Probably the biggest single problem plaguing downtown is many of its owners. And probably the biggest change to come is downtown’s shift from a business and government center to a residential and tourist hub.
According to city Community Development records, downtown is made up of more than 3,000 land parcels, much of it owned by what city economic development director John Woodward calls “onesie-twosie owners,” those who own one or two parcels of land downtown and “are waiting to cash in on them like lottery tickets.” Woodward bemoans these “vacant” landlords and says many are negligent in caring for their properties. And “with a sliver here and a sliver there, it makes a large-scale macro development plan more difficult.”
Like Woodward, Beverley W. “Booty” Armstrong, who co-owns The Jefferson Hotel with Richmond billionaire financier and philanthropist William H. “Bill” Goodwin Jr., is also increasingly concerned with absentee owners.
“I’ll give you an example,” he says. “Franklin and Belvidere, that hotel there. …VCU has tried to purchase it, the Commonwealth Club has tried to buy it, plenty of people have tried to buy it, but the owner is holding out, and meanwhile that thing sits there at one of the city’s busiest intersections, making Richmond look like a ghost town. The whole atmosphere in that regard, it’s what’s preventing interest in downtown Richmond.”
And Armstrong doesn’t think the city is doing enough to fix the problem, either. “The whole atmosphere is uninviting, too many old vacant buildings, the city doesn’t enforce building code,” he says. “I personally don’t think the city government is determined to fix the problems no matter what it takes.”
Most city planners probably wouldn’t agree that the city doesn’t want to fix the problem, but “the city is very limited in terms of what it can do” about absentee landlords, says city planner Tyler Potterfield, who works in the city’s Community Development department. “[The city] can’t do anything as far as getting someone to sell their property. There’s nothing against something being vacant as long as it’s not a nuisance or dangerous and they pay their taxes.”
But back taxes are a problem: Last year, the city announced it was owed $14.5 million in delinquent real estate taxes over the last 20 years. Often the owners of the properties are out of the area or even the state and may be difficult or impossible to find.
There are a small number of city programs and nonprofits focused on dealing with absentee landlords and vacant properties. Potterfield is a member of the Vacant Building Review Team, which keeps track of vacant buildings and reviews them for building code violations. A new city program called Spotlight helps the city rehabilitate condemned blighted properties, but it hasn’t received much funding so far.
When building inspectors find violations, they can also bring violators to court and force them to fix problems. The city Commonwealth’s Attorney’s office had a program called Operation Squalor aimed at prosecuting absentee landlords for blighted properties, but that program has been disbanded and rolled into general community policing tactics.
ACORN (Alliance to Conserve Old Richmond Neighborhoods), a nonprofit group that supports conservation and revitalization of historic buildings, has a volunteer team that monitors vacant properties for building-code violations and will report them to the city. ACORN also helps owners of deteriorating properties find buyers interested in restoring them.
Downtown is not just owned by small-time speculators. Large banks, real estate investment trusts, government and wealthy developers are also the face of downtown land ownership, but a metamorphosis is slowing taking place that may change downtown into a wholly different place in the next 20 to 30 years.
As purveyors of office space complain of vacancies and a “soft” market, much new development is taking place, designed to bring a massive influx of new downtown residents and tourists. Projects such as Riverside on the James, the retail, restaurant and office complex on Brown’s Island, exemplify this move. Along Broad Street, a community-development authority is spending more than $70 million in bonds to revitalize the corridor near the newly revamped and expanded Greater Richmond Convention Center. And don’t forget the proposed $100-million-plus Virginia Center for the Performing Arts on Broad. The VCPA foundation recently lobbied City Council for a 1-percent increase in the meals tax, which was approved to help fund the center.
City incentives, from 15-year tax abatements for renovating historic properties, to handouts totaling millions of dollars for major developers, also play into driving downtown land ownership and development. For example, Richmond Redevelopment and Housing Authority, which handles the city government’s land acquisitions for revitalization projects, is purchasing the old Miller & Rhoads building so that it can sell it to Chicago-based developer Gary Beller of ECI Development Services, which plans to convert the former department store into a 216-room luxury hotel.
The city has already appropriated $1.6 million to help Beller’s project with infrastructure. GE Financial Assurance, which owns the Miller & Rhoads building, tried to get its assessed value changed from $3 million to zero, based on asbestos removal costs, before it transfers the property to RRHA. [The city’s board of review reduced the assessment to $2.3 million on Oct. 9.] RRHA spokeswoman Valena Dixon says it’s not yet known how much RRHA will pay GE for the building, and RRHA will sell the building to Beller for its actual cost, plus any legal and administrative costs that RRHA incurs for the acquisition.
And to be sure, downtown still has a long way to go to become a Mecca for residents or tourists, so Beller’s hotel might have some work in acquiring guests, convention center or not. From Belvidere Street to Interstate 95, Broad Street still looks like a vacant war zone, and there’s only one grocery store downtown and no movie theater. Nevertheless, the faces behind the companies that own downtown are confident that supply will meet demand.
The Definition of Downtown
For our purposes, downtown Richmond is defined as nearly 800 acres of land bordered by the James River to the south; Belvidere Street to the west; Jackson Ward and the interstate to the north; and east to where the Annabel Lee docks. It includes the distinct areas of Monroe Ward, the Financial District, Shockoe Bottom and Shockoe Slip, Tobacco Row, MCV, Jackson Ward, the State Capitol, and some of Church Hill.
In terms of land size, the city government itself is the largest landowner downtown, owning more than 100 acres — about an eighth of the available land. Combined with state and federal holdings and those by VCU/MCV and Richmond Redevelopment and Housing Authority (RRHA), government holdings account for about a quarter of all downtown land in the state capital.
The largest private landowner downtown (and the second largest downtown landowner overall) is Ethyl Corp., the worldwide chemical manufacturing conglomerate. Run by Richmond’s Gottwald family since 1962, Ethyl is now headed by third-generation president and CEO Thomas “Teddy” Gottwald. The company built a $74 million research park on the site of the old State Penitentiary east of Belvidere Street in 1994.
Apart from the Gottwalds and Ethyl, probably the largest family land holdings downtown are held by billionaire William H. “Bill” Goodwin Jr., president and CEO of CCA Industries, the holdings of which include The Jefferson Hotel downtown, the Kiawah Resort near Charleston, S.C., and golf-equipment manufacturer the Ben Hogan Co. Goodwin and his family and partner own and manage properties on at least 12.68 acres downtown, including the Jefferson, assessed at $33.78 million.
CCA Industries’ vice chair is Beverley W. “Booty” Armstrong, who, with Goodwin, co-owns Historic Hotels of Richmond LLC, which owns the Jefferson Hotel. A longtime friend and business associate of Goodwin, Armstrong also is the legal representative for Riverstone Properties, 7.7 acres of downtown land that city assessment records say are owned by a trust set up by Goodwin for his children. Much of the Riverstone land, within the blocks of 100 S. Fourth St., 100 S. Third St. and 300 E. Cary St., is leased for parking. On the street, developers refer to the Riverstone land as “the Goodwin properties.”
“We like to take a very low profile on our stuff,” Armstrong says. “They’ve owned [Riverstone Properties] for a long time, and I need to emphasize that it has not been a good investment. There’s some inherent problems in the city that are preventing the city’s growth, there doesn’t seem to be any real determination to fix.” Among those problems, Armstrong counts crime, homelessness, infrastructure problems with badly maintained streets and streetlights, and not enough trees and landscaping. “They don’t have to put [the homeless] in the downtown area. If we got tough enough, they could send [the homeless] to the county. … We don’t have laws on vagrancy; they say it’s a violation over at the ACLU. Take a look at Monroe Park, most people see it, and that crystallizes their image of the downtown, and it intimidates them.”
Talking about the Riverstone Properties, Armstrong says, “Originally back when that land was assembled, it was thought that downtown would grow into office buildings. We’re trying to make the best use of them we can until a better use comes about. Let me be clear: There’s been no credible individual who wanted to come and buy and develop that property. It’s been owned for a long time, and nobody’s made us an offer. … It’s not like we’re holding it up; nobody else wants to do it. The offer has to be credible and of some quality; we’re not going to let it become junk, any of it.”
Armstrong says he thinks at some point the properties will probably be developed into offices or luxury condos.
As for the Jefferson Hotel, Armstrong, who also serves on the executive committees of Richmond Renaissance and the Virginia Performing Arts Foundation, bought it with Goodwin in 1991. “Frankly, initially, we were just looking for some business to buy, and that business became available. We realized it could be our gift to the city; we’ve been very successful, we bought the hotel, and we think we turned it around; the region is very proud of it. We have also assembled the better part of a couple of blocks that are not associated with the hotel, primarily to protect the hotel from what gets developed around the hotel — not to develop it ourselves,” Armstrong says.
Armstrong and Goodwin have had preliminary discussions about the land surrounding the Jefferson with VCU, which hopes to acquire some of it to build a new business school or conference center or expand its engineering program. But, Armstrong cautions, “there is no guarantee that that’ll come to pass. … We’re not going to do anything that will jeopardize the status of the Jefferson. We even discussed making a park out of one of those lots, [but] we’re not about to do that as long as there’s risk: If that thing got to be like Monroe Park, we’d never get over it.”
Armstrong and Goodwin remain committed to downtown. “Obviously, if we didn’t have hope, we wouldn’t own what we own downtown,” Armstrong says, adding, “[but] our hope is that our continued commentary will have some effect on getting these problems solved.”
Cubicles and Corner Offices
The major type of downtown development is still corporate.
There’s a total of 15.5 million square feet of office space downtown; about 4.3 million of it occupied by the city, state and federal governments, according to Michael Rountrey, senior analyst with Integra Realty Resources. Most of the rest is occupied by private-sector businesses.
Downtown office building values, Rountrey says, range from less than $10 per square foot to about $195 per square foot. Office space is classified as Class A, B or C in terms of quality. At the top of the Class A list would be the “Boardwalk” on Richmond’s Monopoly board, Riverfront Plaza, the most valuable building downtown, with an assessed value of $176 million. The distinctive twin towers sold for $193 per square foot in 1997 and are home to dozens of businesses, including Hunton & Williams, the largest law firm in the southeastern United States, and Wachovia Securities. Riverfront Plaza is owned by Boston Properties Inc., a Boston-based real estate investment trust (REIT), which purchased it in 1997. Built in 1990, the plaza has about 900,000 square feet of office and retail space and more than 2,000 underground parking spaces.
Richmond’s Class B list, Rountrey says, are older but still respectable office buildings, such as the Eighth & Main building, at 707 E. Main St., which was built in 1976. It would be at the top of the Class B buildings and sold for about $96 per square foot. The Class C list is made up of properties, Rountrey says, exemplified by the Heritage Building, a 10-story building at 10th and Main streets that was built in 1909 and the Segal Building at 6 N. Sixth St., which sold for $18 per square foot in 2001.
Downtown’s most expensive buildings are generally owned by REITs such as Riverfront Plaza owner Boston Properties or First States Investors, a New Jersey-based firm whose holdings include the $53 million Bank of America building at 1111 E. Main St., the city’s fifth most valuable building.
Brandywine Realty Trust, a Pennsylvania-based REIT with offices in Richmond, has an extensive list of properties in the Richmond region, including Main Street Centre, also known as the Verizon building, downtown at 600 E. Main St. Assessed at $42.8 million, the 24-story, 424,000-square-foot Main Street Centre was built in 1988. Brandywine acquired it in 1998. Since acquiring it, it’s been a “tough office market,” says Bill Redd, vice president of Brandywine. Though it’s a Class A office building and competitively priced, Main Street Centre doesn’t compete as well with riverfront office buildings because it’s in an older and less desirable area of town, Redd says, so Brandywine has increased its marketing of the building and is offering increased brokerage commissions in an effort to increase occupancy. (The building currently has about a 16 percent to 19 percent vacancy.) Brandywine has also spent about $1 million in renovations to the lobbies and commons areas and its four-level basement parking deck.
Significant portions of downtown are devoted to residential development, and that segment is growing. Some say it may one day supplant the office space, though that may be decades off.
A large residential landowner is Jefferson Townhouse Corp., which owns Jefferson Townhouses, a sprawling 22-acre, 276-unit apartment complex in Church Hill at Mosby and Venable streets near Mosby Middle School. It’s owned by a group of investors that includes its administrator, Harvey Freeman Sr., and most of the units are Section 8 housing.
The vast majority of downtown residential development, however, is upscale apartments and renovated warehouses, mostly in the Shockoe and Tobacco Row areas, catering to young professional singles and couples without children.
The single biggest residential developer downtown is H. Louis Salomonsky, a native Richmonder and architect who was federally indicted in October for alleged bribery conspiracy, attempted bribery and lying to the FBI in the bribery case against City Councilwoman Gwen Hedgepeth. He also serves as vice chairman of the City Council-appointed Industrial Development Authority.
Salomonsky and his longtime business partner, David White, own about 1,500 apartments downtown and nearby. Their holding company, Historic Housing LLC, encompasses SWA Architects, SWA Construction and Main Street Realty, a management and leasing company partnered with developer Mark Merhige. Salomonsky’s business holdings and investments are worth more than $18 million, according to city IDA records.
Underwritten by Wachovia Bank, Salomonsky and White have taken advantage of historic tax credits and performed multimillion renovations on numerous historic properties in Richmond, Baltimore and Washington, D.C., converting them into affordable upscale apartments. In downtown Richmond, their holdings include the old YMCA building and Market Slip near the 17th Street Farmers’ Market; Tobacco Landing apartments near Poe’s Pub; Rocketts View apartments, a converted Confederate hospital and warehouse; Jackson Warehouse in Shockoe Bottom; and the Old Alms House on Shockoe Hill. Salomonsky and White are also developing a $5 million apartment complex downtown for the Council for America’s First Freedom. Additionally, Salomonsky and White own the Coliseum Lofts near VCU and are renovating the old Todd Ham warehouse on Hermitage Road into apartments.
“We both have a high affinity for the city and want to see the city in a better place. We want to see the city prosper and flourish because we enjoy it more than the suburbs,” Salomonsky says.
A big believer in trends, Salomonsky is a devoted disciple of the futurist book “Megatrends” by John Naisbitt, which espoused that Americans would lash out against the “plastic” homogenization of society and seek more authentic living experiences in older buildings with more character. Similarly, Salomonsky believes downtown Richmond is at the beginning of a major change toward a residential district characterized by distinct neighborhoods. “In the coming decades, there will be a continuing demise of downtown as the central business district as we’ve known in it in the past,” he says.
Looking ahead to that future, Salomonsky says that he will be moving out of building apartments and into condominiums in the near future, looking to capture the over-50 baby boomer market that he says will soon be seeking convenient downtown living. “Young people will pioneer more than older, well-to-do people,” Salomonsky says of downtown’s current residential profile, “but the pioneering stage is close to being over.” He’ll also be getting into new construction downtown, saying that lower interest rates will help amortize the cost of new construction, not covered by the subsidy of tax credits.
Salomonsky’s not the only one thinking this way. Developers Howard Kellman and Jerry Peters built a small condominium project this year, Gotham Condominiums, at 1205 E. Main St., selling eight units at $269,000 to $399,000. Now developer Robin Miller of Miller & Associates is developing a 37-condominium property, Shockoe Valley Lofts, at 19th and Broad streets, which opens this month and sells for $125,000 to $250,000 per unit.
“We’re doing something to meet the demand we’ve encountered,” says Miller, who had a waiting list of 30 people for his first condos. “There’s a very strong demand for residential housing in downtown areas, which I think is only going to get stronger. The twentysomething and thirtysomething generation want to be living in a neat building in an area where they can walk to amenities — restaurants, shops, retailers, entertainment, clubs. And I also believe we’re now seeing empty nesters wanting to do the same thing. … They’re tired of living in the 4,000-square-foot house in the suburbs they’ve been maintaining and are going to want maintenance-free living in a condo or luxury apartment and have a second home at the beach or the mountains.”
Miller owns several upscale apartment buildings downtown and in Oregon Hill, the Fan and the Museum District. Downtown, Miller’s company has renovated and manages Grace and First (19 apartments), Linden Tower (36 apartments and six commercial spaces), and the Sydnor & Hundley building (54 apartments and two commercial offices). He’s also working with developer Ronald A. Stallings to develop a major housing project in Jackson Ward called Jackson Commons stretching over seven acres, from Chamberlayne Parkway on the west to St. James Street on the east, and from Duval Street to the north and Leigh Street to the south.
Originally from Tennessee, Miller has been developing in Richmond for 10 years and now lives here in Ginter Park, after developing in Tennessee, Massachusetts, New York and New Mexico. “I love the architecture, I love the people,” Miller says of Richmond. “It’s a great city. It’s got big-city amenities, but small-town flavor. It’s just a great place to live.”
Miller targets young professionals, singles and couples without children, as well as empty nesters, but he says it’s only a matter of time before families start moving downtown as well, once the amenities such as grocery stores and retailers increase in response to the growing demand of downtown residents.
David Levy of Forest City Enterprises Inc. has a similar view, but his company went one better: It opened a grocery store and a CVS pharmacy in the neighborhood for their residents; Forest City still owns both stores. “Forest City had a vision not to redevelop one building, but an entire area,” says Levy.
Forest City, based in Cleveland, Ohio, owns seven renovated warehouse apartment buildings downtown, including the River Lofts at Tobacco Row, a pair of renovated warehouses with 329 luxury apartments anchored by the Old Bookbinders Restaurant, accented by period lighting and landscaping. Amenities include a parking deck and a 2,900-square-foot health club.
Perhaps appealing to the same condo market that Salomonsky and Miller are courting, Forest City will soon be building 1,500- to 2,700-square-foot brick townhouse condominiums with small yards around the 2600 block of East Main Street on empty lots in front of the Lucky Strike building, which Forest City is also developing into 140 additional apartments. The brick condominiums will sell for $220,000 to $300,000.
Forest City chose Richmond, Levy says, not only because of its beautiful warehouse stock, but also because the city leadership offered the right incentives for development. “Without the help of the city and the incentives they presented, it wouldn’t have happened.” Levy also praised the former warehouse owners who maintained the properties until Forest City could purchase them.
George Emerson with Emerson Construction owns 102 apartments downtown, most on East Main Street. He’s currently in the process of acquiring the former Shockoe Bottom Arts Center warehouse building, which is currently owned by a group of investors including the former president of This End Up. Emerson’s mid-range apartments with security systems, fireplaces and parking range from $600 to $1,800 per month. He also praises city tax incentives for his thriving residential communities. And his buildings are only appreciating in value, he says, noting that his property at 313 N. Adams went from an assessed value of $102,000 in 2002 to $526,000 this year after a total gut and renovation.
Emerson and Levy both also believe that new developments downtown such as Riverside on the James, the new mixed-use mall and office buildings coming to Brown’s Island, will only serve to bring more people to live downtown.
“Development,” Levy says, “spurs development.”
Heritage Tourism: Ron Stallings and Jackson Ward
Ron Stallings is planning an architectural renaissance.
“Jackson Ward is the largest area of property associated with African-Americans in the country,” says Stallings, who heads real estate development firm Walker Row Partnership Inc. and its construction arm, R. Alexander Inc. “The history here can create a destination spot for heritage tourism that will ensure Jackson Ward plays a role in the success of Richmond and the new convention center.”
Stallings learned his love for Jackson Ward, once known as “The Harlem of the South,” from his father, the late landlord and developer James Russell Stallings Sr. In the early 20th century, African-American businesses flourished in Jackson Ward, including Maggie Walker’s St. Luke’s Penny Savings Bank. The Hippodrome Theater was part of a vibrant nightlife and headlined acts including Lena Horne, Cab Calloway, Billie Holiday, Nat King Cole and James Brown. But after Interstate 95 divided Jackson Ward, the neighborhood fell into decline.
For Stallings, the future of Jackson Ward lies in reviving its past. He owns about 50 properties in Jackson Ward, totaling 3.1 acres, including the art deco Hippodrome Theater and the St. Luke’s Building, which are collectively valued at about $2.1 million. Within blocks of the new Greater Richmond Convention Center on Third Street, Stallings plans to create high-end retail shops, an upscale hotel and eclectic dining, as well as a museum to Jackson Ward’s history. As for the Hippodrome, Stallings plans to renovate it to its former glory as a 1930s-style venue for live entertainment and dining. He has been seeking investors and capital for more than a year and has previously said he plans to have the projects finished by the end of 2004.
Stallings is also partnering with developer Robin Miller’s firm, Miller & Associates, to create the $17 million Jackson Commons, a development of 83 single-family homes and 25 senior apartments stretching over seven acres, from Chamberlayne Parkway on the west to St. James Street on the east, and from Duval Street to the north and Leigh Street to the south. Groundbreaking is scheduled for spring 2004. — George Goodrich
Goodness Gracious: Gilbert Granger and the Hotel John Marshall
Former Williamsburg Mayor Gilbert L. Granger owns three parcels of Richmond’s downtown and one 16-floor headache — the long-vacant, 74-year-old Hotel John Marshall, located at Fifth and Franklin streets. He bought the historic building at auction for a little over $3 million in 1997.
Granger, an avuncular 68-year-old businessman and investor, stayed at the John Marshall with his family as a boy when his father was a traveling salesman. The hotel’s other past guests include six U.S. presidents, Elvis Presley (three times), Bob Hope, Elizabeth Taylor and Mary Tyler Moore. Granger consulted with his family prior to buying it, and his son-in-law said, “Goodness gracious, this is going to be a big project!” Hence, the tongue-in-cheek name of his downtown real estate company that owns the hotel, Goodness Gracious Inc.
In 1997, city planners and banks seemed in support of Granger renovating and reopening the Hotel John Marshall, which had been closed since 1988. But the day after Granger purchased it, City Manager Robert Bobb resigned. Soon after, a plan to raze the nearby old Miller & Rhoads building to create a downtown park was scrapped. Chicago-based developer Gary Beller of ECI Development Services was lured here to convert Miller & Rhoads into a 210-room suites hotel, which, along with a 200-room expansion to the Richmond Marriott, will create stiff competition for a new hotel at the John Marshall.
The banks that expressed interest in Granger’s efforts have since either merged or relocated headquarters to North Carolina. Today no bank will provide a mortgage for the hotel, Granger says. He’s losing $50,000 a month on the property. Difficulties in future improvements at the Marshall are complicated by the lack of nearby parking—the two closest garages on Sixth Street are undergoing renovations probably not to be completed until at least 2005, according to Richmond Renaissance.
Granger still wants to rejuvenate the hotel, however. He put husband-and-wife team Elizabeth Stewart Bennett and Roderick F. Bennett, former restaurateurs of Scarlett’s at Main Street Station, in charge of improving the hotel’s image. They’ve opened John Marshall’s Martini Kitchen and Bubble Bar to attract clientele and they’re holding weekend dance events, like a recent Madonnathon, to bring the youthful dance-hungry crowd.
Analysts have told Granger it would take about $35 million or more to make the hotel fully operational. Only 60 of the John Marshall’s 440 rooms are currently usable.
Granger insists he wants to keep the doors open, although he can’t estimate when the landmark John Marshall Hotel sign will be lit again. — Harry Kollatz Jr.
More Is More: The Cordish Company and the Power Plant Project
More changes are coming to Richmond’s downtown skyline, courtesy of Baltimore-based The Cordish Co. Cordish is developing the $82 million Riverside on the James complex on the site of the old Brown’s Island power plant. It will include 230,000 square feet of office space, 122 luxury apartments, some of which may be converted to condominiums, an 800-space parking garage, and between 70,000 and 100,000 square feet of retail space.
In 1999, the City of Richmond approached Cordish to create a retail and entertainment complex downtown, either on Broad Street or along the Canal Walk. Cordish chose the canal.
“We noticed there were a lot of good things going on in Richmond,” says Cordish’s director of development, Richmond native David Caldwell. “It’s kind of intangible, but it was a good vibe.”
To make way for the complex, much of the power plant, including three of its four smokestacks, was demolished. Cordish will renovate the remaining historic building into restaurant and entertainment retail space. Caldwell says incorporating the 100-year-old power plant into the project will give visitors and residents a historic setting they can’t get from the new construction out in the suburbs. Similar Cordish projects in Baltimore and Hampton Roads have also created upscale retail and residential space from unused power plants.