You are here
Home > News > Model Tobacco Under Contract…Again

Model Tobacco Under Contract…Again

Southside’s iconic Model Tobacco property as reported by Richmond BizSense is under contract to C.A. Harrison Cos, a Maryland development firm. The property has gone through development fits and starts through various economic cycles, but has failed to gain traction over the last 20+ years.

The project would be absolutely incredible for South Richmond, but is no small undertaking. I have personally toured and studied the property at great length. The development presents massive challenges however, and the project is not for the feint of heart. Here are a list of some of those issues:

  1. With a sprawling set of 7 different buildings, and the massive square footage of the endeavor, the sheer size of the development is daunting. The project easily surpasses $100 Million to develop it in its entirety. The developer and its investors must have very deep pockets, and be in for the long haul. The project will likely take a decade to fully develop.
  2. Given the large dimensions of the buildings, window access for adaptive reuse as apartments is highly challenged. Many of the units will need to be 3 Bedroom apartments in order to provide at least one window in each unit (not necessarily each room). 3 Bedroom units are very difficult to rent at market rates, but less challenged for low-income/affordable units. Nonetheless, the project will require a very large number of 3 Bedroom units no matter the rent type.
  3. The current Zoning/Special Use Permit for the project is very specific to a set of adaptive reuse apartment plans which failed to proceed. Any changes to the the number of units, the mix of low income vs. market rate units, landscaping, etc requires city approval. This will cause lengthy delays to resolve before anything can proceed.
  4. The buildings have not been listed on the list of historic buildings and therefore is not eligible for historic tax credits. While this building complex should easily qualify, this is something that will need to be resolved. Economically speaking, there is no way to viably develop the project without tax credits given the enormous expense associated with repurposing the buildings.
  5. The economically depressed condition of the Jefferson Davis corridor does not help the situation. Add the huge American Tobacco project next door which will also be low income housing, and you have an enormous concentration of 750+ low income units concentrated in one specific area.

On the flip side, things are finally moving again for South Richmond. Investment in the area that was occurring before the Great Recession but came to a screeching halt, has begun again in earnest. The iconic Model Tobacco building could be an enormous opportunity to achieve sizable low income/affordable housing not only for the area, but the entire city.

Let’s hope that this time the new developer is able to see it through to completion. It would be a huge benefit to the area to see this awesome building restored and put back to good use. Fingers crossed…

22 thoughts on “Model Tobacco Under Contract…Again

  1. This is a very large building for apartments to be constructed and absorbed/rented in a short enough time frame given the cost of interest carry and at
    the limited rent levels and safety issues (either real or perceived) in that area. And you have to buy the entire site which includes another good size building that was a power plant for the tobacco factory plus at least 6 low rise former warehouse buildings. In the years of about 2010 to 2014 I received multiple development proposals for this property to be converted to nice loft style apartments similar to many other old vacant Richmond buildings eligible for historic tax credits, but the seller’s price and requirement to purchase all of the property at one time, versus buying and developing in stages, plus the costs of development and limited projected rent levels resulted in the numbers just not working – and we worked tirelessly on multiple differing development proposals over a period of several years. One additional significant cost was installing costly, very sturdy and attractive metal fencing around the property with card access to enter, which was deemed needed to allay potential renters’ safety concerns, and this had been done in some other such situations in Richmond and Petersburg. It will be interesting to see the current development plan and hope it is a great success. We spent so much time on it partially because the City was urging us to find a way to make it work and we did all we could, but the timing was not yet right given the circumstances.

  2. This is the same developer that is faltering the start of the adaptive reuse of the old Ramada Hotel in Petersburg and already owes a contractor a bunch of money for the demo and abatement contract and isn’t paying, after receiving grants from the city and state for same. 🤦🏻‍♂️. Contractors beware!

  3. One of the comments in the BozSense article mentions removing the condition to renovate the buildings so if desired they could tear it down. Only asking to keep the sign somehow.

Leave a Reply

Top