An aerial view from September of the Diamond District site under development beside CarMax Park. (Images courtesy Diamond District Partners)
With construction on its first apartment building now going vertical, the developer behind the Diamond District is amending its programming for the mixed-use project’s initial phase, in response to demand for more commercial space and interest from a high-end hotel brand.
The board for the Richmond Economic Development Authority on Thursday approved the request from developer Diamond District Partners to adjust the mix of uses to allow 96 more hotel rooms – across two hotels instead of one – and 150,000 more square feet of commercial space in the public-private project’s first phase beside CarMax Park.
Those increases would be offset by a reduction of 171 market-rate apartments in the phase, which had been planned for 730 of those units across three buildings and is now planned for 559 – a drop of about 23%. No adjustment is proposed for the 161 lower-income housing units planned in the phase.
The changes represent a 500% increase in the planned commercial space for the phase, which had been originally planned for 30,000 square feet of commercial, and a 53% increase in the number of hotel rooms, from 180 to now 276 rooms.
Those rooms would be split between two separate hotels: a 130-room hotel that would be part of an additional office building, and a 146-room hotel at the northwest corner of CarMax Park that would be a Tapestry by Hilton brand.
A conceptual rendering of the Tapestry by Hilton hotel, which would rise beside CarMax Park and Arthur Ashe Boulevard and include a rooftop bar and restaurant.
The adjustments were described to the board as a net increase in overall density for the phase, based on the methodology of one hotel room and 1,000 square feet of commercial space equaling the density of one market-rate apartment.
DDP general manager Jason Guillot said the changes also would result in more tax revenue generated from the development, as commercial and hotel space are typically more revenue-generating for the city than residential.
“The real estate tax revenue alone generated per square foot of this type of product is greater than residential, generally,” Guillot said in a presentation to the board. “We’ve been working on a tax analysis effect and we think it’s really a net benefit to the project, the revenue streams, the ability to pay back the bonds in the long term.”
Jason Guillot of Diamond District Partners presents the changes to the project to the EDA board alongside colleague Maritza Pechin at Thursday’s meeting. (Jonathan Spiers photo)
Guillot, a principal with local firm Thalhimer Realty Partners, noted that when the Diamond District plan was put together, the demand for office and commercial space was lower coming out of the Covid-19 pandemic.
In the years since, he said, that demand has changed, hence the change that was also aimed at accommodating the Tapestry by Hilton – a higher-end brand whose local properties include Hotel Petersburg and the Virginia Crossings Hotel & Conference Center in Glen Allen.
“Part of the thinking here, when we worked with the city on initially setting this up, is some of these blocks were placeholders, and the easiest thing to do at the time was say it’s going to be apartments. But we knew the project would evolve over time, we may have other uses show up, so that’s why we’re here today,” Guillot told the board.
“The project has evolved. It’s gotten better, it’s gotten bigger. And it’s been two and a half years; we need to update our plan,” he said.
EDA Director Angie Rodgers noted to the board that the original development agreement anticipated the possibility for such changes to the plan and includes provisions allowing the board to approve amendments.
“Part of the original development agreement allows for this board to consider what would be material changes to the development agreement, and we’ve reached one of those points,” Rodgers said. “Fortunately, it is a development change that we feel is positive for the overall development, in order to accommodate a more luxury brand of hotel for the phase that will be adjacent to the stadium.”
The revised program for the Diamond District’s initial phase.
The approved changes come as construction has commenced for the first apartment building, called Dōma, an $80 million project that broke ground in July and will rise six stories and total 276 market-rate units, with projected rents ranging from $1,700 to $3,100 a month.
That will be followed by an adjacent “trophy” office building that Guillot said is being increased from six to seven stories, due to additional interest in space in that building. The now-110,000-square-foot building is to be anchored by local law firm Hirschler, which has signed on to fill 50,000 square feet across four of the seven floors.
The previously announced office building had been added to the project on top of the development agreement’s minimum requirements that called for 30,000 square feet of commercial space. Both the office building and apartment building are scheduled for completion in 2028, and a parking deck they would share is currently under construction and taking shape on the east side of the site along Hermitage Road.
Construction underway on the parking deck for the first apartment building and ‘trophy’ office building.
Northeast of those buildings would rise an office-hotel building that would include the 130-room hotel, the brand for which has not been announced. Both that hotel and the Tapestry by Hilton would be developed by Kalyan Hospitality, which joined the DDP team earlier this year.
Rounding out the initial phase will be the lower-income, “workforce” housing and a park to the south and east of CarMax Park, and a 20,000-square-foot retail building beside the stadium’s main outfield entrance that’s set to include a Makers Union restaurant and a sports bar concept by Eat Restaurant Partners. Guillot said DDP has another user lined up for a third space in the building but did not share details.
The planned sports bar has been at the center of a public feud and related lawsuits from the owners of the Richmond Flying Squirrels, who contend the concept would compete with CarMax Park’s concessions. Disputes have also arisen over infrastructure work that’s underway at the stadium entrance, where asphalt that provided access to the entrance is being replaced with concrete pavers that will connect to an adjacent, future street.
That and other infrastructure work is valued at nearly $48 million, the bulk of which would be covered with $40 million in lease revenue bonds secured by the EDA that are to be financed with the Flying Squirrels’ lease payments for CarMax Park and a $10 million grant awarded from the Central Virginia Transportation Authority.
The retail building, workforce housing and Tapestry by Hilton are planned to be built in 2028, while the hotel-office building and a second apartment building are planned for completion in 2030.
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