United States -  Richmond-Petersburg

Overview:

As the capital of the Commonwealth of Virginia, Richmond’s economy is heavily influenced by county, state, and federal government agencies. The city is home to the Unites States Court of Appeals for the Fourth Circuit, the Supreme Court of Virginia, and state and local courts. Finance, education, and healthcare are also important to the region. The Federal Reserve Bank of Richmond is the headquarters for the Fifth District of the Federal Reserve System; the presence of the bank has attracted numerous financial and insurance corporations to establish a presence in Richmond. Virginia Commonwealth University, founded in 1838, is a public research university located in Downtown Richmond. In 2015, The University’s Medical Center was ranked the #1 hospital in the state by U.S. News & World Report. Furthermore, the Richmond area is known for its abundance of retail shopping centers, including the Short Pump Town Center and Chesterfield Towne Center. Tourists to the area can enjoy a river walk, canal cruise, dining, and shopping in the River District. The Richmond Liberty Trail takes visitors through a tour of the city’s most historic sites and neighborhoods, including the Edgar Allan Poe Museum, the Museum and White House of the Confederacy, and the Virginia Civil Rights Memorial.

In 2013, the market was affected with the opening of the 1,000-room lodging facility at Fort Lee and the mandatory budget cuts related to the federal sequestration. The greatest impact from the new base lodging was felt in the cities south of Richmond, such a Petersburg, Hopewell, and Colonial Heights. The Richmond market experienced a significant increase in new supply during the height of the recession; however, supply has slightly decreased since that time, as some older hotels have closed. A few new hotels have opened in the last year. Quirk Hotel, a unique property that was named one of “Top 60 Best New Hotels and Resorts in the World” on Condé Nast Traveler’s The Hot List, opened in September 2015, and the Homewood Suites by Hilton Richmond Downtown and the Hampton Inn & Suites Richmond Downtown recently opened in 2016. Six hotel sales have been reported in the greater Richmond market since January 2015. While improving market conditions and high investor interest have put downward pressure on capitalization rates, driving hotel values to peak levels, further growth is expected to be held in check given that interest rates and capitalization rates are now beginning to rise.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Richmond-Petersburg United States
Previous Year +2% (24 of 71) +1% (49 of 71)
Growth in 2017 +2% (16 of 71) +2% (36 of 71)
Growth in next 3 years +14% (12 of 71) +10% (36 of 71)

Change In Value For Market:

Richmond-Petersburg RevPar % Change

For more information, please contact:

Janet Snyder
jsnyder@hvs.com
  • +1 972 978-4714 (w)
Mike Bendert
mbendert@hvs.com
  • +1 248 953-7894 (w)
Patricia Shih
pshih@hvs.com
  • +1 404 791-5509 (w)