A big chunk of a Maryland REIT’s Richmond holdings is on the market.
First Potomac Realty Trust is shopping around its 4.2 million-square-foot portfolio of industrial properties that includes more than 700,000 square feet of space at River’s Bend, at Route 10 and Interstate 295 in Chester.
First Potomac CEO Doug Donatelli said his firm is looking to get out of industrial properties to focus more on office products.
“This is a shift we started a couple of years ago,” Donatelli said. “We’ve picked up about a billion dollars worth of office [space] over the past two to three years, and we’ve done really well in that.”
Donatelli said the company’s River’s Bend properties, consisting of six warehouses and flex industrial buildings, were almost 100 percent leased and had performed well. The buildings sit on 150 acres.
According to Chesterfield County records, the company purchased the properties, which also include several large parcels of undeveloped land, between 2006 and 2007 for a total of about $50 million.
River’s Bend was originally developed by Liberty Properties in 1997.
The portfolio that First Potomac is looking to sell contains properties largely in the Washington, D.C., area, with some in Richmond and Hampton Roads. The properties are around 80 percent leased, Donatelli said.
The company wouldn’t disclose its asking price for the 33-building offering, which is being marketed by Eastdil, a subsidiary of Wells Fargo.
Donatelli said the company isn’t giving up on the Richmond market, though.
“We’re definitely not getting out of Richmond,” he said. “In fact, I’m interested in looking at more office products there.”
Richard Porter, executive vice president at Porter Realty, said the River’s Bend development is still prime real estate.
“In Chesterfield County, it’s probably some of the newest product on the market,” Porter said. “It’s certainly still considered class-A.”
Rob Dirom, a broker with CBRE, said the industrial market is somewhat flat for older buildings and that class-A space is in short supply.
“We’ve seen a huge shortage of class-A space, but the rents aren’t high enough for developers to justify putting a lot of spec space on the market,” he said. “It’s kind of a quandary.”
Dirom pointed to the new Amazon and Vitamin Shoppe distribution centers as a sign that Richmond is a desirable location for warehouse and industrial users and said he expected to see more “e-tailers,” meaning big online product distributors, land in the area in the coming months.