Richmond, VA vs. Virginia Beach, VA: Which Is Better for Businesses?

Published: 07-29-2022  Category: General CRE

Virginia is a great location for businesses – it’s a coastal state, it’s close to our nation’s capital, and it has a lot of natural resources.

Both Richmond and Virginia Beach have their own unique advantages that could make them the prime spot to launch or move your business.

To make an informed decision about which location is better for your business, look at the key differences between living and launching a business in Richmond versus launching one in Virginia Beach.

We’ve rounded up some of the most important factors to consider.

Population Comparisons

It’s important to look at the population statistics of the two cities you’re comparing.

The demographics and household income of each area can have more or less of an effect on your business depending on the activity you’re conducting.

Let’s dive in by looking at some key demographics.

Average Demographics

As the largest city in Virginia, Virginia Beach is home to over 450,000 people. The annual job growth rate year over year is -1.2%.

Other average demographics in Virginia Beach include:

  • 50.9% of the population is female.
  • About 57% of the population is between the ages of 18 and 65.
  • The median age is 36.6 years old.

Richmond, VA has a population size of 226,604 and it has an annual job growth rate of 3.4%.

Other average demographics in Richmond include:

  • 52.6% of the population is female.
  • About 63% of the population is between the ages of 18 and 65.
  • The median age is 34 years old.

Both locations are fairly similar in demographics.

There are about 6% more workforce-age people in Richmond compared to Virginia Beach, which may be a factor to consider if you need to hire a lot of employees in the area.

Median Household Income

The median household income in Virginia Beach is $78,136.

The median household income in Richmond is $51,421.

Commercial Real Estate Comparisons

Let’s look more specifically at the commercial real estate comparisons of each area, starting with average commercial rents.

Average Commercial Rents

First we’ll tackle the cost to rent a space in each city.

The average cost of commercial rent in Virginia Beach is:

  • Class A Office Space: $24.64 per square foot.
  • Class B Office Space: $18.53 per square foot.
  • Class C Office Space: $18.42 per square foot.

The average cost of commercial rent in Richmond is:

  • Class A Office Space: $24.81 per square foot.
  • Class B Office Space: $18.61 per square foot.
  • Class C Office Space: $15.17 per square foot.

The cost for rent is very similar in both areas, especially for Class A and Class B space.

However, if you’re looking for Class C office space, Richmond is the less expensive option.

Commercial Vacancy Rates

The commercial vacancy rate will usually tell you how competitive a market is.

  • The commercial vacancy rate in Virginia Beach is 8.95%.
  • The commercial vacancy rate in Richmond is 7.55%.

Looking at these numbers, we can see that Richmond has a slightly more competitive commercial market than Virginia Beach.

CRE Market Outlook for 2022

The outlook for Richmond and Virginia Beach is a bit varied.

Virginia Beach has a slightly older population than Richmond and we can see that job growth is decreasing currently.

Richmond on the other hand is seeing greater job growth than Virginia Beach, and continues to see lower vacancy rates in each sector.

Commercial Activity Comparisons

The activity your business is conducting has an impact on how successful you’ll be in either Virginia Beach or Richmond.

For example, if your business plans to conduct retail activity, you need a population that has disposable income and an area that supports in-person shopping.

Let’s take a closer look at each commercial sector.

Retail: In-Person Shopping Versus Online Shopping

Virginia Beach is a tourist destination, making it an attractive option for both local merchants and chain stores.

The population of Virginia Beach also has a fairly high median income, which means more disposable income among residents. The city is bustling with lots of boutiques, shopping centers, and malls.

In Richmond, a few recent developments have increased retail activity in the area. A new Whole Foods opened in November 2021, and the area is making room for other retail giants like Cabela’s and Wegmans.

Industrial: Warehouse Storage Activity

Virginia Beach is home to a wide variety of industries and businesses, including manufacturing companies and storage warehouses. The Port of Virginia is ideally located for receiving cargo and inventory.

Richmond is seeing some robust growth in their industrial activity. Lowe’s is investing more than $50 million in a new distribution center in the city. And Amazon recently announced its plans to build a new fulfillment center in nearby Henrico.

Office: Office Space Activity

Both Virginia Beach and Richmond have an inventory of office space to choose from.

Virginia Beach has a slightly higher vacancy rate, which means it’s probably a bit less competitive than the Richmond office space market.

This can likely be attributed to the fact that Virginia Beach is more optimal for retail spaces and industrial activity than office activity.

Multifamily: Vacancy Rates & Leasing Activity

Both Virginia Beach and Richmond are bustling with multifamily activity.

In Virginia Beach, a once popular mall is being turned into a 12-story multifamily apartment building, which is just one of the many ongoing projects in the area.

Meanwhile, Richmond’s multifamily sector is being referred to as “the best kept secret in the Southeast.” With steady job growth and more people moving to the area, the demand for multifamily properties is growing.

Deciding Which Location Is Right for Your Business

Both Virginia Beach or Richmond have bustling business communities for you to consider. The city you choose is likely dependent on your specific business goals and the activity you’ll be conducting while you’re there.

Weigh out the pros and cons of each location so that you can get a clear idea of which one is more lucrative for your business.

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