Hampton Roads July 2023 – Key Take-Aways
JOHN SOSCIA – John Soscia & Company
• The Industrial Market.
o The industrial market is all buyer. One of the main reasons for that is the port. It is one of the, if not the most modern port in the US.
o The port is undergoing a widening of the Thimble Shoals Channel as well as dredging it to be deeper.
Currently the channel only allows for one way traffic.
Once the widening and dredging is done it will support two way traffic which will dramatically increase business.
o The port is only going to continue to grow and get better which supports big box and industrial in the area.
o There is a shortage of product to lease. Awaiting product to be built.
Three or four years ago a 200k square foot building would lease for $4.50-$5.00 a square foot. Now it goes for $9-$10.
• The Office Market.
o The office market is still the unknown. However I believe as leases expire, people are going to downsize.
o Suburban office space is strong.
o There isn’t many buyers for big buildings. There isn’t much growth in the industry.
o Flexible office space and flexible working conditions is the future.
o Shared space is also in the future.
o There is a current 8.4% vacancy rate in the area.
o Mix-use for office buildings is also a possibility in the office market.
• The Retail Market.
o The retail market is more dynamic.
o Grocery anchored retail centers are strong and will remain strong.
Even post COVID people still will go buy groceries.
o Shopping centers are unknown. MacArthur is unknown and Military Circle is gone.
• The Residential Market.
o There is no product. Sellers are receiving full price offers in two days. Four or five years ago there was a 6 months’ supply of homes on the market. There is a 1.5 month supply now.
o Average marketing time for a home is 12 days.
o The properties that are staying on the market are the ones that are overpriced or have issues.
o There are no real signs of this changing any time soon.
o Multifamily is strong.
Vacancy rates are going up. 6% vacancy rate.
Rent rates are slightly going up
There is a lot of product in the pipeline.
• Vacancy rates are going to go up and rent rates are going to go down.
As soon as apartments are built, they are leased up.
GREG SCHMITT – Kimley Horn
• Not seeing as much new client work.
• Burning through some backlog from the last year.
• Municipalities are also burning through infrastructure money, so those projects are coming up.
• Seeing a lot of development moving out into the Isle of White County area.
• Vacancy rates are not a problem we can fix in six months, it’s a problem we can fix in three years and hopefully the market stays the same in three years.
DAN SHELTON – Whiting-Turner
• Supply chain issues for materials still exist. 75-90 WEEKS out on switchboards over 1200 amps.
• Labor is still a challenge which is raising construction costs.
o The Tunnel project is also pulling a lot of labor as the rates are hard to compete with.
KEITH SLATTUM – Dollar Bank
• In multifamily properties, units are running at 95% occupancy with 3% rent bumps.
• In the last three years this market has gone up 25% in rent.
• Rents are raising but expenses are not, can’t see it getting better than this, although many are expecting the rent bumps to continue.
• A lot of banks are currently borrowing in order to lend, they are not lending their own deposits.
CHRIS AMBROSIO – Wood Rogers Vandeveter Black
• Interest rates increases, uncertainty, inflation, and uncertainty on recession has slowed deal flow.
• The corporate transparency act is a big deal..
o There is no longer any anonymity if you form an LLC or Corporation.
o VA used to be very friendly to business owners in this regard, you can’t see from public records what individuals own a LLC or even who manages them. This will now change.
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