TowneBank and Children’s Hospital of The King’s Daughters (CHKD) have finalized the purchase of the Norfolk Southern Tower at 3 Commercial Place in downtown Norfolk as well as the adjoining Commercial Place parking garage at 520 East Main Street owned by the City of Norfolk. Closing on both the office tower and the garage occurred simultaneously on June 23. While TowneBank and CHKD now jointly own the tower and the garage and will share the space equally, Norfolk Southern will continue to occupy several of the floors until the end of 2021.
“TowneBank and CHKD are both respected corporate citizens and assets to our community,” says Norfolk Mayor Kenneth Cooper Alexander. “Their significant investment reinforces Norfolk’s downtown as the urban employment hub of the region.” Alexander is pleased that nearly 900 people will eventually work in the tower, several hundred more than are presently there from Norfolk Southern.
Upon termination of the Norfolk Southern lease, the building will house the headquarters of Towne Financial Services, which will include approximately 400 team members in TowneBank Mortgage, Towne Insurance and Towne Benefits. The bank’s headquarters will remain in the Harbor View area of Suffolk and TowneBank’s Norfolk Main Office and Corporate Banking Group will remain in their current downtown locations. “In 2018, when Norfolk Southern announced its plans to relocate, the opportunity to purchase their iconic building was too good to pass up,” says G. Robert Aston, Jr., Chairman of TowneBank.
Consistent with TowneBank’s commitment to the community, TowneBank will donate the net proceeds of Norfolk Southern’s lease payments through 2021 to CHKD’s current campaign to build a mental health hospital for children on its Norfolk campus. CHKD ultimately plans to relocate approximately 475 members of its workforce into the downtown building, including information services, patient financial services, Human Resources and Health System administration.
The acquisition of the 301,745-sf office building solidifies Norfolk’s standing as the commercial, financial and medical center of the Hampton Roads region and further strengthens its Class A office market. The downtown class A vacancy rate remains below 10 percent which is very strong. “Between TowneBank and CHKD there will be nearly 900 new employees working in downtown. This will surpass the previous number of Norfolk Southern employees, and bring new high-paying jobs downtown,” said Jared Chalk, the Interim Director of the Norfolk Economic Development Department. “This is the largest jobs announcement for downtown Norfolk since ADP’s expansion in 2016.” Downtown Norfolk is now home to more than 7,000 residents and a downtown workforce of over 30,000 employees.
While the downtown tower will not include any direct patient-care services, Jim Dahling, CHKD President and CEO says, “This opportunity allows us to move office functions out of our on-campus clinical buildings so that we can repurpose those spaces to better serve the children of our community. And, we are able to realize long-term efficiencies as we eliminate leased office spaces in the community,” Dahling continued. “The decision to jointly own this building represents the most time-sensitive and cost-effective solution to critical space shortages for both our patients and our staff, including expediting our ability to bring much-needed mental health services to children in advance of the opening of our new mental health hospital and outpatient services tower in 2022.”