Tel: 804.864.1100

Tel: 804.864.1100

entrepreneurship

Richmond’s Commercial Real Estate Market Still Robust

GreeneHurlocker’s commercial real estate attorneys, Andy Brownstein and Jared Burden, along with more than 200 real estate industry colleagues, attended the Greater Richmond Association for Commercial Real Estate (GRACRE)’s 2020 Real Estate Market Review on February 18, 2020. What’s the verdict on the health of the local commercial real estate market in the Richmond MSA? Good, with few reservations.

Among the six speakers we heard plenty of optimism about the area’s ability to absorb more commercial real estate space, including apartments, office, industrial and hospitality. However, a consistent them was that is both finite demand, given the middle-market nature of Richmond’s business environment, and finite supply, given the lead time (up to 36 months) in developing commercial property. As a result, given shifting interests rates and other financing considerations, projects will have to be carefully planned and developed.

News coverage in the Richmond Times-Dispatch of the event is here.

Richmond’s rise in the Metropolitan Statistical Area ranking (now 45th) due to its population growth (1.3 million), of which 54% are of prime working age, along with relatively constant rates of space absorption, suggests commercial development has not reached saturation. Even older office developments, such as Innsbrook, are getting seeing good demand rents due to redevelopment and improvement of old commercial stock.

If there was one property class that is especially hot, it would be multifamily. Eric Phipps of SNP Properties cited properties in Scott’s Addition and Manchester as continuing to be in very high demand. He also suggested that the West Broad Street corridor and Jackson Ward to be ripe for future commercial development, and that Richmond could consistently absorb 1,500-2,000 a year for the next few years.

Nick Patel of Kalyan Hospitality discounted the potential for multiple casinos to be developed in Virginia in the short term, even if the proposed development in Richmond goes forward, but said he felt up to 1,000 additional rooms could be built in the greater Richmond market. He did not believe the downtown hospitality market would not see any luxury hotel development until average room rates approached $200, up from approximately $150 today.

While retail is still a challenging asset class, there are a number of exciting projects underway in the Richmond area, including the redevelopment of Regency Square and Virginia Center Commons, Carytown Exchange and the Sauer Center, showing that there is still an appetite for retail development under the right circumstances. Nikki Jassey provided a window into the shifts created by the rise of Amazon and different approaches taken by retail tenants and developers.

Finally, there remains a strong demand for industrial properties, especially along the interchanges of Interstates 295 and 64 and Interstates 295 and 95. We have benefited from strong local transportation infrastructure as well as the growth of data center demand without the downsides of locating in Northern Virginia.

It sure was good to run into a number of our friends and colleagues in the real estate business and hear some promising news about the future at GRACRE. If you would like to know more about what we learned, or discuss commercial real estate opportunities in Richmond or other parts of Virginia, contact Andy (804.864.1100)  or Jared (703.258.2678) or any of GreeneHurlocker’s Virginia real estate attorneys.

Ideas Are Just That: Part 3

We’ve been sharing a series of blog posts and videos here and here about how an idea is just that: an idea, and how there are some basic, critical things a high-potential start-up technology company founder must do in order to make any idea worth having and building upon. As I said in my first post, the fact is, most ideas suck. So a founder needs to be sure this idea is worth making it the most important thing in her life for the next months or years.

My third suggestion for the immediate post-idea step is: Focus obsessively on creating a minimally viable product.

Don’t get caught up in the romance of the wonderfulness or inevitability of your idea, the greatness of your team, or the exuberant free feeling of having decided to jump in with both feet. The fact is, you haven’t yet accomplished the whole reason for doing this in the first place, which is selling something to people who want to buy what you have to sell. The excitement is going to wear off and then it’ll be time to get to work. If you don’t get to work immediately, you probably will have lost your opportunity.

It is all about speed.

Too many startups begin with an idea for a product that they think people want. When it isn’t resonating with customers, it is often because the founders never spoke to prospective customers and determined whether or not the product was interesting. When customers ultimately communicate, through their indifference, that they don’t care about the product, the startup fails.
The truly most important question you need to start asking yourself is the following. It’s the first thing you should ask yourself even before you swing your legs off the edge if the bed to get up on the first morning after to you come up with your great idea.

“Should this product be built?”

And then, soon thereafter, maybe before you brush your teeth, you need to ask “Can we build a sustainable business around your product?’
At this point it’s really only about two things: a first product that you know the world needs, and a plan for how first product can actually get customers. The team needs to be focused brutally on these things. Let the customers be your source of accountability.

The new company should be focused on quickly developing a minimally viable product and then learning as much as possible about its weaknesses and opportunities for improvement. Iteration upon iterations, pulling your hair out from anxiety that you’ll never get it right, near-all-nighters and lost weekends — all of that fun stuff. The point is to do all of this on the front end, quickly, and always being in dialogue with the customer, not stuck in an echo chamber of a founder team that may be overly enamored with the original concept.

When a founder focuses on figuring out the right thing to build—the thing customers want and will pay for—she need not spend months developing a prototype or waiting for a beta launch to change the company’s direction. Instead, she can adapt her plan incrementally, inch by inch, minute by minute, moving fast, boxing out the competition.

A couple of years ago I spent three days in the James Madison University’s Icehouse facility with about 24 entrepreneurs who had agreed to lock themselves in and spend that whole weekend developing companies based on pitches that they made on the first night. These people , for the most part, had never met each other. Groups coalesced around about eight ideas big and small. Through the weekend there was a compressed process of honing the original idea and creating a business plan and readying the product or service for the launch. I remember several of the teams were stumped by this question: Will customers want this? Only one of the groups spent the first night doing customer demand research – one group had thought to do this out of eight. That may be somewhat reflective about what real companies do when they go out into the real world. I hope not.

The founding team members need to relish being sponges for crucial information gleaned from the only people that matter: potential customers. This is never more true than at inception and in the earliest weeks and months.

Watch for our next post on “Ideas are just that.” Meanwhile, if you have any questions about startup steps or business law, just reach out to me or any of our Virginia business lawyers.

Wow! Andy Brownstein Has Joined as A Partner!

Andy Brownstein, business lawyerAndy Brownstein joined us on January 1 as partner in the firm and focuses his law practice on business law, corporate finance, mergers and acquisitions, real estate and investment banking. He’s working in our Richmond office.

Andy counsels business clients and entrepreneurs in buy and sell-side mergers and acquisitions, strategic financing and capital investments, joint ventures, credit facilities, commercial real estate investments and contract matters.

“I’ve known Brian for many years, and I’ve watched as he and Eric Hurlocker developed a niche practice in the energy and regulatory arena into a strong multi-disciplinary firm with an intriguing and entrepreneurial client base, something that I’ve been interested in personally and professionally for most of my career,” Andy says.

He was a founder of and served as General Counsel of Global Realty Services Group for a decade, while also serving as its Chief Financial Officer (2009-2016) and President of its affiliated title company (2013-2017). Prior to GRSG, he was Senior Vice President-International Services for LandAmerica Financial Group after serving as SVP-Corporate Development. After law school, he served on the corporate finance team at McGuireWoods. Other career positions were with investment banking and private equity investment firms in both Richmond and New York.

Andy earned his J.D. and B.A. at the University of Virginia. At law school, he was the recipient of the S. Phillip Heiner Memorial Scholarship and was a William H. Echols Scholar in his undergraduate years.

Help us welcome Andy warmly. You can reach him at ABrownstein@greeneHurlocker.com or (804) 864-1100. If you want to know more about our business lawyers, just ask.

Ideas are Just That: Part 2

Jared Burden explains that the co-founders of a new tech business based on a great idea need to keep in mind several powerful elements of that relationship for it to have its best chance for growth and success.

Read his Ideas Are Just That: Part 1 post here. If you have comments or questions about this topic or any business law issue, please contact Jared or one of our Virginia business lawyers.