Richmond, Va.—During this past recession, Richmond, Va. has outperformed many other markets in the Southeast, according to Charles Dalton, principal of Real Data, an apartment research firm for the Southeast.
Dalton attributes the strong demand for apartments to the relative lack of development activity and the weak for-sale housing market. In fact, over 2,600 units were absorbed over the past year, which is above the 920 units added.
“Most development activity, right now, is mostly concentrated in the downtown central part of the city,” Dalton tells MHN. “A lot of that redevelopment is of old warehouses into loft-type apartments.” Currently, approximately 1,300 units are under construction, with about 700 of those units in downtown Richmond.
“Richmond typically has been pretty stringent on allowing development activity,” Dalton points out. “They have more entitlement restrictions on development so they have generally kept development in check, which helps if you’re already in the market. If you’re not in the market, it makes it difficult to get in.”
Vacancy hit its high of 9.9 percent in January 2010, which was the highest the market had seen in more than 10 years, Dalton notes. As of January 2011, vacancy was 6.8 percent. The Central and North submarkets recorded the lowest vacancies, at 4.7 percent and 4.4 percent, respectively, according to Real Data’s most recent Richmond Apartment Index report.
Meanwhile, same-store rents are up 2.6 percent year-over-year, though they are still playing catch-up to where they were prior to the recession, notes Dalton. Highest rents are currently being achieved in the Central submarket, at $1.24 per square foot.
The transaction market, which only had five sales in the past year, has seen mostly Class B properties trading, Dalton reports.