With work already underway on a first-phase 14-story tower, two prolific local developers are readying another nearby Manchester site for a similar project.

Fountainhead Real Estate Development and WVS Cos. this month paid about $3 million for nearly 4 acres at 3 Manchester Road, where they plan to build a seven-story mixed-use building, dubbed South Falls East.

Fountainhead’s Tom Papa confirmed the deal.

The group put the site, which consists of four contiguous parcels, under contract about a year ago. Combined, they most recently were assessed by the city for about $1.8 million.

They now control some of the most developable property along south Richmond’s riverfront, with plans to add additional density to one of the city’s fastest-growing neighborhoods.

“This is some of the most beautiful property in the city,” Papa said. “You’re not going to find sites like this anymore, so we have to be mindful of how we develop it … all while keeping in mind the highest and best use for the property, and at the moment, it’s dense residential and commercial development.”

Papa said the new development is an extension of its original South Falls project, which was announced nearly three years ago and is beginning to take shape on a 3.74-acre, quasi-island former paper mill site at 111 Hull St. west of the Mayo Bridge. It eventually will house a 14-story, 255-unit apartment tower and a six-story, 135,000-square-foot office building.

South Falls East will cost around $50 million to develop, and will include five stories with a total of 233 apartments that will sit above a two-story podium to be used as amenity space for future residents, along with commercial space.

Construction on the eastern site is scheduled to begin around the first quarter of 2020, Papa said. The other South Falls tower will be nearing completion across the street.

Richmond-based Walter Parks Architects is designing South Falls East, while KBS Inc. is the general contractor.

Opportunity Zone boost

Combined, Papa said the two South Falls phases represent up to $200 million in investment.

To help finance part of that amount for the eastern phase, the group is using the Opportunity Zone program as a funding mechanism.

Opportunity Zones enable real estate developers to pool together funds from investors as an alternative way to complement traditional financing.

There are about 212 Opportunity Zones in Virginia, according to the Virginia Department of Housing and Community Development.

While the program was created to help economically depressed areas, the Virginia zones chosen include several increasingly popular neighborhoods across Richmond such as Manchester, Church Hill, Scott’s Addition and Jackson Ward, as well as some that are beginning to grab the attention of developers such as Blackwell, Clopton and Maury.

Papa said they are securing unnamed investors through an Opportunity Zone fund for the project. He wouldn’t disclose how much the group was raising for the project.

The seller of the Manchester Road property was an estate tied to local produce wholesaler V.F. Lanesa Inc., which is based in Manchester at 317 Hull St.

Papa said the development group has the option to purchase Lanesa’s neighboring 13,100-square-foot office building and warehouse at 317 Hull St., along with a vacant 0.68-acre parcel the estate owns at 100 Hull St. But he emphasized there are no immediate plans to either purchase or develop them.

Apartment development is sizzling across metro Richmond, and nowhere is that more evident in the city than in Manchester.

The two South Falls projects will be joined by The Current, a planned $68 million, two-building office, retail and residential project on a 2-acre surface lot at 400 Hull St. that will include 215 apartments. That project, from Lynx Ventures, also is looking to utilize an Opportunity Zone fund.

Meanwhile, construction crews continue to plug away at the latest phase of City View Landing, a $25 million addition with 161 apartments and 13,300 square feet of ground-level commercial space.

The stretch of Hull Street between East Sixth and Brander streets alone will boast over 850 apartments either under construction or planned for the corridor.

“It a hotbed of development,” Papa said. “The more desirable the neighborhood becomes, the more investment will follow.”