CoStar Group formally broke ground on an expanded research and technology campus overlooking the James River in Richmond, Virginia, on Tuesday, launching a project that promises to bring more than 2,000 new employees to the state capital and triple the company’s office footprint there.
The project is meant to house the company's rapidly growing workforce, which totals 1,500 in Richmond and increased by 25% this year to about 5,300 employees worldwide, CEO Andrew Florance said during a groundbreaking ceremony at the site. It also represents a major investment in Richmond, where the provider of commercial real estate data and services could become one of the top private office tenants in the city.
CoStar’s new research hub is slated to span 750,000 square feet across 26 stories, making it the second-tallest building in Richmond. Once completed, the company’s footprint in the city could be as much as 1.2 million square feet, the largest of any of CoStar’s 80 locations across 15 countries. CoStar is headquartered in Washington, D.C., where it occupies about 170,000 square feet.
CoStar initially announced plans for the $460 million project in December, and the company still expects to receive $15 million in funding from the state.
The building is set to be LEED certified, which is an environmental sustainability certification, and include mass timber elements. It would be 421 feet tall, from its lobby level to the top, according to Nadia O’Dea, CoStar’s senior director of corporate real estate and services. It is also situated on a hill, bringing its elevation to 444.5 feet, which puts it just below the height of the 449-foot James Monroe Building, a downtown office being eyed for demolition.
In addition to the office, CoStar is planning a five-story multipurpose building for employee and community amenities, Virginia Gov. Glenn Youngkin (R) said at the ceremony.
Tuesday’s groundbreaking took place on the front lawn of CoStar’s existing research and technology center at 501 S. Fifth St. in Richmond, which is about 311,000 square feet. CoStar also acquired a 117,500-square-foot office for $20 million in May, located on the opposing bank of the James River at 901 Semmes Ave.
“We have already begun hiring in anticipation of the new campus,” O’Dea told CoStar News in an email. “The building at 901 Semmes Ave. will house some of our growth until the new campus delivers.”
Once CoStar takes occupancy in the 901 Semmes building, slated for later in November, the firm will own about 88% of its space in the city, according to CoStar data. It leases space in the historic Pattern Building at 470 Tredegar St. and subleases part of medical supplier Owens & Minor’s building at 951 E. Byrd St., both of which are less than half a mile from the site of the planned building.
Right now, the company occupies a cumulative total of about 366,000 square feet in Richmond. If it maintains all its current office space and fills its to-be-constructed office, CoStar would have one of the largest office footprints of any private company in Richmond. It would rank after Capital One and Dominion Energy, which both occupy about 2 million square feet, according to CoStar data.
CoStar could also become one of the city’s largest employers. Florance said at the groundbreaking he plans to hire 2,000 new employees in Richmond, on top of the existing 1,500 who currently work in the city. The jobs would primarily be in software development, analytics, engineering and other roles, with an average salary of over $100,000, he said.
“An investment of this magnitude by CoStar will illustrate to other companies that Richmond is a viable, appealing location for a hub or headquarters,” Jeff Kidd, assistant vice president for capital assets and real estate at Virginia Commonwealth University, told CoStar News. “Because the expansion is located downtown, it will also drive increased demand in rental markets downtown and in new developments south of the James River.”
Florance said that his investment in the office market stems from a belief in getting back to in-person work after the pandemic.
“Breaking ground today is sort of special because it is a commitment to building back to together, working together in person,” he said. “We are more productive as we come back together.”
In his closing remarks, Florance said it is “one of our dreams” to build a restaurant and retail mixed-use development off Brown’s Island along the James River where the tower is planned. CoStar bought about 4 acres of the land along the river in 2020.
CoStar, which was founded in 1987 and came to Richmond in 2016, owns a variety of real estate marketplaces and services, including Apartments.com, LoopNet and the hotel data and benchmarking service STR, and it is the publisher of CoStar News. The company saw a year-over-year revenue growth of 12% in 2022 and was selected for inclusion in the S&P 500 in September.