Richmond, the capital of the Commonwealth of Virginia, is one of America’s oldest major cities. Home to Patrick Henry’s “Give me liberty or give me death” speech during the Revolutionary War, the city has since evolved into a sophisticated professional hub, home to one of 12 federal reserve banks and many law, finance and government agencies.
Let’s take a closer look at the Richmond Area.
With a 6% corporate income tax rate that has not increased in over forty years and a construction cost that is 12% less than the national rate, per the Virginia Economic Development Partnership, employers could be identifying Richmond as an attractive place to work.
Richmond counts national law offices such as Hunton & Williams, McGuireWoods and Williams Mullen, as well as large international finance corporations including Genworth Financial and Capital One as major employers with offices in the metro area. In addition to law and finance, Richmond boasts a Bio+Tech Park, a life sciences community near the Virginia Commonwealth University (VCU) Medical Center that spans 34-acres and reports having 70 private and non-profit companies with approximately 2,400 researchers, scientists and engineers at the facility.
The unemployment rate in Richmond has declined steadily since 2009. According to the Bureau of Labor Statistics (BLS) in March 2018, the unemployment rate in Richmond was 3.5%, lower than the national rate of 3.9%.
While the professional services sector receives most of the notoriety in the Richmond area, it is not the only industry experiencing growth. As of March 2018, job growth in the Mining, Logging and Construction industry was at 4.1% and the Trade, Transportation and Utilities industry increased 3.2%, over the past 12 months, the equivalent of 4,300 jobs added, according to the BLS.
Growing Housing Market
The business climate and low unemployment rate might have led to population growth, as Richmond has grown at a rate of 11.1% from April 2010 – July 2017, over double the national rate of 5.5%, according to the US Census Bureau.
This population, which could be employed in the professional services and healthcare sectors, have increased the market’s median household income of $78,700, an 8.7% increase from the previous year and well above the last reported national median household income of $59,039, according to the U.S. Department of Housing and Urban Development, and BLS, respectively.
The larger household income could be pushing prices for existing single-family homes in the Richmond Metro, up to $245,000, a 3.3% year-over-year increase in the fourth quarter of 2017, according to the National Association of Realtors.
What’s Next for Richmond
The job growth and burgeoning industries in Richmond could make the area a good location for commercial real estate investment. Industries like healthcare are on the rise, which we discuss in greater detail in another blog post, four reasons to consider medical office buildings.
While Richmond might not have the same major market appeal as New York or San Francisco, the data available at RealtyMogul enables us to take a deeper look at a smaller market that might be experiencing unique growth.
While no one truly knows what the future holds for Richmond, it is important to do your homework and make an educated decision based on data and statistics. While the statistics presented above are factual, past performance is not indicative of future performance. Individuals considering investing should always consider the risks and make sure they are comfortable with the amount of volatility when measured against their long-term goals.
Investors should understand the risks associated with real estate investing and that nothing is guaranteed. Investors should also consider risks when investing in Richmond, which experienced a job growth rate of 0.6% in March 2018, 1.0% less than the national rate, according to Axiometrics, which also reported the market’s annual rent growth rate was above the national average of 2.5%, indicating an increased cost of living.
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