"But prices there have gotten so high there are no deals to be had," John Madures, associate director with GVA Advantis, tells GlobeSt.com. Madures represented the seller, Charleston AN, in the sale of the Chesterfield County shopping center.
According to Madures, a new wave of investors have entered the Richmond market, targeted retail centers, from strip malls, which are a favorite of 1031 Exchange investors (as can be seen by Silver Spruce LLC's acquisition of The Shops at Railey Hill to higher-end retail centers that are preferred by institutional investors. Cap rates for Richmond retail tend to be as low as 7.5% to more typical rates of 8% to 9%. The Midlothian Festival Shopping Center traded at an 8% rate.
Indeed most of Richmond's commercial real estate assets have become a magnet for investors in recent years. However, Madures says, "shopping centers turn over very quickly, with less than 90 days as an average for being on the market."
Average price sales range from $90 per sf for B and C class shopping center to $178 per sf for higher end, to as high as $300 per sf, he says. Rental rats average $15 per sf, triple net and can run as high as $20 per sf, triple net. Midlothian Festival Shopping Center's asking rates are between $13 to $14 per sf, plus a $1.29 common area maintenance charge.
Located at 9550 Midlothian Turnpike, the center is close to major office parks in the Midlothian corridor and to CJW Johnston-Willis Hospital. It was built in 1987 and consists of 15 fully leased retail spaces ranging from 1,000 to 8,000 sf. Madures says the buyer intends to make some capital improvements and reposition the property to higher paying tenants when the leases roll over.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
