The Richmond industrial market continued its positive trajectory through the final quarter of 2024, marked by major investments, robust leasing activity, and notable absorption gains. Sustained by healthy demand and growing institutional interest, the region remains a key player in the U.S. industrial real estate landscape.
Amazon Revives Plans for Multi-Story Warehouse Project
A standout event this quarter was Amazon’s decision to salvage its previously stalled plans for a massive 3.2 million sq. ft. multi-story warehouse in Goochland County. By purchasing the 105-acre site for $16.5 million, Amazon is poised to add a significant footprint to the Richmond industrial market. Dubbed “Project Rocky,” this development will not only represent roughly 50% of Amazon’s current presence in the area but is also expected to create 1,000 new jobs upon completion. Such a large-scale project reinforces Richmond’s appeal as a hub for major logistics and e-commerce operations.
Institutional Investment Highlights Richmond’s Appeal
Richmond’s industrial real estate sector continues to attract attention from global investors. In a prominent deal, EQT Exeter acquired a multi-state, 33-property portfolio, which included five properties in Richmond. This acquisition underscores the confidence that institutional investors have in the region’s long-term growth prospects. With solid fundamentals and sustained expansion, Richmond is quickly becoming a favored market for large-scale industrial investment.
Positive Absorption and Vacancy Trends
Richmond recorded 1.4 million sq. ft. of positive net absorption in Q4 2024, driven largely by the delivery of two owner-built projects. For the full year, the market posted a total of 2.9 million sq. ft. of positive absorption, extending its streak of annual occupancy gains to more than a decade. This impressive absorption figure is a testament to the consistent demand for industrial space in the region.
However, the delivery of two speculative buildings that have yet to secure tenants caused a slight uptick in the vacancy rate, rising by 10 basis points quarter-over-quarter to 3.7%. Despite this minor increase, the vacancy rate remains 60 basis points lower than it was at the end of 2023, reflecting the overall strength and stability of the market.
Leasing Activity Hits Multi-Year High
Leasing activity in Richmond surged during the fourth quarter, with tenants signing 29 leases totaling 2.5 million sq. ft. This marked the strongest quarter for leasing volume since Q2 2021. Over the course of the year, a total of 85 leases were signed, amounting to 5.4 million sq. ft. of industrial space leased in 2024.
This heightened leasing activity highlights the market’s ability to attract a diverse range of tenants, including e-commerce operators, logistics firms, and manufacturers. As demand for high-quality industrial space remains strong, Richmond is well-positioned to continue drawing significant leasing interest.
Rent Growth Reflects Landlord Confidence
With demand for industrial space showing no signs of slowing, landlords have responded by increasing asking rents. By the end of Q4 2024, average asking rates had climbed to $7.93 per sq. ft. on a triple net basis, reflecting continued confidence in the market’s upward trajectory. The combination of low vacancy and steady absorption has enabled landlords to push rents while maintaining strong occupancy levels.
Outlook for 2025: Continued Growth and New Developments
Looking ahead to 2025, Richmond’s industrial market is expected to maintain its positive momentum. The delivery of Amazon’s multi-story warehouse and ongoing interest from institutional investors should further bolster the region’s profile. Additionally, as speculative projects lease up and new developments break ground, Richmond will likely see further gains in both absorption and rental rates.
Conclusion
The Richmond industrial market ended 2024 on a high note, driven by major investments, strong leasing activity, and sustained absorption gains. With Amazon’s large-scale project and institutional interest adding to the region’s appeal, Richmond is poised for continued growth in the coming year.
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