Riverside at James. Image via Google Street View
A decade after acquiring Riverside on the James in downtown Richmond, Virginia, American Real Estate Partners has found a new owner for the trophy office. AREP sold the roughly 263,700 square foot fortune to Opal Holdings and received $ 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 includes condominiums, retail space and an attached parking garage on six levels, priced at $ 86 million AREP acquired the 14-story office tower in 2011 for approximately $ 63.7 million, according to records from the Richmond City Assessor’s Office.
“We have owned the project for nearly 10 years and felt we had achieved our primary goal – creating value for our investors,” said Brian Katz, co-founder and president of American Real Estate Partners, to Commercial Property Executive.
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Riverside on the James, also considered one of four trophy office buildings in the Richmond CBD, has done well under AREP’s leadership. In addition to improving the building’s health and wellness profile by gaining the UL Industries verified indoor air healthy building brand and the WELL health and safety rating, AREP ensured that occupancy rose from 82 percent to the current 95 percent. In addition, law firms Troutman Pepper and PNC Bank – both original tenants at Riverside on the James – occupy 77 percent of the property and have completed four extensions between them, with corresponding occupancy through June and January 2028.
Like bees to honey
Richmond is by no means a prime office hub, and the city’s office market is having the same negative pandemic impact as other metropolitan areas. However, the investment community found Riverside on the James irresistible.
“The sales process was pretty competitive as several well-known investors were actively bidding on the asset,” said Katz. “While office values may decline with short-term leasing risk, trophy assets with long-term leases in secondary cities in the Mid Atlantic and the Southeast are attracting great interest from investors, and I suspect this trend will continue for the foreseeable future.”
Chris Lingerfelt of JLL Capital Markets, who represented AREP on the sale together with colleagues Ryan Clutter and Stephen Conley, agrees with Katz’s assessment of the sales market for office investments in Richmond. In a press release on the deal, Lingerfelt noted the positive attitude of an east coast company like Opal Holdings interested in the Richmond office market. He added that given Richmond’s strong economic fundamentals and a growing appetite for capital placement in the Southeast, JLL expects this trend to continue for years.