Market Study | 25
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
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
ITY OF CHESAPEAKE
