Trophy Office Tower in Richmond Changes Hands
- Apr 08, 2021
A decade after acquiring Riverside on the James in downtown Richmond, Va., American Real Estate Partners has found a new owner for the trophy office property. AREP sold the approximately 263,700-square-foot asset to Opal Holdings and walked away with $77 million, according to the Richmond Times-Dispatch.
Located at 1001 Haxall Point between the James River and the Haxall Canal, Riverside on the James is part of a mixed-use development that also features residential condominiums, retail space and an attached six-level parking garage developed at a total cost of $86 million in 2005. AREP acquired the 14-story office tower in 2011 for roughly $63.7 million, as noted in records of the Richmond City Assessor’s Office.
“We’ve owned the project for almost 10 years and felt that we had accomplished our primary objective—create value for our investors,” Brian Katz, co-founder & president, American Real Estate Partners, told Commercial Property Executive.
Riverside on the James, which also holds the distinction of being only one of four trophy office buildings in Richmond’s central business district, has thrived under AREP’s stewardship. In addition to enhancing the building’s health and wellness profile by securing the UL Industries Verified Healthy Building Mark for Indoor Air and the WELL Health & Safety Rating, AREP saw to it that the occupancy level jumped from 82 percent to a current 95 percent. Furthermore, law firm Troutman Pepper and PNC Bank—both original tenants at Riverside on the James—occupy 77 percent of the building and have executed four extensions between them, providing for respective occupancies until June and January 2028.
Like Bees to Honey
Richmond is by no means a top-tier office hub, and the city has seen its office market suffer the same negative pandemic-induced consequences as other metros; however, the investment community found Riverside on the James irresistible.
“The sales process was quite competitive with several well-known investors actively bidding on the asset,” Katz said. “While office values may be down where there is short-term leasing risk, trophy assets with long-term leases in secondary cities in the Mid-Atlantic and Southeast are seeing significant interest from investors, and I suspect this trend will continue for the foreseeable future.”
JLL Capital Markets’ Chris Lingerfelt, who represented AREP in the sale transaction along with colleagues Ryan Clutter and Stephen Conley, concurs with Katz’s assessment of the Richmond office investment sales market. In a press release on the transaction, Lingerfelt remarked on the positivity of an East Coast-based firm like Opal Holdings taking an interest in the Richmond office market. He added that, given Richmond’s strong economic fundamentals and a growing appetite to place capital in the Southeast, JLL anticipates this trend to continue for years to come.