Richmond Office Market
The Richmond office market experienced 61,000 square feet of negative net absorption during Q2 2024 and ended the quarter at a 15.1% vacancy rate. This negative net absorption was largely due to Northwest Richmond, which experienced 94,000 SF of negative net absorption, highlighted by 19,500 SF of space being vacated at 8006 Discovery Drive within the Forest Office Park. Despite this, the market continues to perform impressively relative to other major office markets. The Richmond market has shown resilience during the recent economic downturn, as leasing activity hovered close to historical averages from 2020-2023. This positive activity continued during Q2 2024, with the market seeing 0.7 MSF of leasing activity during the quarter, which is higher than the historical second-quarter average of 0.5 MSF. New leases drove the leasing market in Q2 2024, evidenced by three of the top five transactions being new leases. The Innsbrook submarket, located in the Northwest region of Richmond, was the most active submarket, containing three of the top five notable lease transactions.
Richmond Industrial Market
Despite Richmond experiencing almost 900,000 SF of negative net absorption during Q2 2024, fundamentals remain healthy as evidenced by the tightness of the market. Richmond ended the quarter with a vacancy rate of 4.5%, which is much tighter than the market’s historical average of 5.8%. Average asking rents ended Q2 2024 at $9.26 PSF, an increase of 10.0% year-over-year. Overall, the market has seen an impressive 53.8% increase in rents since the beginning of 2020. The market’s development remains strong, experiencing almost 10.0 MSF of deliveries in 2022 and over 5.0 MSF of deliveries in 2023, much higher than the decade’s annual average of 2.7 MSF. Development has slowed in 2024 but continued strong, as user demand is keeping the pipeline steady looking forward into 2025 and 2026.