Scott’s Addition boom times affecting current and former tenants
RICHMOND, Va. — When Tom Hohman moved his business to Scott’s Addition three years ago, he thought he had secured a long-term home for his industrial design firm in the increasingly sought-after neighborhood.
Then the Scott’s Addition real estate boom got in the way – at least temporarily.
The building Hohman was renting was purchased last year by a local development team, who he said made him aware of a removal option in his lease, and eventually said he had 60 days to vacate to make way for a conversion to office space for higher-paying tenants.
Staying wasn’t an option, as he said the new rent after the conversion would be $17 per square foot – five times higher than what Hohman said he’d been paying.
He started looking for other locations around town, in Manchester and other former industrial districts, but his heart wasn’t in it.
“I really want to stay here,” Hohman said in early May. “There’s nothing else like it, I can think of, in Richmond.
“It kind of astounds me that this (hasn’t already) become what it’s about to be.”
Hohman’s situation is one of many playing out in the fast-transitioning neighborhood, bounded by West Broad Street to the south, Boulevard to the east, Interstate 195 to the west and railroad tracks to the north.
A surge in interest from developers and businesses continues to convert industrial warehouses into offices and apartments, making way for new tenants – both businesses and residents.
That’s forcing more seasoned tenants in the neighborhood to pay higher rent, move elsewhere or adjust to make way for new tenants and the prices that come with higher-quality commercial space.
Hohman was given an opportunity to stay in the neighborhood by his new landlords, Charles Bice of KB Building Services and Birck Turnbull of Cushman & Wakefield | Thalhimer, who purchased the building at 1408 Roseneath Road and two adjacent buildings for $3.46 million last September with the development arm of UrbanCore Construction.
They offered to move his business, Hohman Design, into a smaller, unfinished space next door, at a lower rent than spaces they’re converting but still higher than he previously paid.
They recently negotiated a five-year lease with a five-year option for the 2,000-square-foot space at 3425-B W. Leigh St., next door to his current 6,000-square-foot space, where he said he has spent $20,000 upfitting and personalizing it.
“It’s one-third the space at three times the price. That’s the move I’m making,” Hohman said.
Continue reading on RichmondBizSense.com to read more about the other situations in this changing business climate.