CoStar Group officially debuted its expanded campus along the James River in Richmond, Virginia, on Wednesday. Yet the company’s role as one of the city’s largest corporate anchors has been decades in the making.
From a tiny 3,500-square-foot outpost in the city, the global provider of online real estate marketplaces, information and analytics now occupies a complex of more than 2 million square feet teeming with thousands of employees. The beacon of that presence — and the company’s literal stamp on Richmond’s skyline — is the newly constructed, 21-story tower developed to house CoStar’s next era of corporate growth.
The 750,000-square-foot high-rise is one of the first ground-up office developments to be completed in recent years in Richmond, if not much of the United States. It’s a project that shows office developments can still reshape city geographies, even after the pandemic and resulting economic turbulence sent the national construction pipeline into a deep freeze. What’s more, it’s a venture that comes as other companies, such as Walmart, move to integrate their workplaces into surrounding neighborhoods.
“Often companies evolve and grow somewhere by chance, and they’re not always deliberate in selecting where they are and why they’re there," said founder and CEO Andy Florance from his office in the new tower. “But from a talent perspective, where you need thousands of people with lots of skills, our being in Richmond is not accidental.”
The LEED-certified project broke ground in late 2022 and now sits as the highest building throughout greater Richmond. It’s hard to miss: The building’s crown and vertical spines light up at night with digital art created by Refik Anadol, an artist whose work with artificial intelligence-inspired displays has been shown on the Las Vegas Sphere and in collections at Manhattan’s Museum of Modern Art.
Anadol showed off one of his interior creations during the open house at which employees, their children and their guests interacted with the artwork and got a firsthand look at the building’s amenities. CoStar also announced donations to Richmond Public Schools, the Black History Museum and Cultural Center of Virginia, Children’s Hospital Foundation and the Richmond Metropolitan Habitat for Humanity.
CoStar acquired the then-vacant site for $20 million in 2020, a point when most other companies across the country were slamming the brakes on their real estate expansions and investments. Instead, Florance said that with the company expanding the way it was and quickly outgrowing the buildings it was already in, it made no sense to do anything other than invest in space that would make CoStar’s footprint more efficient.
“As we started hiring and getting more people to move here, we added more and more floors and filled up more and more buildings,” Florance said. “There were some people that would spend half their day running from meetings in one building to another meeting somewhere else.”
Not ‘just a building’
Since Richmond’s office market didn’t offer the kind of space the company sought with the amount it needed, CoStar set about building something itself.
The result: Foundry Park, CoStar’s new three-building campus bounded by South Fifth and Seventh streets overlooking the James River.
The newly constructed tower connects to the company’s existing space at 501 S. Fifth St., which it acquired for $130 million in early 2021. A smaller, six-story multipurpose building sits adjacent to its taller counterpart and includes employee amenity spaces, a food hall, auditorium and, ultimately, space for restaurant operators that will be open to the public.
All of it will help further integrate the CoStar campus into the city’s fabric, something Pickard Chilton principal Bill Chilton — one of the project’s lead architects and someone who has designed headquarters for the likes of Sherwin-Williams, CalPERS and Dominion Energy — said was a key goal.
“This isn’t just a building, it’s a commitment for the employees and people around it,” Chilton said at a morning open house event with company executives and guests. “The design steps down to the river, and it’s a campus that opens up to the rest of the city. A building is only as alive as the people it draws through the doors, and the people here are doing their best thinking.”
CoStar has evolved to become one of Richmond’s largest employers. Recent graduates of the nearby Virginia Commonwealth University populate batches of new hires, and Florance himself is known to recruit servers from local restaurants if he thinks they would make promising additions to the CoStar workforce.
“Once you make a commitment to a location, you want to make sure that you view that city as your partner, and that’s the whole community,” Florance said. “If a company like ours is looking to recruit, develop and retain thousands of staff, everyone in the community is part of your source. So we invest in the community and commit to the community, and that’s been working for us.”
Outside connection
In the decade since the real estate marketplace and data giant subleased its first office in the city, CoStar’s head count has skyrocketed from fewer than 20 people to more than 2,440. The new Foundry Park campus can house as many as 4,000 employees, but Florance said the new tower is just the latest point along the company’s growth trajectory. He thinks CoStar could one day employ about 8,000 people in the Richmond area.
Walking around the city now, it has become almost impossible to escape the CoStar name.
Employees with branded backpacks walk across the T. Tyler Potterfield Memorial Bridge connecting the company campus to their apartments in Manchester. They spill into downtown restaurants and bars after work for happy hour. Workers visiting from out of state can stay at hotels that provide a designated shuttle service to the CoStar offices.
That activity is a significant driver for the city’s economic engine, helping to boost property values and spurring apartment and storefront openings aimed at catering to the evolving workforce.
Greater Richmond is the second-fastest-growing region in Virginia, according to the city’s economic development department. Over the past decade, the city has experienced a population spike of about 11%, and local officials estimate another nearly 20% bump by 2050.
While the regional cost of living is still far below nearby counterparts in the Washington, D.C., area or Philadelphia, Richmond has become one of the strongest for-sale housing markets in the country, according to Homes.com data. Developers have jumped in to capitalize on the demand, and rents have been able to maintain their upward trajectory despite a construction pipeline that now includes more than 5,000 apartments.
Kicking off the next phase
It’s all a far cry from the second-floor space Florance rented in the 1980s across from a bus terminal known as the Cary Street Station just east of downtown, a year or so before he officially launched what would become the largest data, marketing and analytics platform for real estate around the world.
The Arlington, Virginia-based conglomerate behind dozens of brands including Apartments.com, Homes.com and Matterport, making use of technology to create digital twins of physical real estate, employs about 8,000 people around the world and either leases or owns more than 2.2 million square feet of office space to accommodate them.
And while the dot-com bust, the 9/11 terrorist attacks, Great Recession and, most recently, the pandemic have all generated their own narratives about how the office market is nearing its demise, Florance has held firm in his belief that not only is that untrue, but that investing in physical office space is also critical to a company’s success.
“I believe that people working together and interacting together is an essential component of work, and this campus was part of that and designed around that.”
“Like everyone else in the pandemic, we went through the work-from-home siren song with everyone sailing toward those voices, but we’re in commercial real estate,” the CEO said. “If commercial real estate doesn’t exist, do we exist? I believe that people working together and interacting together is an essential component of work, and this campus was part of that and designed around that.”
The data and marketing giant is hardly alone in its conviction in physical office space. JPMorgan recently unveiled its new supertall corporate headquarters at 270 Park Ave. in Manhattan, and others including law firm Sidley Austin, OpenAI and Starbucks have spearhead some of the largest deals signed so far this year, which, in some cases, will kick off ground-up projects of their own.
And for CoStar, its new Richmond campus was designed to be an investment for the company itself.
CoStar has a long track record of acquiring or investing in properties while the rest of the market is backing away, a game plan Florance is ultimately expecting to deploy at Founders Park.
“We don’t want to keep real estate on our balance sheet for the long term, but we also have the luxury of time,” he said.
That means the company can wait while Richmond’s corporate identity continues to strengthen, valuations climb and the market attracts more investor interest. At that point, Florance said the company would consider a sale-leaseback deal that — considering it would involve a high-credit tenant occupying the entirety of a trophy building — would more than make back CoStar’s investment on Foundry Park.
But until then, the company is focused on creating a new anchor for the city.
With employees bustling through the hallways and training rooms filled with new hires, Florance said there’s been a distinctive shift in how everyone is interacting with the new space. That’s especially important given that, as CoStar was founded alongside the rise of the internet age, it is now positioning the campus as its new artificial intelligence hub while the company heads into its next phase of technological development.
“I stepped into a training class earlier this week and was struck by something different,” Florance said. “In the new building, people are more engaged and more excited about what lays ahead. It makes people want to show up and more than just in a physical way, but in a mental way, too.”