The Elevance Health building sold in the priciest office deal in Richmond, Virginia, in 2023, providing a show of confidence in an office market that appears to be slowly on the mend after the coronavirus pandemic upended the sector.
The sale is also a reminder that despite the turbulence caused by extended remote and hybrid work policies and general economic concerns, demand remains for quality properties in good locations with investment-grade tenants.
In recognition of the sale and its reflection on the market, the deal earned a 2024 CoStar Impact Award for sale of the year, as selected by an independent panel of local industry professionals.
The five-story, 291,008-square-foot property is fully leased to Elevance, a health insurance provider out of Indianapolis that, until mid-2022, was named Anthem. The company is on a 13-year, triple-net lease that is scheduled to run through December 2035, according to CoStar information and is carrying out extensive upgrades to the property.
The deal comes as investment activity in the Richmond area has fallen back in line with pre-pandemic trends, with 120 office deals closing in 2023, according to CoStar data. That is just below the market's all-time average of 130 deals per year.
About the Deal: Salus Government Properties paid $63 million in August to acquire the Elevance building, located off West Broad Street at 2103 Staples Mill Road, and a three-story, 844-stall concrete parking garage at 200 Maywill St. The company, an Arizona firm that owns and operates facilities leased long-term by select U.S. government agencies and Fortune 500 companies, bought the properties as the upleg of a 1031 exchange. The seller was Kinsale Capital Group, a local insurance company that acquired the Elevance building in late 2022 as part of its $76.2 million purchase of the longtime Anthem campus. That deal included several area properties, including the adjacent 254,997-square-foot building at 2015 Staples Mill Road. The insurance company's headquarters is located across the street at 2035 Maywill St.
What the Judges Said: "In an otherwise difficult office investing environment, the sale showed investors are still attracted to the region," said Andy Little, principal of John B. Levy & Co.
Additionally, Scott Keeton, managing director of Commonwealth Commercial Partners, highlighted the property's standing as a large corporate campus that occupies a prominent location in the market.
They Made It Happen: Rebecca Barricklow, Joe Marchetti, Will Bradley and Mark Williford of Colliers | Virginia brokered the sale.
CoStar Market Manager Christian Taylor contributed to this report.