Richmond Bizense hosted its inaugural event, “The Future Of…,” and Sands Anderson was pleased to be a sponsor. This sold-out event focused on office space trends that are reflecting in the changes of where and how people work. With exciting economic development and business growth in the region, commercial real estate is a hot topic. Topic highlights from the sold-out event attended by key players in Richmond’s commercial office space follows.
Leading the discussion and panel moderator was Professor David Downs, director of the Kornblau Institute at VCU and professor in VCU’s Department of Finance, Insurance, and Real Estate. The panel sharing their insights on Richmond’s business future and current local market trends included:
- Jane DuFrane, a director of leasing for Highwoods Properties, Inc. in Innsbrook in western Henrico County
- Jeff Galanti, a principal in the Riverstone Properties, LLC, located in the James Center in downtown Richmond, which it purchased and is renovating
- James Crenshaw, the Director of Collaboration at Gather, which is a large local co-working brand
- Jessica Zullo, a director at Hickok Cole, a Washington, D.C. and Richmond architecture and interior design firm that is working on The Current project in Manchester neighborhood of Richmond
- Yogi Singh, a local developer whose family-owned firm’s most recent projects have been focused on converting old buildings in downtown Richmond to modern offices
Professor Downs guided the panelists’ conversation providing each an opportunity to share insights from their commercial real estate experiences in the Richmond market:
Whether tenants desire to locate an office in an urban or a suburban setting.
- Many of the panelists believed that this decision depended on the lifestyles of the employees of each particular tenant and what amenities those employees wanted with their office space. Each environment offered different pros and cons that business tenants and their employees considered.
- Galanti predicted that many tenants would split their office spaces to have back office space in a suburban environment and a downtown outpost for branding and the recruitment of talent.
The diversity of workspaces desired in the modern office space.
- All of the panelists commented on how many different types of workspaces are desired by tenants in current floorplans for offices. Tenants desired multi-use rooms, cafes or kitchenettes, traditional offices, open floor plans, multiple work station configurations, etc. all within the same office. Employees work in different ways in different environments and tenant businesses are trying to accommodate these different workstyles.
- Crenshaw stated that Gather has been learning from its tenants and providing more traditional offices in its recent floorplans compared to more open floorplan space when it first started its business.
- Several panelists discussed how co-working businesses and traditional office landlords worked together to deliver different offerings to potential tenants and were not necessarily direct competitors because each could capitalize on its own niche.
- Several panelists commented that demographic shifts such as younger tenant decision-makers and more women in the workforce will shape the types of workspaces that are common in the future.
Outlook on the effects from changes in transportation.
- The panelists could not give area-wide predictions on how Richmond offices would change or adapt to changes in transportation such as a heavier dependence on ride-sharing and driverless vehicles.
- Several of the panelists’ businesses are planning for the future to be able to adapt as necessary. Highwoods Properties, Inc. is building parking decks to be more easily converted to office space when/if less parking is needed for future office commuters. The Current project will have wider pick-up/drop-off lanes for ride-sharing and driverless cars. Additionally, The Current will have car charging stations for electric cars.
Outlook on new speculative commercial office building versus renovating the existing commercial office stocks.
- Singh, Ms. DuFrane, and Mr. Galanti all agreed that the Richmond market in the short term would likely focus on renovating existing commercial office space versus building new speculative commercial office buildings.
- Singh thought there may be niches for new speculative building, but there is a lot of existing commercial office stock that developers can revitalize.
- Galanti believed that costs of new speculative buildings were currently too high for the Richmond market. The Richmond market had been a tenant-favorable market and was now slowly shifting to a landlord-favorable market.
What would be the next potential neighborhood or area to be revitalized (aka “The Next Scott’s Addition”)?
- Several panelists were not sure whether the success and speed of development of Scott’s Addition could be replicated, but the panelists offered the following areas as contenders on the short list for the title of “The Next Scott’s Addition”:
- Northside (along the Chamberlayne and Bellevue corridors);
- The area between Scott’s Addition and VCU; and
- Monroe Ward.
There were several consistent insights the panel shared that were discussed in October at the 2017 VCU Real Estate Trends Conference, which also covered national real estate trends. We are pleased to provide you with the highlights from these events and value what we glean to further support our clients with commercial real estate and business issues.