Jackson Ward / Gilpin

[eandslee]

2 minutes ago, Virginian11 said:

Is this the admiral project?  I hope not, but funny that feeling worry about I Miss RVA was the first emotion I felt when reading the article before my own disappointment haha. 

This IS what was formally known as The Admiral. 

[Virginian11]

54 minutes ago, wrldcoupe4 said:

https://richmondbizsense.com/2023/03/07/jackson-ward-project-site-put-up-for-sale-approved-plans-included/

Challenging environment right now with construction costs and access to capital. 

A reminder that we are fortunate for every project that’s currently  in motion right now.  

[blopp1234]

Seems like this is an issue with the developer, not an issue with the project itself or the city.

[BigBobbyG]

How likely do y’all think it is that another developer will step up to the plate? 

[upzoningisgood]

Probably a financing issue. Equity is hard, debt is even harder. If I had to guess, Parkway dropped out as an equity partner, SNP went ahead and bought the land because they thought they could get an equity partner or had one in mind, got the project rezoned to recoup some spent $ through higher land value, then couldn’t secure the equity partner. 

[eandslee]

33 minutes ago, BigBobbyG said:

How likely do y’all think it is that another developer will step up to the plate? 

If a local developer doesn’t have the appetite, could it be a better possibility that an out-of-town developer either partners with SNP on this one or buys up everything and does it themselves like Avery Hall (a NY developer) is doing at Rivers Edge in Manchester?

**BTW, haven’t seen or heard any movement from Avery Hall on their Manchester project at Rivers Edge in a long while.  I wonder if cost of construction/tighter financing is causing them to pause their project too. They sure seemed “gung ho” when they first bought the property!  Now it seems…just crickets.  
 

Geez…I hope this economy doesn’t prove to be a dream killer!

[upzoningisgood]

11 minutes ago, eandslee said:

If a local developer doesn’t have the appetite, could it be a better possibility that an out-of-town developer either partners with SNP on this one or buys up everything and does it themselves like Avery Hall (a NY developer) is doing at Rivers Edge in Manchester?

**BTW, haven’t seen or heard any movement from Avery Hall on their Manchester project at Rivers Edge in a long while.  I wonder if cost of construction/tighter financing is causing them to pause their project too. They sure seemed “gung ho” when they first bought the property!  Now it seems…just crickets.  
 

Geez…I hope this economy doesn’t prove to be a dream killer!

If they’re in the design stage, it would be crickets anyway. They also might have put the project on ice. There’s no way to know with where they would be in the design process. 

[I miss RVA]

We've seen this movie before - and I do fear it's becoming  a trend. The high interest rates is probably the hardest hurdle to scale - because it seemed that developers were still going forward with large projects even though inflation, supply chain issues, etc., had driven construction costs up. My guess is that the continued bump-up in the interest rates are what's torpedoing these projects.

It's very frustrating. As I said - we've seen this movie before - just as RVA gets a head of steam, the economy hiccups and RVA just can't seem to weather the storm - and we have to cycle back and do a reset. Think Centennial Towers - 2008 (admittedly, a full-on economic crash - but you get the idea).

The one upside is that it COULD bring in an out-of-town developer, a la Avery Hall in Manchester on the former Rivers Edge II site. Perhaps with the Project Formerly Known as the Admiral TRULY shovel-ready, all the paperwork approved from the city's standpoint and everything ready to go, perhaps someone could come swooping in and get this building constructed.

I'm imagining that just because construction may be staggering just a bit doesn't mean there's any less demand for housing in RVA - the local economy appears to be quite strong -- particularly if GRP can really make some hay while the sun is shining and snag one or two of their heavy-hitters on which they've locked their tractor beams. Bring more companies to RVA with more jobs, the demand for housing continues to go up - the dam will HAVE to break at some point. I could see an EPIC flurry of major construction happen in the city when the dam breaks because the demand is there.

Edited March 7, 2023 by I miss RVA

[wrldcoupe4]

These deals aren't penciling for many. It seems really challenging. The landscape has moved a ton the past year. Higher interest rates, higher construction costs, lack of equity, changing  LTV requirements, rent growth slowing... I wouldn't say it's just because they're local. Big national developers have dropped a lot of deals recently for the same reasons.

[I miss RVA]

12 minutes ago, wrldcoupe4 said:

Big national developers have dropped a lot of deals recently for the same reasons.

In other cities? (And you know the ones I mean when it say this without saying it...)

[upzoningisgood]

46 minutes ago, wrldcoupe4 said:

These deals aren't penciling for many. It seems really challenging. The landscape has moved a ton the past year. Higher interest rates, higher construction costs, lack of equity, changing  LTV requirements, rent growth slowing... I wouldn't say it's just because they're local. Big national developers have dropped a lot of deals recently for the same reasons.

All of this.

 

34 minutes ago, I miss RVA said:

In other cities? (And you know the ones I mean when it say this without saying it...)

Yes.

[wrldcoupe4]

1 hour ago, I miss RVA said:

In other cities? (And you know the ones I mean when it say this without saying it...)

EVERYWHERE. 

[eandslee]

31 minutes ago, upzoningisgood said:

All of this.

 

Yes.

…love the candid discussion here, but don’t like the outlook.  Basically, we should expect to see a HUGE building slow-down…maybe to the point of a crawl…IF anything else.  Surprises me then that CoStar is still moving forward unless they were able to lock in their costs a while ago…maybe…or unless they are just sucking up the additional cost. 
 

I guess I’ll just be super surprised if anything new gets built from this point forward…

Are we at that point now?  Just trying to manage my expectations. 
 

Thanks again for the reality check!

[I miss RVA]

55 minutes ago, eandslee said:

…love the candid discussion here, but don’t like the outlook.  Basically, we should expect to see a HUGE building slow-down…maybe to the point of a crawl…IF anything else.  Surprises me then that CoStar is still moving forward unless they were able to lock in their costs a while ago…maybe…or unless they are just sucking up the additional cost. 
 

I guess I’ll just be super surprised if anything new gets built from this point forward…

Are we at that point now?  Just trying to manage my expectations. 
 

Thanks again for the reality check!

That's how I'm taking it.

Now -- what about when we get to the light at the end of the tunnel? Will RVA's pent up demand generate an explosion in development once we emerge from whatever this negative economic period actually is? Or is it something that could take several years to ramp back up even AFTER economic conditions became much more construction friendly? Is that something driven by market/market size? In other words - will NOVA, CLT, RDU, Nashville, etc., rebound faster than RVA because they are all larger markets?

@upzoningisgood & @wrldcoupe4-- particularly interested in your expert opinions on this. I know it's almost impossible to speculate - but if you were able to read tea leaves, what leaves do you think you'd see relative to this question?

Edited March 7, 2023 by I miss RVA

[upzoningisgood]

1 hour ago, eandslee said:

…love the candid discussion here, but don’t like the outlook.  Basically, we should expect to see a HUGE building slow-down…maybe to the point of a crawl…IF anything else.  Surprises me then that CoStar is still moving forward unless they were able to lock in their costs a while ago…maybe…or unless they are just sucking up the additional cost. 
 

I guess I’ll just be super surprised if anything new gets built from this point forward…

Are we at that point now?  Just trying to manage my expectations. 
 

Thanks again for the reality check!

If you are under construction or have already secured debt and equity, you’re fine. If you’ve only secured equity, you’ve got an uphill battle but will probably be ok if your project is relatively small and you’re willing to be patient. But, you’ll have to wait awhile and slow down or pause design. If you have neither, you’re screwed for the time being unless you’re in one of a few markets (which does not include Richmond), you have a super killer project, or you have a relatively small project. The latter group is mostly pausing and delaying spending money. 
 

CoStar is going to be fine. You have to remember, every person who they bring to Richmond is not being paid DC or Atlanta wages, so they save money on the back end. Also, they have a notoriously high-pressure, high-turnover staffing model and the company has decided they want to be 100% in-office. Combined with companies finding they need awesome offices to lure workers (current and prospective) back to work, they would need to do a lot of renovations to their current offices, making the delta between DC/Atlanta and Richmond smaller. And, they already have debt and equity and have put it towards the project. I think they will see construction through. 

[Hike]

Another item I’ve noticed, and someone correct me if I’ve overlooked anything, so far this year I haven’t seen any significant developments announced, at least not sizable projects. We’re still watching the same projects that were announced months, year(s) ago. Without new projects, that will affect the next phase and would mean a gap between the end of what’s out there now and any new start up. Like all of you, I eagerly look every day for the next announcement, one to give me a sign, but so far, I’m still waiting for that sign and fear there will be a gap and slow down.  The economy is strange right now, high inflation, raising interest rates, and the economy seems to still be going, as if not phased, though there are few drop offs here of late. (Amazon phase 2 on hold, the ones mentioned here, etc.) The FED is trying to slow it down by raising interest rates, but it’s not happening, though may be now,  I believe until we stop buying, which is intended to lower prices, we’re in for a ride, hopefully it’s not too bumpy.

 

Edited March 7, 2023 by Hike

[wrldcoupe4]

I also think you can't exactly compare an owner/occupant built to suit to a multifamily project... the variables are too different. But for perspective, there are plenty of large occupiers that have paused planned projects... Amazon has paused indefinitely the next phase of their HQ2. Microsoft has paused a large project in Atlanta. CBRE put their HQ tower in Dallas on hold.

For the multifamily, on the front end, many of the equity partners are sitting on the sidelines right now. Unless someone has already raised a fund to deploy now, it seems tough to get new equity to the table. Then lenders want you to bring more equity (cash) to the table to provide the  financing. You have to get the numbers to continue to pencil while construction costs outpace rent growth. Then once you do build it and sell it, the buyers are looking at a higher return because of higher interest rates. 

 

 

[upzoningisgood]

I only brought up CoStar to answer the second part of the original comment.

Agree with the multifamily component. 

 

[I miss RVA]

So again -- to my previous question -- what happens on the back end when the economic drivers that are stalling/stopping projects relent (interest rates fall, inflation drops, costs lower) and we "emerge" from this rather difficult economic situation? 

Will RVA's pent up demand generate an explosion in development once we emerge from whatever this negative economic period actually is? Or is it something that could take several years to ramp back up even AFTER economic conditions became much more construction friendly? Is that something driven by market/market size? In other words - will NOVA, CLT, RDU, Nashville, etc., rebound faster than RVA because they are all larger markets?

[Hike]

6 minutes ago, I miss RVA said:

So again -- to my previous question -- what happens on the back end when the economic drivers that are stalling/stopping projects relent (interest rates fall, inflation drops, costs lower) and we "emerge" from this rather difficult economic situation? 

Will RVA's pent up demand generate an explosion in development once we emerge from whatever this negative economic period actually is? Or is it something that could take several years to ramp back up even AFTER economic conditions became much more construction friendly? Is that something driven by market/market size? In other words - will NOVA, CLT, RDU, Nashville, etc., rebound faster than RVA because they are all larger markets?

I’d like to believe the conditions won’t change and RVA remains favorable and the desire would still be there for people wanting to live here and companies wanting to move here and the march of progress continues. The locations you mentioned may rebound faster due to size, but feel good about Richmond, we just have to get past this, at least that’s my guess and hope. 

[eandslee]

Wait a minute...(this question may have been answered already, so I apologize in advance if that is the case)...what happens to all the current pent-up demand for housing (assuming it doesn't wane enough) if there is no new housing being constructed (on a multifamily level)?  The way I see it, rental rates will increase and home prices will increase (due to increased demand and not enough supply) resulting in a crazy and very competitive RE market (even more so than it has been)...especially, if people are not phased (much) by increased interest rates.  Sure, some may drop out of the market, but there appears to be a very strong and active RE market again this Spring/Summer.  Would this scenario not help developers with acquiring financing and getting their multifamily projects to pencil?  If not, at some point you might conclude that there will be fewer people in the market to buy a new house, rent a new apartment...resulting in fewer people moving to the area (maybe more so the City due to the limited supply and astronomical prices)...the secondary and tertiary effects of which, could be absolutely devastating to the growth Richmond has seen up to this point...bringing it to a grinding halt!  Eye yah yah!  Hate to think of what could happen here.  It might take years to recover from this!  Am I tracking this correctly?

[whw53]

Just to get a sense compared to last few years in terms of POD filings for projects with over 50 units-
1/1/2023 - 3/7/2023 >> 1
1/1/2022 - 3/7/2022 >> 5
1/1/2021 - 3/7/2021 >> 2
1/1/2020 - 3/7/2020 >> 7
1/1/2019 - 3/7/2019 >> 3

Sent from my SM-S908U1 using Tapatalk

[I miss RVA]

2 hours ago, whw53 said:

Just to get a sense compared to last few years in terms of POD filings for projects with over 50 units-
1/1/2023 - 3/7/2023 >> 1
1/1/2022 - 3/7/2022 >> 5
1/1/2021 - 3/7/2021 >> 2
1/1/2020 - 3/7/2020 >> 7
1/1/2019 - 3/7/2019 >> 3

Sent from my SM-S908U1 using Tapatalk
 

Definitely an interesting indicator - and it looks like there's some cyclical variability. Amazingly 2020 was the strongest comparable period and last year was second strongest - whereas 2021 was the second weakest. Would be curious to know if this is, in fact, a cyclical thing - a ramp up in POD filings one year - construction the next.

Where my biggest concern is - and where the rubber meets the road - is projects in the pipeline being put on ice after the PODs are filed (and in the case of the Project Formerly Known as the Admiral - EVERYTHING had been filed & approved. All that was remaining to be accounted for was final money and shovels.

To me - that's the brass tacks. How many of these PODs get to groundbreaking. And given what we're seeing in Alexandria with the Amazon pause - how many of the ground breakings get topped out and ultimately completed?

[Downtowner]

So we just talked to our realtor over the weekend she told us housing inventory all over rva is extremely slim. Also I’m wondering all if these places who are short on staff what happens if they need more help? Do people just pause hiring despite horrible employment situation for businesses? What the heck is about to happen? I heard the fed is about to get a lot more aggressive with the interest rate too. Are they trying to make where nobody has a job? What the heck is going on here? I’m really scared despite I have a pretty good recession proof job as does my wife I am in the electrical field also have hvac experience too with Freon license. My wife is a nurse. If I have to go into service I can go from new construction back to service work. The job I’m at we are about to change hours working on our job in cville, we are about to start working from 6 pm to 4 am which I hate but have worked overnight before. People on the floors above us are complaining about the noise we are making setting this project back further. 

[I miss RVA]

18 hours ago, eandslee said:

Wait a minute...(this question may have been answered already, so I apologize in advance if that is the case)...what happens to all the current pent-up demand for housing (assuming it doesn't wane enough) if there is no new housing being constructed (on a multifamily level)?  The way I see it, rental rates will increase and home prices will increase (due to increased demand and not enough supply) resulting in a crazy and very competitive RE market (even more so than it has been)...especially, if people are not phased (much) by increased interest rates.  Sure, some may drop out of the market, but there appears to be a very strong and active RE market again this Spring/Summer.  Would this scenario not help developers with acquiring financing and getting their multifamily projects to pencil?  If not, at some point you might conclude that there will be fewer people in the market to buy a new house, rent a new apartment...resulting in fewer people moving to the area (maybe more so the City due to the limited supply and astronomical prices)...the secondary and tertiary effects of which, could be absolutely devastating to the growth Richmond has seen up to this point...bringing it to a grinding halt!  Eye yah yah!  Hate to think of what could happen here.  It might take years to recover from this!  Am I tracking this correctly?

I don't think the demand is going to wane, tbh. Just because the economy has soured vis a vis the construction & CRE industries doesn't make RVA any less desirable today or tomorrow than it was yesterday or last year when LEGO decided to come here, when brokerage firms decided to move here, when realtors decided to open offices here, etc. I feel certain that RVA is very well positioned to emerge from these global economic choppy waters every bit as strong as she was in 2019, 2020, 2021 and 2022.

@eandslee-- I think what you're presenting in the last part of your post is a worst-case scenario that I don't think is the reality relative to RVA's position. If this was the Richmond of 20, 25, 30 years ago, you might have a point. But if memory serves, RVA came out of the 2008 economic crash like a house-afire - -fully fueled and ready to launch -- and we know what she's done over the past 10 or so years. I honestly believe that RVA will be every bit as desirable a location for businesses and new residents when this economic difficulty settles down as she ever was -- and crazy as it sounds, I have the gut feeling she'll pick right back up where she left off.

That's why I raise the question with our CRE gurus -- what can we expect when the economy becomes more development friendly in the (hopefully) near future?

In summary -- I echo what @Hikepostulated. 

18 hours ago, Hike said:

I’d like to believe the conditions won’t change and RVA remains favorable and the desire would still be there for people wanting to live here and companies wanting to move here and the march of progress continues. The locations you mentioned may rebound faster due to size, but feel good about Richmond, we just have to get past this, at least that’s my guess and hope. 

this!!!!

Edited March 8, 2023 by I miss RVA