DOMINION BOULEVARD CORRIDOR STUDY | Chesapeake, Virginia
24 | Market Study
Market Study | 25
Retail
The market appears to have stabilized.
Vacancy rates continue to drop and as of
2014- Q1 were at 6.5%, and rents have
remained stable at approximately $13/
net net net (nnn) average rate. There was
limited construction during the downturn,
which, in turn, has allowed the market to
recover relatively quickly. Retail growth is
tied to household growth, so as the region
continues to gain households, retail will grow
as well.
Currently, the retail market, as defined by
a 10-mile radius around the Study Area,
is mostly in balance relative to demand,
and includes many active retail areas that
provide high amenity benefit for nearby
residents and employees. The area,
which includes a Walmart store, captures
Long-term, the growth in Professional and
Business Services and Health Services as
well as other office-oriented employment will
help bolster the office market.
The office market in the VA Beach MSA
has only recently begun to recover from
a dramatic contraction from 2008 through
2011. From 2006 to 2013, the average
annual office absorption was only half
the volume of office space delivered in
the MSA. Construction activity dipped to
150,000 square feet in 2012 (less than 10%
of the highest annual completion levels
before the downturn). Net absorption was
close to -500,000 square feet in 2011. The
market appears to be improving, showing
a promising uptick in both absorption,
completions, occupancy, and rent growth in
2013. See Figure 12.
Industrial
The Hampton Roads region is unique in that
it has almost double the amount of industrial
space (96M SF) than office space (48M SF).
The industrial market is performing relatively
significant spending from outside residents
for general merchandise, electronics,
and apparel products. Although there are
multiple grocery stores in the north and east
half of the retail area, there exists an under
supply of food and beverage, health and
personal care retail. It is estimated that $22
million in annual sales of food and beverage
are spent outside of the area due to a lack
of large-scale grocery stores in the southern
side of Dominion Boulevard.
Office
The office market is still in recovery, but
2014 is expected to be better than 2013,
suggesting the office market will soon be
in recovery as well. Vacancy rates as of
2014-Q1 were 11.5%, and average rents
at $16.44/square foot (SF), below the
peak of $18.41/SF. Office growth is tied
to employment growth, and 2013 was
challenged by sequestration which impacted
defense and government contracting
companies in the region.
Exhibit II-7
PERCENT NEW HOME SALES BY YEAR
HAMPTON ROADS AREA
2000-2013
Year
% New
2000
30.0%
2001
35.0%
2002
31.0%
2003
29.0%
2004
34.0%
2005
32.0%
2006
30.0%
2007
26.0%
2008
22.8%
2009
17.8%
2010
16.9%
2011
15.6%
2012
16.7%
2013
15.3%
% NEW HOME SALES
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
15,000
20,000
25,000
30,000
35,000
SOURCE: Residential DataBank (2000-2011), Old Dominion University (2012-2013)
0.0%
5.0%
10.0%
0
5,000
10,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Resales
New Sales
% New
Exhibit II-7
E4-11982.40
Printed: 3/27/2014
Figure 10: New and Resale Homes by Year,
Hampton Roads Areal 2 0-2013
Source: Residential DataBank (2000-2011),
Old Dominion University (2012-2013)
Figure 11: Apartment
Submarket Absorption
Capture, Chesapeake
and Norfolk/Hampton
Roads Region; 2000-
2013 Source: Reis
well with only 8% vacancy rates and rental
rates close to $5/nnn SF. The challenge
for future industrial is that the types of
jobs that lead to industrial development
(Manufacturing, Trade) are expected to
decrease. Manufacturing is expected to
increase after the large losses from 2001-
2010, but Trade, Transportation, and Utilities
is expected to decrease for the foreseeable
future. Opportunities in industrial are tied
to the obsolescence of old buildings, and
finding niche opportunities.
At the MSA level, the industrial market had
a challenging 2013 after a brief recovery
from the recession. Average industrial rents
and occupancy appeared to bottom in 2010,
at $4.50 and 90%. The market delivered a
total of over a million square feet of industrial
space over the two years, allowing rent and
vacancy to recover to nearly 2007/2008
levels. Vacancy has continued to drop from
the high in 2009. In 2013, however, the MSA
experienced net negative absorption. Rents
have slipped slightly from $4.90 in 2010
down to $4.60 in 2013.
Exhibit III-5
CHESAPEAKE SUBMARKET CAPTURE OF NORFOK-HAMPTON ROADS APARTMENT ABSORPTION
CHESAPEAKE AND NORFOLK-HAMPTON ROADS REGION
2000-2018
-10%
0%
10%
20%
30%
40%
500
1,000
1,500
2,000
PROJECTED
2000-2013 AVG. CAPTURE:
9%
SOURCE: REIS
-40%
-30%
-20%
-500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Metro Absorption
Chesapeake Absorption
% Capture of Region
Exhibit III-5
E4-11982.40
Printed: 3/27/2014
CITY OF CHESAPEAKE
