Chang started in Fairfax with a restaurant called China Star, and has since moved to other Northern Virginia locations plus Georgia and Tennessee. He also has one in Charlottesville.

Chang has developed a following for his Szechwan cuisine with many of his fans stalking him from restaurant to restaurant. Chatter about his whereabouts and food is constant on the sites DonRockwell.com and Chowhound.

There’s also an entire website dedicated to all-things Peter Chang related. Plus he’s been the subject of a New Yorker profile.

Chang will open the restaurant Peter Chang’s China Café at the end of February, according to Richmond.com.

In May, Mondial leased the first four floors — about 240,000 square feet — of the former Circuit City headquarters building.

“We thought with our continued growth, we would need that fifth floor,” said spokesman Daniel Durazo. “So we agreed to lease it.”

Mondial previously had an option to add the fifth floor, but the landlord was still shopping it around to potential tenants.

A group of local investors led by Pruitt Associates purchased the building in late 2010 for about $6 million after the owner of the building defaulted when it lost its tenant (Circuit City).

Michael Pruitt, who spent close to a year trying to buy the building from a special servicer, said the building is designed for a single tenant.

“We didn’t know if a tenant would come in and [lease the whole building], but it really worked our great for them and great for us,” Pruitt said, adding that the interior designers will have an easier time now that they know the entire building will be used by one tenant.

Mondial has about 900 employees in Richmond and plans to expand to about 1,000, Durazo said. The company is scheduled to move into its Deep Run digs by the end of 2012. Mondial presently leases space on Parham Road and at Innsbrook.

Meanwhile, the new local owners of the other Circuit City building are still looking for tenants. Diversified Realty Ventures and Markel/Eagle joined forces to purchase Deep Run III for $12.4 million.

The two Deep Run buildings are connected by a breezeway.

The lease will run through June 30, 2013, according to Richard Bostwick, the company’s general counsel.

Jane duFrane worked the deal for Highwood Properties, which owns the building and had listed it for lease this year after Bostwick hadn’t made its plans clear. The lease was set to expire at year’s end.

The company, whose labs’ tasks include examining specimens for cancer, recently vacated its other Innsbrook office on Lake Brook Drive. That building was taken over by Snagajob.

Richard Bostwick said employees from the Lake Brook location have been consolidated into the headquarters building.

The company owns several labs across the country. Its Nashville and Phoenix labs are for sale, according to commercial real estate listings.

BizSense also recently reported that the company closed on a deal to give it a capital injection.

Healthcare Finance Group agreed to lend Bostwick $43 million: $20 million in a revolving line of credit and $23 million in secured loans.

Mondial said it leased four of the five floors at the building, known as Deep Run I, and has an option to lease the fifth floor. Mondial presently leases space on Parham Road and at Innsbrook and will consolidate into its new building in 2012, just as its leases expire.

BizSense first broke the story in January, reporting that Mondial was looking hard at the space, which had lots of Circuit City’s old furniture, including a sea of cubicles on several floors.

Jon Ansell, Mondial’s CEO, said the company will not be using the cubicles. Instead Mondial will be designing its own look and feel.

“The building really fits the kind of feel that we’re looking for in a workplace,” Ansell said by phone Monday.

“We realize people spend eight hours a day of their lives at work, and we want to create a space [that mirrors] who we are as an international company … something that creates an inspirational and fun workplace.”

The company said in a news release that the new facility would provide amenities such as an auditorium, fitness center and walking trails, as well as beefed-up technology for communicating with a global workforce. It’s also closer to the interstate for commuting employees, Ansell said, which is a plus.

Mondial started looking for a new building about a year ago, Ansell said.

Deep Run I, which went dark in late 2008 when Circuit City went bankrupt, will now house a company that has been in growth mode over the past 10 years.

In 2000, Mondial had 213 workers in Richmond, the company said. Today is has about 900 workers and plans to hire more than 100 more workers over the next year.

A local investors group led by Pruitt Associates purchased the building in late 2010 for about $6 million after the owner of the building defaulted after losing its paying tenant (Circuit City).

BizSense was unable to reach Pruitt Associates on Monday. But in November, Michael Pruitt talked with BizSense about the investment and the strategy behind it. You can read that story here.

The Dominion Club did not have the money to pay back $1.7 million in initiation fees that were contractually supposed to be returned at the end of December to current and former members, said Vernon Inge, a lawyer from LeClairRyan who is representing the club. (You can see a list of the members and former members, and what they are owed in a filing here.)

Other members were supposed to eventually be paid back $10 million to $11 million that they paid in initiation deposits. But those funds weren’t due just yet. That will make those members unsecured creditors, Inge said, adding that it’s unlikely unsecured creditors will get much money back.

Some vendors might also not get all they are owed, Inge said. Despite these problems, the club has been mostly up-to-date on its bills and will keep paying them after the filing.

The country club, which opened in 1992 and was developed by HHHunt, is operationally on better financial footing, Inge said. HHHunt is owed $10.6 million from the club and will turn that credit into equity, Inge said, meaning the developer will lose that sum.

“It’s business as usual,” said Inge. “It will be completely transparent to the users of the club that we are in Chapter 11 and the club will be providing services when the weather permits, just like it’s always been.”

Dominion is the second local course to enter bankruptcy in recent years. In October 2009, the Federal Club filed for Chapter 11 bankruptcy protection. That course was eventually sold for less than half of what it cost to build it.

Other golf clubs have filed Chapter 11 bankruptcy protection in Williamsburg and Lynchburg. And even courses that cater to the wealthy are struggling to find enough new members to replace ones that have given up their memberships. (You can read about that in an RBS story here.)

Compared with the Federal Club, the Dominion Club has far more members (more than 700 compared with fewer than 150) and has enough cash flow to maintain the course, Inge said.

Inge said the Dominion Club has paid back $6 million in refunds. However, the club does not have enough to keep paying.

Members were first notified that initiation deposits would not be refunded in a letter that went out last week.

HHHunt has been operating the club, Inge said, and might try to turn over control to the members. That move was also tried at the Federal Club, but the member-group did not end up bidding.

“The members will basically be the only creditors,” Inge said. “Ultimately, we want to find a way for the current members to control the golf course.”

HHHunt considered selling the club to the members last decade, but the deal fell through.

Dale Austin, the chief financial officer for Patient First and a member at the Dominion Club, said he paid an initiation of $16,000. Austin said members were supposed to get their money back after a certain number of years or when they left the club.

“If you resigned from the club, you had to do it on Aug. 1 and it was effective Dec. 31,” Austin said. “Typically, a member only gets his or her money back when the club can sell the membership.”

Below are the letters sent to members and former members, respectively, regarding this matter.

But the right-hand panel is actually a reinforced steel door with two bolt locks that leads to a private restroom, complete with shower.

“One lock would be normal, but two?” Michael Pruitt said on a recent tour.

It’s one of Pruitt’s favorite details, along with the five-story atrium and the wooded grounds out back.

He explores the building like a kid in a new tree fort, theorizing that the two locks might mean that the bathrooms doubled as “safe rooms” in case of emergency.

Pruitt and his company, DRCC Properties LLC, are the proud new owners of Deep Run I, a 300,000-square-foot, five-story building that was the better of Circuit City’s two headquarters buildings.

A gusty deal

Michael and his uncle, longtime Richmond developer Tommy Pruitt, spent close to a year trying to buy the property and the land, which were separately owned and both distressed. 
The land was owned by the bankrupt Circuit City entity and overseen by the bankruptcy court. Nobody was in much of a hurry to do anything with it.

The building was owned by an investment group, but after Circuit City went bust, that trust had no tenant and no rent coming in, so it did what some underwater homeowners do: It sent the keys to the lender. Only the lender wasn’t one bank, but rather a group of investors who each owned pieces of the loan, so a servicer was put in charge.

That servicer hired local real estate brokerage Thalhimer to shop it around.

Thalhimer contacted the Pruitts.

Not that they were looking for deals. Pruitt Associates sold its office portfolio in 2007. But they were intrigued.

The Circuit City building had one big thing in common with the company’s other successful real estate investments: a prime location.

“The bones are solid, and we liked that. We liked the exposure to Interstate 64, and the building has access to Broad Street and Gaskins. What’s neat about this location: It’s improved over time,” Pruitt said, adding that there are now restaurants, coffee shops and hotels nearby.

The deal was complicated, but that didn’t deter Pruitt, who worked in finance on Wall Street for five years. He wanted to simultaneously buy the land from the bankrupt Circuit City and the building from the servicer representing a collateralized loan. It’s enough to make your head spin. And to scare off some of the potential buyers.

David Downs, a professor of real estate at Virginia Commonwealth University, said that the Pruitts had the advantages of liquidity and an appetite for the risk. “A project like this, it wouldn’t appeal to a lot of investment [firms]. The risk is abundant as to how to get tenants in, get it leased up and what sort of tenant improvement you have to anticipate,” he said. “A lot of players like REITS are happy to pass on it.”

He added that with that extra risk comes some reward if the project flies. “Where real money is made is in a down market. That’s where you pick something up at a very low basis,” Downs said.

Indeed, Pruitt paid a combined $5.75 million to assemble the building and 58 acres of land, which includes a parking lot, a wetland that can’t be developed, a softball field and sand volleyball court out back, and some land that could be developed for a future use.

The building’s previous owner borrowed defaulted on a $17 million loan, and that was just the building with no land. Henrico County most recently assessed it at $13.6 million.

The cost to build a similar building brand new, should the marketplace need more supply, would be about $60 million, using a cost basis of $200 per square foot.

Eric Robison, who manages the investment division at Thalhimer and who shopped the building, said that a local buyer had another advantage over the investors who had it. “The law says that the lender could not buy the land because the entities in a securitized loan cannot add to the collateral.”

That meant that the building’s owner was prohibited from making the most natural move: buying the land so the building and land were together. Plus, the lender was hesitant to have to pony up the money to lure new tenants and fix up the floors to their liking, Robison said.

Remember, this was fall 2009. The economy was getting worse, and real estate was a dirty word.

“We had to then find an investor who was savvy enough to realize that the fundamental challenges were temporary and not indicative of how the office market behaves,” Robison said.

There was only one problem: Who would want a tenantless, non-rent-paying building with the obligation to pay rent to the land on which is rested?

Pruitt said he was comfortable with the risks of owning just the building, or just the land, figuring it would work out in end. If he had just the building, he could find tenants. If he had just the land, he got the rent from the building’s owner. And if they didn’t pay rent, he could snatch the building as collateral once they were in default. 

Now he owns both.

Fixer-upper

circuitmeetingroom

This is pre-owned.

There is the faintest smell of must inside Deep Run I. There are other subtle cues that a once-great company had 3,000 workers here. There’s red carpet in the entrance. A few small Circuit City logos glued to the wall and a room full of old computers. 

The second and third floors have wall-to-wall cubicles, and some of the corner offices have dry erase boards with writing still on them. (You can see an RBS video of the going-out-of-business sale at the HQ here.)

“It was Class A space. We are trying to bring it back to that standard,” Pruitt said.

After the Pruitts upgrade the building, they hope to find one tenant large enough to take the entire space, or at least an entire 55,000-square-foot floor.

Pruitt said he’s showing the building once a week now. One office broker said there is interest from outside the area and from Richmond. A corporate relocation or upgrade, a la Capital One’s purchase of two buildings at Innsbrook in August, would be ideal. (You can read more about that in an RBS story here.) 

Pruitt said they’re going to redo the landscaping and add a new roof, and the building is getting a monitoring system that helps it cut energy costs.

circuitcubicles

But that brings up one of the peculiar challenges of his strategy: Should he chase one huge tenant who wants the entire building, or should he subdivide it? And how much should he subdivide it? Into floors? Half-floors?

David Wilkins, an office broker at CB Richard Ellis, said most office tenants in Richmond require about 20,000 or 25,000 square feet. That’s why many of the buildings at Innsbrook have floors that are about that size. Deep Run I’s floors are about twice that size.

There are also a lot of other options out there for potential tenants. Vacancy at Innsbrook is about 25 percent. But that will be falling soon, Wilkins said, adding that a couple of deals are close on the former LandAmerica headquarters. And there are only a few huge blocks of space that compete with Deep Run, Wilkins said.

Still, there might be more competition coming next door. Deep Run III, which was also a Circuit City building, is in default, Wilkins said, adding that he anticipates a short sale on that building. That building is completely vacant.

“Frankly, I wouldn’t be surprised if Pruitt picked up Deep Run III,” Wilkins said.

Pruitt said he’d consider making a run at that building, too. Even if it doesn’t have hidden bathrooms in the executive suites.

The film premieres tonight at the Virginia Film Festival in Charlottesville. Wulf, who moved to Richmond to work in training for Circuit City, said he wants to have a local showing in a month or two.

Click here to view the embedded video.

“I had a picture that hung on my wall of [Circuit City founder] Sam Wurtzel, and when I left the company I sent that picture back to Alan, his son. Then I asked him if he’d grant me an interview because I had an idea about a documentary,” Wulf said.

Throughout the movie, Sam Wurtzel is painted as the ballast and spiritual leader of the company. It was his emphasis on customer service that helped the company get off the ground, initially selling TV sets to African Americans from a shop on Broad Street. Then the company added other appliances and soon branched out to other markets.

Through interviews with Alan Wurtzel, former Circuit City presidents and rank-and-file support staff, Wulf explores how one of Wall Street’s darlings went into a slow decline and then collapsed in 2009 after suppliers would no longer lend the company inventory. But that was really just the straw that broke the camel’s back.

The film is broken into two parts: One that explains how the company started in the 1940s and grew as Wards (the name wasn’t changed to Circuit City until the 1980s) and one that explains how it lost its competitive edge over the past 20 years (same-store sales began slipping, Best Buy gained market share, gambles didn’t pay off) and eventually collapsed.

tomwulf

“The company also was on top so long, it didn’t pay attention to competition,” he added. “They stopped listening to the customer service associates.”

Several major figures are not in the film, including former chief executives Rick Sharp and Phil Schoonover, who was voted the worst CEO in America by a national business magazine in 2008.

The film uses lots of videos – former Circuit City ads, internal management training videos and news reports – as it chronologically tries to explain what made the company so successful through the 1980s and what made it sluggish over the past 15 years.

For example, to show how the company kept changing its marketing strategy and slogan, Wulf cuts to old ads. One has the tag line, “We’re with you.”

That was changed in 2004 to, “Just what you needed.”

None of those changes mattered much, according to Wulf’s account. The company made several blunders, such as signing 30-year leases on buildings that were eventually situated in sub-optimal neighborhoods and gambling  millions on a failed video rental disc.

Perhaps most fatally, the documentary posits, the company purchased almost a billion shares of its own stock this decade. If it hadn’t done that, the film suggests, it would have been able to weather the recession instead of filing for bankruptcy protection and then liquidating.

AlanWurtzel

Wurtzel speaks candidly and at one point says that during the Schoonover years, the company was just grasping for straws.

“If it didn’t have a good margin, we did not want it,” Wurtzel said of the policy to not stock as much merchandise as archrival Best Buy. “So we did not have games, which was key to attracting kids, and we did not have as many models of computers.”

For Wulf, the film is intensely personal. The former TV journalist left the news business in the 1980s to work as a sales representative for Circuit City in Atlanta. Wulf then worked his way up and was hired in Richmond to work on management training. He then worked at CarMax for 12 years.

The developer has so far not wanted to comment about its long-term plan for the office building, which is vacant. Circuit City filed for bankruptcy protection in 2008 and liquidated in 2009. The land and the office building were separately owned, and thus required separate negotiations. Step one was buying the land from the bankrupt estate.

With that step completed, Pruitt is negotiating with the lender that owns the building, and that purchase could close within a few months, according to a person close to the deal. Pruitt is no stranger to big projects in Richmond. The company’s website lists office projects including West Creek Business Park in Goochland and GlenForest Office Park in Henrico.

In other Circuit City news, Bloomberg is reporting that the bankrupt entity’s unsecured creditors may get up to 30 percent on claims of what they are owed. Initially they were told not to expect more than 13.5 percent. Circuit City paid most of its secured claims, according to Bloomberg, by liquidating stores.

The final schedule will need to be approved at a Sept. 8 hearing.

Downtown Short Pump news partner Richmond BizSense could not learn the price by deadline, but that will be public once the deal closes.

“Initial plans call for operations and call center functions to occupy the new space sometime in the second half of 2011,” wrote Shelley Solheim, a spokeswoman for Capital One, in an email with BizSense. “It’s too early to quantify future demand,” she wrote, meaning it’s unclear how many employees might eventually work in the buildings. However, buildings of that size could handle upward of 1,500 workers.

The facilities were built in the late 1980s for Wheat First Securities, which was purchased by Wachovia Securities. They have been vacant since Wachovia Securities moved its headquarters to St. Louis after a merger with A.G. Edwards. First State Street Invest 3300 bought the 22-acre campus in 2005 for $18.8 million.

Once occupied, the deal will help bring down the vacancy rate at Innsbrook, which stood at 25 percent in the second quarter of 2010, the highest for any submarket in the Richmond region, according to a quartlery market report produced by Thalhimer. The Central Business District had a vacancy rate of 14.6 percent, according to the same report.

Capital One is the second largest employer in Richmond behind VCU. The company had about 6,800 full-time workers in 2010.

This will be Blue Ridge’s third store in Richmond – they have locations in Chesterfield Towne Center mall and also closer to Gaskins Road at 10164 West Broad Street – and also their biggest. Blue Ridge also has a store in Williamsburg and a flagship store in Charlottesville.

The other stores in Richmond are closer to 4,000 square feet, according to Nick Orrell, manager at the West Broad store.

Jeff Smith, the president of the company, did not return several calls seeking comment.

“The new store is going to have some higher-end outdoors merchandise,” Orrell said, “and the store we’re in now, the plan is to turn it into an online and outlet store. We will have a station where customers can order online.”

Brenda Martin, who is working on the project for the developer, the Breeden Company, said that Blue Ridge wants to open in October. Construction should begin shortly, she said.

She also said Breeden and Blue Ridge had been working on a deal off-and-on for more than a year and a half.

Blue Ridge might have felt a new sense of urgency when REI opened a 26,500-square-foot store in November. REI sells a lot of the same gear and apparel and also sells biking gear, which Blue Ridge does not.

Orrell said that the outlet store will get closeout merchandise from some of the premium brands, like Mountain Hardwear and North Face. The outlet concept will also sell discounted merchandise that’s not sold from some of the other locations.

Orrell said Blue Ridge sells to two main types of customers: avid outdoors enthusiasts and lifestyle consumers, who don’t necessarily need a down puffy coat by the top brand but like it nonetheless.

He said that he has not seen a big decline in business since REI opened. “Maybe the pot has gotten bigger, with more people aware of outdoorsy stores in Richmond,” he said.

“But we’re hoping people still shop local, and we’re hoping our customer base enjoys the time they spend inside our store.”

The new store will be part of an in-line retail development in front of the new Short Pump Hilton, according to renderings from the Breeden Co.