,” a prediction with which our local agents agree.
Strong Economy Promotes Commercial Growth
Reid Murphy, REALTOR® and partner at BMC, Building Management Company, said that the “power of our local economy,” makes our area attractive to investors and contributes to the growth of Charlottesville’s commercial market. Part of this, of course, is the insulating impact of UVA and the Medical Center.
Other factors at work here include our area’s natural beauty, and the desirability of a lifestyle that appeals to employers and employees alike explaining, in part, why Charlottesville is often on top ten lists such as Best College Towns, Best Places to Retire, Best Cities for Entrepreneurs and many more.
The strength of our residential real estate market is another big factor that supports increasing expansion of the commercial market. CAAR’s recent Year End Market Report showed a 12.7 percent year over year increase in home sales in the last quarter of 2016, accompanied by an impressive 19 day decrease in the median number of days that homes stayed on the market and a 14.6 percent decrease in the inventory of homes for sale.
Charlottesville is “seeing really good activity and continues to perform extremely well,” said Peter Wray with Triangle REALTORS®. He added that the activity is “across the board,” including both leases and sales and that “net income prices are still close to, or at, an all time historic high.”
“The market is still doing great,” said John Pritzlaff, with Thalhimer. He pointed to activity throughout our region from Brookhill Development, proposed for an area between Polo Grounds Road and Forest Lakes South and recently approved by Albemarle Supervisors, to 5th Street, the IX Building and West Main.
Tanashia Washington with Woodard Properties expressed excitement about the increasing number of calls she is receiving from business owners looking for space of all kinds. One particular trend she has noticed is more and more inquiries about properties to purchase rather than lease.
Steve Melton with Virginia Land Company agrees with this assessment stating that many of his customers are also choosing to buy, a choice that surely reflects faith in the long-term strength of our local economy.
Bill Howard, owner and broker at Real Estate III Commercial Properties, Inc., described the Charlottesville market as “very good.” He added that “lots of rental office space that has been on the market for years is now leasing up,” definitely good news. Howard explained that other sectors of the commercial market such as retail centers are also doing well while prospective tenants looking for industrial and warehouse space are frustrated by inventory shortages.
It is not just close-in areas where commercial business is booming. Bill Gentry with Jefferson Land & Realty in Madison County just acquired two new commercial listings. “We are having an increase in inquiries on commercial properties,” he said and “we find this very pleasing.”
Here are some are highlights of commercial activity throughout our area.
Wray’s strip center on Route 250 in Pantops is a good example of recent retail activity in that area. He said the center, which is relatively new, is “leasing up well.” One tenant, Mattress Firm, leased 4,000 square feet, and leases are signed for all but two remaining vacancies there.
Five years ago the Virginia Land Company started building 1415 Rolkin Court, a Pantops-area office project now featuring a variety of medical offices and other businesses including a mortgage company. Today they are happy to report only three remaining vacancies.
Melton is now looking forward to the opening of another, nearby office building called the Monscane Center—from a native American term describing an area occupied by a local Monacan tribe—located behind CarMax at the site of the old White House Motel. His company is in process of submitting paperwork to the county for approval on this three-building project that will offer 45,000 square feet of much-needed Pantops-area office space, available for either purchase or lease.
Route 29 North
Activity in this busy corridor includes the recent acquisition of the Shops at Stonefield by New York-based O’Connor Capital Partners Pritzlaff said. The popular Maine-based clothing store, L.L. Bean has recently leased space there, and will soon be joined by Midici, The Neapolitan Pizza Company, featuring natural, non-GMO ingredients.
Across the street, Kroger is planning for a 2017 opening of its new bigger store in Seminole Square having grown out of its current home of 35 years at 29 North and Hydraulic. Kroger’s former location will then become the new home of craft store Hobby Lobby.
Further north, the 300 acre Brookhill Development between Polo Grounds Road and Forest Lakes South will be a mixed-use project that includes 100,000 to 150,000 square feet of what Pritzlaff calls “fun retail” that offers amenities to residents living in this neighborhood and nearby. “It’s a downtown for people who don’t live near downtown,” he said. Future residents may also be able to walk to the movies as there is a theater “in conversation,” Pritzlaff said, along with restaurants and a gym. In the future, a hotel may also be part of the picture.
In Madison County, Gentry reports the just opened Family Dollar north of Sheetz at Cornerstone Square is “doing a heck of a business.” He expects this to open the door to other businesses who will want to capitalize on this success and locate there as well.
Another recently-opened Madison business is Bald Top Brewing Co., a micro-brewery that brought in music and food trucks for a Friday, Saturday and Monday (Dec 30,31 and Jan 2) grand opening weekend. The good news, Gentry explained, is that it was a huge success, the bad news is that they ran out of beer on the second day. Gentry is now in conversation with another company interested in opening a similar business in Madison.
The recent opening of 5th Street Station has been warmly welcomed by existing south side residents who love staying close to home when they shop for groceries and a host of other goods and services. The center is also bringing more residents to the area who, in the past, rejected the south side because it was too far from essential services.
As more retailers open their doors there, the interest grows. Pritzlaff says the Alamo Draft House theater will soon be open for business and that there is a push for new restaurants to locate nearby. He explained that the next phase of this center will be more “entertainment focused.”
In addition, in April Martha Jefferson expects to open a 4,000 square foot facility that will offer a family practice with extended hours—walk-ins accepted.
Wray advises that other retailers wanting to take advantage of 5th Street Station traffic will be able to find a home nearby when a center, to be located between the Holiday Inn and the entrance to 5th Street, moves through its final stages of approval.
In other activity in that area look for two big, new apartment complexes that Pritzlaff says will be finished this calendar year.
Low vacancy rates in the downtown market mean business owners are looking to nearby, close-in locations when they need more space. Preston Avenue, which Murphy says is “trending” with a “downtown vibe” is popular especially for companies looking for a second location.
For example, one of Murphy’s projects at 805 Preston at Forest is now fully leased and features Carpet Plus and Blue Ridge Pack and Ship. When MarieBette opens their new bakery there, customers will be able to pick up fresh baked goods when dropping off a package or shopping for carpet.
Another close-in area that has a lot to offer business owners is McIntire Plaza, home to Circa and C-ville Coffee. One of the benefits of this project, Washington said, is its prime location. She added that the center is affordable allowing entrepreneurs to thrive and attracting what she calls “cool, unique businesses.” The center can accommodate a wide range of enterprises from those needing a small office space like a therapist or tutor moving into their first commercial space after working from home, to, at the other extreme, businesses needing a large warehouse space. While space is currently available, she is confident it will fill up fast.
A little further out, a BMC project on River Road offers a hard-to-find industrial opportunity. Two spaces were just recently leased; Digs, Inc, specializing in expert excavation, and Dos Amigos, a landscaping company. Some show-room quality space is still available there, Murphy said.
South of downtown, the IX Building is almost all leased, Pritzlaff said. Once a busy textile factory, this project is now a seventeen-acre, mixed-use business center offering space for office, retail, restaurants, and arts and crafts. Conveniently located just two blocks from the downtown mall it features green spaces, free parking and community events.
Today IX visitors can enjoy Brazos Tacos and stop by Sweethaus when they are ready for dessert. Later this year, they can also enjoy brews from the award winning Three Notch’d Brewery whose Brewmaster, Dave Warwick, has received Virginia Craft Brewers Cup medals for four different Three Notch’d beers. The company will move its production facility from its current location on Grady Avenue to the IX Building and add a restaurant. The Richmond-Times Dispatch quoted CEO George Kastendike as saying the IX Building appealed “because of the personality of the location.”
Still another active, close-in area of town is West Main which Pritzlaff said is “doing very well.” The area is seeing the construction of apartments that will appeal to students, he said, calling it a “student housing hub.” In addition, visitors can look forward to staying at the Quirk Hotel, which he described as “an art-focused boutique hotel,” that will be a nice place for out-of-towners to mingle at the rooftop bar.
Charlottesville’s commercial market had a great year in 2016 and agents predict that in 2017 our area will enjoy more of the same in just about every part of town.
Celeste Smucker is a writer, blogger and author who lives near Charlottesville.