Richmond Office Market Figures Q4 2022

Despite economic headwinds, several large employers proved bullish on the Richmond market by securing new headquarters. Berkshire Hathaway Energy subsidiary BHE GT&S purchased two office buildings totaling 192,000 sq. ft. at 10700-10750 Capital One Way for $20.75 million ($107.97 per sq. ft), relocating from 79,000 sq. ft. at 6603 West Broad Street in late 2023.

Noting rising construction costs and delays, Genworth Financial cancelled plans to build a new headquarters, and subleased 180,000 sq. ft. at 11011-11013 West Broad Street. Occupation of the space in Q3 2023 will reduce the current sublease vacancy rate of 1.9% by 50 basis points (bps).

Undeterred by construction challenges, Costar broke ground on its $450 million research facility downtown. Completion is scheduled for 2024. Richmond-based Kinsale Insurance Company also purchased two buildings at 1912 Maywill Street and 2015 Staples Mill Road as a sale-leaseback from Elevance Health for $76.2 million. Totaling 580,000 sq. ft., the purchase is an investment opportunity and potential site for expansion from Kinsale’s 89,000 sq. ft. at 2035 Maywill Street.

Nine tenants signed a total 311,000 sq. ft. in Q4, up 14% quarter over quarter, but down 73% over the prior year. The market recorded just 16,000 sq. ft. of negative absorption in Q4. However, occupancy losses earlier in 2022 resulted in negative 489,000 sq. ft. for the year, the lowest on record. Direct vacancy closed at 10.3%, up 20 bps from Q3 and 80 bps year over year.