Deep Run III was built in the late 90s for Circuit City but is now home to tenants like McKesson, Travelers and others. (Courtesy Marwaha Investments)
After quietly falling into foreclosure this summer, Deep Run III, the former Circuit City headquarters building in Henrico, is back under local ownership.
The 6-story, 355,000-square-foot office building at 9954 Mayland Drive sold on Monday to prolific real estate investor Gagan Marwaha for $31 million.
Known initially for buying apartment buildings in Petersburg, Marwaha and his firm Marwaha Investments more recently have been on an office building buying spree that now spans five deals totaling $53 million in less than 24 months.
Like most of Marwaha’s other office deals, Deep Run III was considered a troubled asset. Marwaha purchased the property from insurance giant Principal, which had been the noteholder when the building’s previous owner, Boston-based RMR Group, defaulted on the loan.
Principal then opted to foreclose and held an auction on the courthouse steps in July, before selling to Marwaha.
The sale closed on Sept. 22 and Deep Run III has been renamed Marwaha Business Plaza, following Marwaha’s pattern of changing the name of his office properties to signify new ownership.
“That’s the biggest change that tenants are excited about. It’s going to be a culture change,” Marwaha said. “We are just going to operate it at a very efficient level and make tenants feel heard and appreciated.”
Gagan Marwaha
The sale and rebrand mark the latest chapter in the building’s up-and-down history.
Deep Run III was built in the late 1990s as part of the Circuit City headquarters campus when the electronics retail giant was near its peak.
But the company collapsed into bankruptcy about a decade later in 2008, leaving the building empty. In 2011, local real estate private equity firm Markel | Eagle Partners bought the vacant property at a fire sale price of $12 million. Markel | Eagle then invested around $16 million to upgrade the building, constructed a new parking deck onsite and got it fully leased with tenants like Travelers Insurance, United Bank and anchor tenant McKesson.
Markel | Eagle made a successful exit in 2019, selling the property to RMR for $56 million.
Six years later, when RMR’s loan came due and the value of the property had fallen below the loan amount, RMR let the non-recourse loan fall into foreclosure. That opened the door for Marwaha, who had previously done a deal with RMR for the Parham Place office park (now called Marwaha Business Park) in central Henrico in 2023.
Deep Run III was 84% occupied at the time of the deal with vacancy of 60,000 square feet. Perhaps the biggest risk in Marwaha’s strategy is that McKesson’s anchor lease of 119,000 square feet is coming due in two years. United Bank and Old Dominion Mechanical’s leases are also up in 2027. Other tenants in the building include TForce Freight, the Virginia Cannabis Control…
Read More: Marwaha strikes again, buys former Circuit City HQ out of foreclosure for
