Hampton Roads March 2023 – Key Take-Aways
Kelly Martone, Bellwether Enterprise Real Estate Capital
- The monetary policy path has been shaken up by the FED with the recent SVU fallout.
- The labor markets are still strong. CPI is moderating, but month over month is going in the right direction.
- PPI has increased year over year and so has retail.
- Historically if the two-year treasury is higher than the 10 year treasury in shorter term bonds, then a rescession is coming. As of recent, the two-year treasury was 5% and the 10 year was 4%.
- Banks did 60% of all commercial loans in the 4th quarter last year. “This is huge!” Life Insurance Companies only did 20%.
- A lot of banks are only lending to existing customers. Banks are hoarding deposits.
- Life insurance companies currently have plenty of capital.
- Traditionally, life insurance companies will get more aggressive towards the end of the year.
- Over the past couple of years, multi-family and industrial have been the hottest property types out there. Interest in retail is growing over the past year. Strong interest in self-storage as well.
- Little to no interest in office space other than medical and life science buildings.
- There is a lot of demand on refinance in comparison to acquisitions which have dried up.
Deborah Stearns, JLL
- Most tenants are doing a hybrid model between work from home and in office.
- Capital One vacated 115k square feet in Chesapeake, and then the school board bought the whole building.
- Amerigroup pulled out of the two buildings by CBN, Sentara purchased the building immediately.
- Sentara will be vacating blocks of space over the next 3 years.
- It is very much a landlord’s market at the moment.
- The hot new market is IOS (Industrial Outside Storage).
- 2 plus acres of land for this use is going for $5-$6k per acre per month.
- Utilized for trailer storage.
- One of the big issues on ground up constructions is lead time. Getting generators, steel, etc.
Joe Lowery, Cohen Investment Group
- Materials are still expensive and have long lead times.
- HVAC, PVC, Plumbing, all have gone up in price, while lumber is coming down.
- Bitcoin for the long term seems interesting. For those wise enough to understand it, it could turn out well.
- Precious metals (gold) has kept up with inflation since 1970.
- The price is controlled by too many other influences.
- Sand is more precious of a resource than water as drinkable water can be made, and sand cannot.
- Desalinization, water recycling, etc. can all create water.
- Sand cannot be made. Concrete, building materials, etc. require sand.
Dan Shelton, Whiting-Turner
- Construction is more expensive because of the changes caused by the pandemic.
- People want plush offices in comparison to basic cubicles.
- Comfortable costs more money.
- Materials have gone up, also making construction costs higher.
- The labor market is also causing costs to increase as quality employees cost more money.
- Lead times are a challenge. Electrical specifically is a challenge.
Greg Schmitt, Kimley-Horn
- Transportation of goods, pipe materials, concrete pipe all causing costs to go up.
- PVC goes up and down in price as well causing increased costs.
Hugh Cohen, Cohen Investment Group
- More issues to come with the current banking crisis.
- Potential for rates to drop in July.
- This could affect the debt ceiling conversation.
- Potential for some conversion opportunities of office to multi-family.
Mike Moore, London Norfolk
- It is getting more and more difficult to get insurance in the area.
- Flood
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