Richmond area sees highest office occupancy rates in almost a decade
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The Richmond area is seeing some of its highest office vacancy rates in nearly a decade.
Why it matters: The pandemic-induced disruption of how and where people work is hitting the commercial office sector hard and leaving millions of square feet of workspace sitting empty.
What's happening: About 8.7% of the available office space in metro Richmond was vacant as of last week, CoStar Group market analyst Alvin "AJ" Abston tells Axios.
- That's the highest it's been since the third quarter of 2014.
- And up sharply from 2019, when the vacancy rate sat at 6.5%, according to a report from Virginia Realtors.
Yes, but: Richmond is faring better than the state average and most large cities, which are seeing double-digit vacancy rates.
- Virginia's is at 12.6%, driven largely by Northern Virginia's 16.5% office vacancy rate.
Meanwhile, Richmond has seen negative "net absorption" every quarter for the past two years, meaning when companies move and lease office space, they're leasing less of it, per Virginia Realtors.
- Right now, Richmond is sitting on nearly 6 million square feet of empty office space throughout the region, Abston says.
Zoom in: Innsbrook — the suburban office park created out of western Henrico farmland in the late 1970s — has the highest vacancy rate in the area, at 16.9%.
- Around 500 companies and 22,000 workers operate out of the complex, which today includes restaurants, retail, apartments and townhomes (and more on the way), according to its website.
Nearby West Creek — the corporate home for over 10,000 workers at Capital One, CarMax, HCA, and Performance Food Group, among others — has the lowest vacancy rate in the region, at 1.2%.
- Of note: Capital One, the region's second-largest employer, called its workers back to the office at least part-time in the spring.
Other parts of town:
- Glenside vacancy: 12.4%
- Midlothian corridor vacancy: 12.4%
- Downtown / Central Business District vacancy: 9.7%
- West End vacancy: 7.3%
- North Broad (Jackson Ward to VCU Health): 4.6%
On the bright side, in some cases, those vacant office buildings are turning into desperately needed housing for the region. Hundreds of apartments have been built or are under construction in former office buildings across Richmond.