Foundry Park - CoStar HQ

[eandslee]

4 minutes ago, wrldcoupe4 said:

Would be nice, although 2 things: we don’t know their long term plans for the Manchester space. Maybe it’s just swing space for a few years? And 2, they paid $170/SF for that building. Their new building will probably be north of $600/SF to build and more expensive if you go taller. It’s so much cheaper to not go taller. 

My first thought was that it was going to be swing space and that they'll sell it after the tower is built, but then a part of me thought about what if they expand again and need more space?  Wouldn't it be nice to have everyone right there in one spot on their campus/tower on the north side?  Regardless, I think they got a smashing deal on the Manchester building.  I think they paid more for just the land at Foundry Park!  A great real estate investment for them at the very least!

As far as the price per square foot for the tower...they have deep pockets and I'm pretty sure they can spring for several more floor if they wanted to.  It's all an investment - this research HQ is going to make them way more money than they will spend building it.

[I miss RVA]

10 hours ago, wrldcoupe4 said:

Their new building will probably be north of $600/SF to build and more expensive if you go taller. It’s so much cheaper to not go taller. 

So this harkens back to the age-old question and well-worn drum I keep beating on here. Yes - it's SO much cheaper to NOT go taller. But if this were Charlotte or Atlanta or Nashville or Austin or Philadelphia or where ever - they might not just go taller - they might REALLY go taller. And 26 stories would somehow turn into 35 or 45 - or heck, even 60.

Mind you, I'm throwing out hypothetical -- and quite potentially not-realistic numbers. But if the office space being built is strictly for CoStar and not being constructed on spec - wouldn't that factor OUT the "rate of return" on rents vs construction costs that seems to put a VERY hard cap on how tall developers are willing to build in RVA? For some time now, I've asked this question again and again (pertinent to different situations - office buildings, residential, mixed use, etc.) - and the bottom line is always that RVA isn't big enough to generate rents or ROI for developers to justify the exponentially greater costs to build taller. But if this was a different (admittedly larger) city -- that wouldn't necessarily be that much of a problem - and the same 26-story building in RVA might end up 35-stories in Raleigh or 45-50 stories in Charlotte or Austin or 60 stories in Atlanta or Philly.

So what gives?

Edited May 7, 2022 by I miss RVA

[DowntownCoruscant]

There’s demand to build buildings of that height there, and there isn’t here. Every one of those places are much larger or growing at a much faster rate. It’s not an insult to Richmond, just reality.

[I miss RVA]

34 minutes ago, DowntownCoruscant said:

There’s demand to build buildings of that height there, and there isn’t here. Every one of those places are much larger or growing at a much faster rate. It’s not an insult to Richmond, just reality.

For spec space, that makes sense. But what about in CoStar's case where it's their HQ? How does market size/growth rate/demand factor in if a company is building an HQ building? Is it a case that there would be demand to build "extra" space & lease it out to other companies? In other words, CoStar would not build a single-tenant tower/complex.

What sucks is that it always comes back to the bottom line...  and the bottom line is always that RVA isn't big enough.

Edited May 8, 2022 by I miss RVA

[KJHburg]

1 hour ago, I miss RVA said:

For spec space, that makes sense. But what about in CoStar's case where it's their HQ? How does market size/growth rate/demand factor in if a company is building an HQ building? Is it a case that there would be demand to build "extra" space & lease it out to other companies? In other words, CoStar would not build a single-tenant tower/complex.

What sucks is that it always comes back to the bottom line...  and the bottom line is always that RVA isn't big enough.

I agree not sure why Costar bought this building (other than it is good deal) and if it is for swing space why not just lease some space until their tower is done?  Yes Costar could have built much taller in Richmond and leased some of the space out to high value clients like law firms which Richmond has a lot of.   They love premium high floor spaces.   Then if they needed the space as they grow they could not renew their leases.  This is a real estate information company and even where rents are cheaper in office space some tenants will pay a premium to be in brand new building.  Downtown did not have a new office building built downtown for almost 30 years until the Frost Tower went up and it leased well even at much higher rate than existing buildings downtown.   Charlotte big banks always built larger buildings than then needed and leased out space to others and pushed them out if they needed the space. 

[I miss RVA]

6 minutes ago, KJHburg said:

Yes Costar could have built much taller in Richmond and leased some of the space out to high value clients like law firms which Richmond has a lot of.   They love premium high floor spaces.   Then if they needed the space as they grow they could not renew their leases. 

Now, that makes sense!  @KJHburgwas it you who made mention some time back that CoStar actually WOULD have (or WAS GOING TO??) build taller had it not been for the pandemic? I'm wondering if they might have followed this exact formula and gone with an additional 5 or even 10 floors were it not for the seismic shift in office space requirements as the pandemic totally changed the workforce dynamic?

[KJHburg]

Just now, I miss RVA said:

Now, that makes sense!  @KJHburgwas it you who made mention some time back that CoStar actually WOULD have (or WAS GOING TO??) build taller had it not been for the pandemic? I'm wondering if they might have followed this exact formula and gone with an additional 5 or even 10 floors were it not for the seismic shift in office space requirements as the pandemic totally changed the workforce dynamic?

yes my well connected source said it was going to be taller and was shorten (still can't believe that whole elevation of the site above sea level  added to building height snafu at the announcement) 

But in saying all that they could have built it taller and leased it out.  Costar knows a lot of details about office leases everywhere so they could have lured someone to lease a floor or two or more in their new high rise. 

[I miss RVA]

2 minutes ago, KJHburg said:

yes my well connected source said it was going to be taller and was shorten (still can't believe that whole elevation of the site above sea level  added to building height snafu at the announcement) 

But in saying all that they could have built it taller and leased it out.  Costar knows a lot of details about office leases everywhere so they could have lured someone to lease a floor or two or more in their new high rise. 

Wow - did they give you any indication or estimate as to HOW MUCH taller it would have been?

[KJHburg]

It was going to be the tallest building in the state and not counting any elevation over sea level.  Taller than that CapOne tower in Tysons. 

[DowntownCoruscant]

11 hours ago, I miss RVA said:

For spec space, that makes sense. But what about in CoStar's case where it's their HQ? How does market size/growth rate/demand factor in if a company is building an HQ building? Is it a case that there would be demand to build "extra" space & lease it out to other companies? In other words, CoStar would not build a single-tenant tower/complex.

What sucks is that it always comes back to the bottom line...  and the bottom line is always that RVA isn't big enough.

True - and this is surely not my area so I probably know the least among any on this board - but it’s not like they were paying cash for this thing. So presumably this was the height with the most palatable financing while keeping in mind there’s apparently a point where things get exponentially more expensive the higher you go.

[I miss RVA]

17 hours ago, DowntownCoruscant said:

True - and this is surely not my area so I probably know the least among any on this board - but it’s not like they were paying cash for this thing. So presumably this was the height with the most palatable financing while keeping in mind there’s apparently a point where things get exponentially more expensive the higher you go.

Not being in the CRE industry, nor in construction, I have absolutely no clue about the inner workings of these things, but what you said here makes a LOT of sense. 

I'll say this - all of this is EXTREMELY disheartening to me because I get the feeling that UNLESS I'm fortunate enough to live another 30 years (which would have me checking out at close to 90 years of age - and I somehow get the feeling that ain't gonna happen) - I won't live long enough to EVER see RVA do much beyond what she has going now - meaning - I get the feeling I won't live to see even a modest 40-story building built downtown. Won't live to see the city come anywhere CLOSE to 400K residents (much less anything significantly larger), won't live to see the metro go much beyond 2 M population (I might see her GET there) - won't see RIC do anything even remotely approaching what CLT has done in terms of a hub, total passengers, direct destinations, international flights, terminal size, multiple concourses and significnately more gates that she has now.

It galls me that the city spent 35 years of my youg adult life wasting time by LOSING somewhere between 65K and 70K in population from when the annexation of Chesterfield was complete on 1 JAN 1970 (the RT-D estimated that the city's population was at 264K at the time) until the nadir somewhere in the mid-2000s - when she hit her all-time low of 194K (estimated between census years)

I was chatting with one of our friends from Carolina last night - and I did some simple math on an Excel spreadsheet. If we had started with a 264K baseline -and used a VERY MODEST growth rate of only 1.5% annually, over the 35 years that the city busied herself LOSING population, she would have grown to an amazing 445K CITY population by 2005. And again, that's using ONLY 1.5% annual growth - and we ALL know that annual growth rates would fluctuate - some years would be bumper crop years and some might be closer to famine years. But still - had the CRAC actually had some legit SANITY and effing BRAINPOWER in play and had they WELCOMED Piedmont here in 1978, establishing a hub here by the early 80s (as happened in Charlotte) instead of saying "thanks, but no thanks" - AND if the city's powers that be had gotten the "boosterism" bug and gone out and AGGRESSIVELY recruited and bagged companies in the more-expensive Northeast who might have been MORE than willing to relo a couple of hundred miles to the south to that city along the banks of the James, I think it's safe to say that we would have seen a significantly higher rate of growth during stretches of those 35 years - and that the city's population by 2005 would actually have been greater that the 445K estimate that was derived using 1.5% annual growth.

And given all of the development and growth that's taken place in RVA over the past 15 or so years that saw stretches of VERY impressive growth by percentage, I submit that it is reasonable to suggest that the city's population might not be all that far behind Charlotte's current tally of 900K. Or at least no smaller than 600K to 700K in the city - and well north of 2M in the metro. And the kind of percentage growth we've enjoyed in recent years -- based on a larger denominator -- means that growth -- and by extension CRE development -- would look VASTLY different than it does today. For example - a project like The Summit on W. Broad - might be 20 or 30 stories tall - instead of eight.

Hard not to see downtown RVA with more than a few 40-50 story towers under those circumstances - and probably at least one building in the 60-story range. Plus, it's easy to envision a FOREST of high-rise residential buildings in Monroe Ward, Manchester, the riverfront - and larger buildings all across town in other locations.

So please, dear friends... forgive me while I lament what is/was a pretty nice dream that never came to pass - because this is the potential I've always known and seen that RVA has had - potential I doubt I'll live long enough to see even partially fulfilled. And THAT is the part that's heartbreaking to me.

Edited May 9, 2022 by I miss RVA

[eandslee]

Don’t forget the banking rules that Virginia had at the time that caused all the Richmond banks to be bought out, moving all Richmond HQs down to Charlotte.  That was HUGE!  What a complete shot in the foot!

[I miss RVA]

13 hours ago, eandslee said:

Don’t forget the banking rules that Virginia had at the time that caused all the Richmond banks to be bought out, moving all Richmond HQs down to Charlotte.  That was HUGE!  What a complete shot in the foot!

Oh indeed - that was huge. But in my analysis, I'm counting on the city's powers that be, whether it's government driven, civically driven or done by the business community (or likely some combination of the three) to ramp up the boosterism and to aggressively go outside the state to other regions of the country to recruit businesses to the capital city in the exact same way Austin raided Silicon Valley and poached a BOATLOAD of their businesses - bringing them from the uber-expensive NoCAL region to the much more cost-friendly central Texas/capital city area. There is NO REASON IN THIS WORLD why RVA couldn't have done the same except for NOT WANTING TO. We were too damn busy re-fighting the Civil War, re-litigating the post-annexation morass, making sure corrupt politicians "got theirs" financially and politically, and cramming our heads up our collective tuchuses at the altar of "historic" preservation to even REMOTELY think about what could be done to not just stem the tide of the three-and-a-half-decades-long open-artery hemorrhage of population, but to actually fuel a long-track, sustained, extended period of business growth and population boom. Like, oh yeah - Austin -- figured out how to do. We were too busy being too fiscally conservative to pony up money to expand and build out the airport infrastructure for something that would have been a permanent game-changer.

I agree the banking regs were a death-knell for RVA-based banks. But what was stopping us from going to DC or NY or other places that are significantly more expensive and reaching out to (pick a business/industry or three of choice) and saying - "come to RVA, we'll help get you set up - get you running, it's cheaper here, great weather (if you like heat and humidity, which I utterly despise), mountains and seashore nearby - new airport (if we had been BUILDING that new airport) - We could have overcome the loss of the banking HQ's to Charlotte several fold if we had actually gotten up off the porta potty and gone out there and done the work.

But that's takes "want to" - and with the exception of the last few years, I haven't seen a whole lot of ANYTHING even CLOSELY resembling "want to" in RVA my entire life.

 

Edited May 9, 2022 by I miss RVA

[eandslee]

Well, we can’t change what happened in the past, we can only change the future. Let’s work to do that so that Richmond doesn’t miss the “economic development train” again!  Here’s to Richmond’s future!

[I miss RVA]

4 hours ago, eandslee said:

Well, we can’t change what happened in the past, we can only change the future. Let’s work to do that so that Richmond doesn’t miss the “economic development train” again!  Here’s to Richmond’s future!

While I agree with you intellectually - my emotional buy-in is somewhat truncated because -- admittedly, very selfishly -- my portion of Richmond's "future" gets incrementally shorter with every passing day. That's just reality. I'm not 25 with maybe upwards of 50 or more years of "future" ahead of me to watch RVA finally blossom and become the city I've always dreamed she'd become. Let's face it - we often talk about the city's tricentennial celebration in 2037 - and a LOT of growth and development can happen in River City over the next 15 years, to be sure. But in 15 years, I'll be turning 75! And unless I miraculously make it into my 90s and do so without much cognitive or physical decline, I can bloody well forget seeing much more than only part of the city's wonderful future. And all things considered - she ain't moving fast enough for my satisfaction - not when she wasted 35 years of prime time frittering away her potential to be the hot go-to city we talk about her becoming.

But either way - I'll raise a toast of "l'chaim!!" to RVA's awesome future. 

Edited May 9, 2022 by I miss RVA

[Downtowner]

31 minutes ago, I miss RVA said:

While I agree with you intellectually - my emotional buy-in is somewhat truncated because -- admittedly, very selfishly -- my portion of Richmond's "future" gets incrementally shorter with every passing day. That's just reality. I'm not 25 with maybe upwards of 50 or more years of "future" ahead of me to watch RVA finally blossom and become the city I've always dreamed she'd become. Let's face it - we often talk about the city's tricentennial celebration in 2037 - and a LOT of growth and development can happen in River City over the next 15 years, to be sure. But in 15 years, I'll be turning 75! And unless I miraculously make it into my 90s and do so without much cognitive or physical decline, I can bloody well forget seeing much more than only part of the city's wonderful future. And all things considered - she ain't moving fast enough for my satisfaction - not when she wasted 35 years of prime time frittering away her potential to be the hot go-to city we talk about her becoming.

But either way - I'll raise a toast of "l'chaim!!" to RVA's awesome future. 

I’m hoping to at least experience a little bit of a taller and faster growing Richmond at some point in my life. I’m 33 currently I live to be 80  it will be 2068. I’m hoping even though I may be old and frail I hope I at least have the mental capacity to see and understand what it was and what is now and the future. If I don’t have the mental capacity to realize the comparison of Richmond now 2022 and Richmond 2068 it won’t do me any good. I just hope my mind is in good enough shape to realize the difference of the two years and of the Richmond from before. 

[I miss RVA]

11 minutes ago, Downtowner said:

I’m hoping to at least experience a little bit of a taller and faster growing Richmond at some point in my life. I’m 33 currently I live to be 80  it will be 2068. I’m hoping even though I may be old and frail I hope I at least have the mental capacity to see and understand what it was and what is now and the future. If I don’t have the mental capacity to realize the comparison of Richmond now 2022 and Richmond 2068 it won’t do me any good. I just hope my mind is in good enough shape to realize the difference of the two years and of the Richmond from before. 

Jesus - I'd be turning 106 in the year 2068! 

[Downtowner]

My goal is to make it to the next cenntennial of the United States in 2076 I would be 88 if I make it to that and am able to function and be able to feed myself go to the bathroom on my own and zip my pants up I’m okay with living to 88 anything after that I’m good with saying piece out earth. Would love to be a part of the next centennial of the United States. My guess is I won’t make it that long but you never know. 

[mintscraft56]

On 12/20/2021 at 3:31 PM, vdogg said:

Most of our *towers* here in Norfolk are around the 300 ft range. Trust me when I tell you our forum would be ecstatic about getting a 425 ft tower downtown. While not as grand as originally thought to be (Whatever is anymore? Seems to be a growing trend among developers), this is still a very major development in every aspect and will make a significant impact on Richmond. It's also one more piece of the puzzle. More developable land off the table>>scarcity>>higher land value>>taller buildings.

This is a late reply but your right, if we even got a building above 8 floors we would be estatic and would probably not fall asleep for a few nights. 

On 5/9/2022 at 11:51 AM, I miss RVA said:

Jesus - I'd be turning 106 in the year 2068! 

Jeez, I would be 62. I only hope to God i´d beable to live that long. 

[ancientcarpenter]

With the way the stock market has been and the talks of recession, I wouldn't be surprised if RVA pulled the short straw here and we never see the CoStar building go up. Costar stock is down -45% and we don't see signs of bottoming out yet...

Maybe this is a small dip and things will continue as they have been since 2020... or maybe we are in for one hell of a year of disappointment. I look forward to quoting myself in the next 6-12 months and saying "wow was I wrong!"

Here's to CoStar breaking ground any day now, sooner rather than later I hope.

[Brent114]

Don’t let the fear of recession get you down, most of downtown Richmond was built during recessions.  I had a buddy that would joke (around 2000-2005?) about how we need a new recession so that downtown could grow. 

Recessions don’t last very long and if there is one, it’s just based on temporary buying habits and the war in Europe.   The fundamentals of the economy are good (low unemployment, wage gains, historic personal saving, reduced personal debt…).    It’s not like millions of people falling behind on ballon mortgage payments or a sector of the economy crashing (like the .com bust). 

[I miss RVA]

1 hour ago, Brent114 said:

Don’t let the fear of recession get you down, most of downtown Richmond was built during recessions.  I had a buddy that would joke (around 2000-2005?) about how we need a new recession so that downtown could grow. 

Recessions don’t last very long and if there is one, it’s just based on temporary buying habits and the war in Europe.   The fundamentals of the economy are good (low unemployment, wage gains, historic personal saving, reduced personal debt…).    It’s not like millions of people falling behind on ballon mortgage payments or a sector of the economy crashing (like the .com bust). 

100% correct. If there is a recession (and I am hard-pressed to call it such given how solid the fundamentals are, as you listed @Brent114-- particularly job growth, low unemployment and wage gains) ... the biggest boogeyman right now is inflation - some of which was (like Thanos) inevitable because of Covid. Some of it is (like Thanos) inevitable because of the war in Ukraine. I get a little nervous when I see the Fed nudging interest rates up - and I pray they are not overly aggressive with this strategy because it has largely failed in the past as an inflation control measure and has caused the economy (weaker than it has been in recent times) to stall and tumble into a recession.

To your point: indeed, a lot of growth spurts downtown happened during recessions. Ironically, the longer economic boom of the '90s that stretched into the early 2000s is the stretch that saw nary a single highrise building that wasn't state owned and operated built in downtown RVA -- a span of 15 years from the completion of the Riverfront Plaza in 1990 to the construction of Riverside on the James in 2005.

Edited May 19, 2022 by I miss RVA

[ancientcarpenter]

If anyone has been following the special session (this friday) budget. There is a very interesting line in there for CoStar:

 

"2. Disbursement of these funds shall be based upon an agreement (the Agreement) between the City, the Company and the Virginia Economic Development Partnership Authority setting forth the terms and conditions of the distribution of funds to the City and any expected repayment should the Company fall short of its promises to invest at least $460,500,000 at the facilities, and to create at least 1,984 new jobs that pay an average annual wage of at least $85,000 related to its operations at the facilities."

 

https://lis.virginia.gov/cgi-bin/legp604.exe?222+amd+HB29AG

 

I know the CoStar building is already expected but we will know for sure come this Friday's budget session. CoStar must spend almost half a billion dollars in RVA city.... on top of that bring in almost 2,000 very high paying jobs. 

 

Note: This is HB29 that is certifying last 2 year's budget that allocates for CoStar's spending in the future!

Edited June 16, 2022 by ancientcarpenter

[eandslee]

Aw man!  Good information, but came here hoping to read a report that construction had started! 

[I miss RVA]

6 hours ago, ancientcarpenter said:

If anyone has been following the special session (this friday) budget. There is a very interesting line in there for CoStar:

 

"2. Disbursement of these funds shall be based upon an agreement (the Agreement) between the City, the Company and the Virginia Economic Development Partnership Authority setting forth the terms and conditions of the distribution of funds to the City and any expected repayment should the Company fall short of its promises to invest at least $460,500,000 at the facilities, and to create at least 1,984 new jobs that pay an average annual wage of at least $85,000 related to its operations at the facilities."

 

https://lis.virginia.gov/cgi-bin/legp604.exe?222+amd+HB29AG

 

I know the CoStar building is already expected but we will know for sure come this Friday's budget session. CoStar must spend almost half a billion dollars in RVA city.... on top of that bring in almost 2,000 very high paying jobs. 

 

Note: This is HB29 that is certifying last 2 year's budget that allocates for CoStar's spending in the future!

Just the raw numbers are staggering. Between CoStar and Lego - knowing metro RVA will pick up just south of 4,000 new jobs (between 3,700-3,800) in the next however-many years is VERY heartening!

Now THAT'S is what I'm talkin' about!!  

Edited June 16, 2022 by I miss RVA