Looking for input from commercial and land investors on a site a friend of mine owns in Richmond's East End.
The basics:
• ±1.96 acres across two adjoining parcels
• 0.46 AC zoned C-3 and 1.5 AC zoned R-3
• Frontage(~24K cars/day), secondary access (~25K cars/day)
• Next door to Walgreens, across from Walmart
• 1.5 mi to I-64
What we're trying to figure out:
1. Would you pursue rezoning the R-3 piece to commercial, or market it as is?
2. Express car wash, QSR with drive-thru, medical office, or something else? Which users are most active for sites like this in Richmond right now?
3. Sell as one assemblage or split the parcels?
Full disclosure: I'm helping him figure out the best use for the site. He’s also considering selling as is, so if it fits your buy box, feel free to DM me.
Mostly I'd value hearing how experienced folks would think about this one.
From a lender perspective, I'd start by looking at what the city is likely to support before spending time and money on a rezoning effort.
With Walmart, Walgreens, strong traffic counts, and easy access to I-64, my first thought is that the commercial piece may be carrying more value if the R-3 portion can be incorporated into a larger commercial use. That said, the highest value doesn't always mean the fastest or most profitable path. Rezoning can add value, but it also adds time, cost, and execution risk.
For potential uses, I'd be looking at:
QSR with drive-thru if the site layout supports stacking and access.
Express car wash, assuming there isn't already market saturation nearby.
Medical or urgent care users.
Small retail strip with a credit tenant anchor.
Self-storage could also be worth exploring depending on supply in that submarket.
As for selling versus splitting, I'd probably evaluate it both ways. Larger users often want control of the entire site, especially if future parking, access, or stormwater requirements come into play. On the other hand, splitting can sometimes maximize value if the commercial frontage commands a premium and the residential piece appeals to a different buyer pool.
If I were advising your friend, I'd spend a little money upfront with a local land-use attorney, civil engineer, or broker who regularly works redevelopment sites in Richmond. Understanding what the city would realistically support could have a significant impact on value before making a decision to market it.
The biggest question I'd be asking is: what are the nearby commercial users expanding into that corridor today? If there's active demand from QSRs, medical groups, or service retail, that answer may ultimately drive whether pursuing a rezoning is worth the effort.
just speaking to what I know, there might be many more options out there, and I would need to see just how close "across from walmart" really was, but generally speaking if its near a grocery anchor and high visibility to the main road, with true lighted access then an urgent care operator would be interested, but they are generally pretty constrained on what they can pay in end rent or as a land basis, but if you wanted to build to suit there is likely a solid play there, again pending the market and competition metrics proved out, and 2 acres is likely large enough to do a multi tenant building.
Appreciate the insight, Michael. The Walmart-anchored center is right across the intersection, and the site has frontage on the main road just off the signalized corner. The multi-tenant idea is interesting. Only the 0.46 AC front piece is zoned C-3 and the rest is R-3, so I'm curious whether you'd see that as rezoning upside or a hurdle for that kind of build-to-suit.
Corey, on your question to Michael about the split zoning: I'd treat the R-3 piece as unproven until the city says otherwise, and value the C-3 corner on its own. At 0.46 acres, that front piece may only fit a smaller user such as a drive-thru or car wash, so whether the other 1.5 acres can join it depends on the rezoning path, not on traffic counts.
Before picking a user, I'd find out three things. What does planning staff say about rezoning the R-3 portion, and how long does it typically take? What does the city's adopted plan for that area call for? Do stormwater, grade, or access limit what can be built on the back acreage?
On one assemblage versus two parcels: a buyer who needs the full 1.96 acres will pay for land that is already entitled, while a corner-only buyer may not want the R-3 carry. A pre-application conversation with planning gives you numbers for both routes.
Is your friend leaning toward selling as is, or would he wait for entitlements?
Levi, really helpful breakdown, thank you. My friend is leaning toward selling as is and letting the buyer handle entitlements, which is part of why the price reflects the R-3 portion. Your point about a pre-application conversation is a good one, and we may do that to give buyers a clearer picture. If you know anyone who works sites like this in the Richmond area, I'd appreciate the connection.
Corey, Michael's urgent care read is right on traffic but weak on land basis. Urgent care rents support $28-$34/SF NNN, which caps a pad near $500k after horizontal. Levi is right: treat the 0.46 AC C-3 as the only entitled collateral and the 1.5 AC R-3 as an option, not a fact.
Run the math. At 7.5%, 25-year amort, the debt constant is ~8.9%. A 1.25x DSCR floor sizes debt at ~9.0x NOI. Against an 8.0% cap that is ~72% LTV, so DSCR, not LTC, sets the take-out. If construction is 65% LTC and 70% LTARV, the gap is equity. Carry the land and soft costs at a 9% constant through an 18-month S-curve: slow pre-app, peak at site plan, slow at permits. Horizontal infra runs $250k-$400k per pad, not per acre. Two pads on 1.96 AC can eat $600k-$800k before vertical. A QSR drive-thru needs 0.8-1.0 AC and queue depth; an express wash needs 1.2-1.5 AC and a long stack. QSR and wash are active in Richmond today, but both price land to a fixed rent ceiling. Medical office still needs 2.5-3.0 AC and stronger demographics.
Do not split unless the C-3 pad stands alone with its own access and stormwater. Otherwise sell one assemblage to a user who prices entitled dirt. What is your all-in basis per buildable pad after rezoning and horizontal, and what rent clears a 1.25x DSCR?
This is a great breakdown, thank you. Your math holds up, and the point about selling one assemblage unless the C-3 pad can stand alone is well taken. The front parcel does have its own frontage on the main road, but stormwater is still an open question.
To clarify, we're not developing it ourselves, so the all-in basis really depends on what a buyer pays for the dirt. Flipping your question around: if you were underwriting this as a single assemblage for a QSR or express wash user, what land price would you need to clear that 1.25x DSCR? Happy to share the plat and site details by DM if you want to run it.
From a lender perspective, I'd start by looking at what the city is likely to support before spending time and money on a rezoning effort.
With Walmart, Walgreens, strong traffic counts, and easy access to I-64, my first thought is that the commercial piece may be carrying more value if the R-3 portion can be incorporated into a larger commercial use. That said, the highest value doesn't always mean the fastest or most profitable path. Rezoning can add value, but it also adds time, cost, and execution risk.
For potential uses, I'd be looking at:
QSR with drive-thru if the site layout supports stacking and access.
Express car wash, assuming there isn't already market saturation nearby.
Medical or urgent care users.
Small retail strip with a credit tenant anchor.
Self-storage could also be worth exploring depending on supply in that submarket.
As for selling versus splitting, I'd probably evaluate it both ways. Larger users often want control of the entire site, especially if future parking, access, or stormwater requirements come into play. On the other hand, splitting can sometimes maximize value if the commercial frontage commands a premium and the residential piece appeals to a different buyer pool.
If I were advising your friend, I'd spend a little money upfront with a local land-use attorney, civil engineer, or broker who regularly works redevelopment sites in Richmond. Understanding what the city would realistically support could have a significant impact on value before making a decision to market it.
The biggest question I'd be asking is: what are the nearby commercial users expanding into that corridor today? If there's active demand from QSRs, medical groups, or service retail, that answer may ultimately drive whether pursuing a rezoning is worth the effort.
Appreciate the lender's perspective. On self-storage, there's already an Ample Storage facility right across the corridor, so that one may be covered.
Your closing question is the right one: which QSR, medical and service retail users are actively expanding along that corridor right now. Since you suggested a local land-use attorney, civil engineer or broker who works redevelopment sites in Richmond, is there anyone you'd recommend? A referral would go a long way.
Corey, I'd start with the C-3 corner and work back from there. The R-3 piece is mostly valuable as depth and parking for whatever goes on the corner, so I wouldn't split them unless a buyer specifically wants only the corner.
On rezoning first: it can add value, but your friend pays the fees, carries the hearing risk, and could wait months for a vote that might not go his way. The other route is to market the assemblage as is and let the buyer rezone under contract, with closing tied to approval. He keeps title while that happens, and the price can reflect the new zoning.
Before choosing either one, I'd call Henrico planning staff and ask two things. Does the comprehensive plan support commercial on the R-3 portion? Have nearby R-3 to commercial requests passed or failed recently? If staff is supportive, a contract contingent on rezoning usually makes the most sense for him.
Express car wash and drive-thru users are picky about stacking and curb cuts, so check access before he pitches them.
Spencer
Spencer, this is really practical, thank you. Framing the R-3 piece as depth and parking for the corner makes a lot of sense, and the rezoning-contingent contract seems like the cleanest path for my friend. He keeps title while the buyer carries the entitlement risk.
The two questions for Henrico planning staff are a great starting point. In your experience, how long do buyers in Henrico typically ask for on the contingency period, and do they usually put up a deposit that goes non-refundable once the rezoning is approved?
most larger single tenants will need about 1.75 acres. I would hire a site engineer to layout what is possible for the site. You may be surprised that you may have less than 2 acres to work with if you count curb cuts, retention ponds, easements, drive thru' tenant requirements etc. Once you have a site plan from the engineer then you can go to the county as well as market to potential tenants.
Corey, glad it helped. I can't point you to anyone in Richmond, since I don't work that market, so I'd rather not guess. For finding the right people, planning staff will often tell you at a pre-application meeting which consultants regularly bring projects through their office. A local civil engineer or a land use attorney who has taken rezonings through that same office is who I'd want in the room, and I'd ask each of them how many similar cases they've handled there and how long it took.