Key Findings – Market
• While completing a long-term forecast for an area over a 20+ year
horizon, the current state of the market is not as critical as with a
development project that is slated to start and be finished within a
five-year timeframe. However, understanding the current market
provides us with the opportunity to understand where the study
o
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 2014Q1
were 11.5%, and average rents at $16.44/fs, below the peak of
$18.41/fs. Office growth is tied to employment growth, and
area fits into the region, as well as provide an understanding of
short-term opportunities.
o
For-sale residential: The for-sale residential market is slowly
recovering from the Great Recession. Home prices are up and
inventory is down. The Hampton Roads region still has a large
2013 was challenged by sequestration which impacted defense
and government contracting companies in the region.
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.
number of foreclosures to work through the system.
However,
all indicators point to a continued recovery, and long-term
health in the for-sale market.
For-sale housing also
represents a
strong short-term opportunity in the study
area
.
o
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 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
o
For-rent residential: The for-rent residential market is currently
very strong. Vacancies are low and rents are increasing. There
has been a lot of new development recently in the rental market
in the region, so the opportunity for additional short-term rental
many not be as strong as it was a few years ago.
However,
long-term, the apartment market should remain strong
.
(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 is tied to the obsolescence of old buildings,
and finding niche opportunities.
The rental market includes both multifamily rentals as well as
single-family rentals.
o
Retail: The market appears to have stabilized. Vacancy rates
continue to drop and as of 2014Q1 were at 6.5%, and rents
have remained stable at approximately $13/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.
Dominion Boulevard | City of Chesapeake | April 11, 2014 | E4-11982.40
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