You are on page 1of 3

MARKETBEAT

HAMPTON ROADS, VA

INDUSTRIAL SNAPSHOT
A Cushman & Wakefield Research Publication

Q3 2013
at any level. Market rates may erode further given the lack of net absorption and deal velocity. These events may prove positive for tenants looking in the market to improve current facility deficiencies and for value add or opportunistic buyers as buildings come to the market at significantly less than replacement cost. STATS ON THE GO
Q3 2012 Overall Vacancy Direct Asking Rents (psf/yr) YTD Leasing Activity (sf) 7.2% $5.35 2,025,075 Q3 2013 8.1% $5.03 2,134,279 Y-O-Y CHANGE 0.9pp -6.0% 5.4% 12 MONTH FORECAST

ECONOMIC OVERVIEW
The unemployment rate in Hampton Roads continues to trend in a downward direction. As of July, the unemployment rate sat at 6.2%, 70 basis points lower than last years rate of 6.9% and 1.5 percentage points lower than the national rate of 7.7%. Specific to employment, the following thoughts are from Dr. James V. Koch, State of the Region, Hampton Roads 2013: There are encouraging signs that the terms of international trade are moving in the favor of the United States. American workers continue to become more productive; U.S. firms are benefiting from the lower costs of important inputs such as natural gas; the cost advantages of competitors such as China are being eroded by rapidly rising wages there and increasing transportation costs; and the value of the dollar has declined over time, making U.S. goods less expensive in the eyes of foreign consumers. These developments, however, are gradual in nature and competition in tradable goods continues to make some U.S. firms reluctant to hire new workers, especially when uncertainties exist about the cost of these employees because of health care and other factors.

OVERALL RENTAL VS. VACANCY RATES


$7.00 $6.50 psf/yr $6.00 $5.50 $5.00 $4.50 $4.00 2009 2010 2011 2012 Q3 13 8.5% 8.0% 7.5% 7.0% 6.5%

ABSORPTION
Current year-to-date leasing activity continues to have a slight lead of 5.4% over last years numbers with approximately 2.1 million square feet (msf) leased. While leasing activity is up, direct net absorption is negative, at 38,793 square feet (sf). Seven of the twenty submarkets have lost ground this year, with Oakland Industrial Park (Peninsula) and West Norfolk (Southside) accounting for a combined negative 345,739 sf of absorption, offsetting gains in thirteen submarkets. Leasing activity year-to-date is consistent with 2012 numbers and it is expected that Hampton Roads will close out the year close to 2.5 msf leased. Overall absorption looks to trail 2012, more in keeping with the historical average.

OVERALL NET RENTAL RATE

OVERALL VACANCY RATE

LEASING ACTIVITY VS. OVERALL NET ABSORPTION


5.0 4.0 3.0 msf 2.0 2.7 2.5 0.2 4.2 2.5 0.8 2.1 2013 YTD -0.1 2012 1.0 0.0 -0.4 -1.0 2009 2010 2011 -0.2 OVERALL NET ABSORPTION

OUTLOOK
While the economy continues to show a tepid and fragile recovery, industrial activity will be hampered locally by both sequestration and the current government shutdown. Uncertainty with the Affordable Care Act will also produce caution among industrial occupiers, particularly among manufacturers involved with government contracts

LEASING ACTIVITY

Thalhimer The Town Center of VA Beach 222 Central Park Avenue, Suite 1820 Virginia Beach, VA 23462 www.thalhimer.com

For more information, contact: Oscar Gomez Financial Analyst 804 697 3498 oscar.gomez@thalhimer.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.

HAMPTON ROADS, VA
SUBMARKET INVENTORY OVERALL VACANCY RATE 8.1% 12.9% 4.5% 10.2% 6.3% 5.4% 7.1% 7.2% 4.1% 11.7% 7.6% 15.2% 81.4% 10.8% 0.4% 16.4% 3.5% 7.2% 6.3% 6.2% 12.2% 8.5% 8.1% YTD LEASING ACTIVITY UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS 0 0 0 13,500 0 0 13,500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13,500 13,500 YTD DIRECT NET ABSORPTION 335,033 0 0 (232,218) 26,674 81,855 211,344 34,472 86,454 (98,513) (83,320) 26,461 0 22,714 8,250 (99,498) (25,193) 0 (16,880) 8,437 (113,521) (250,137) (38,793) YTD OVERALL NET ABSORPTION HT $6.50 $0.00 $0.00 $0.00 $0.00 $0.00 $6.50 $0.00 $0.00 $0.00 $9.95 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $9.95 $6.96 MF $4.69 $0.00 $0.00 $5.07 $8.00 $4.00 $4.78 $3.50 $0.00 $4.25 $0.00 $3.00 $0.00 $0.00 $0.00 $4.47 $3.50 $0.00 $4.03 $4.07 $2.93 $4.08 $4.29 DIRECT WEIGHTED AVERAGE NET RENTAL RATE OS W/D $3.27 $4.93 $0.00 $0.00 $10.39 $9.10 $6.00 $6.96 $6.90 $7.74 $10.48 $6.72 $11.86 $0.00 $6.90 $0.00 $9.44 $5.80 $0.00 $5.82 $6.79 $6.89 $7.32 $7.27 $0.00 $0.00 $6.73 $6.38 $4.61 $5.17 $4.85 $6.45 $5.14 $4.39 $5.06 $2.00 $6.39 $8.00 $4.73 $5.20 $0.00 $5.85 $3.64 $6.08 $4.72 $4.80

Copeland Gloucester Mathews County Oakland Oyster Point Williamsburg Extended PENISULA Airport Industrial Park Bainbridge Cavalier Central Norfolk Cleveland Franklin City Greenbrier Isle of Wight Lynnhaven Norfolk Industrial Park North Suffolk Portsmouth South Suffolk West Norfolk SOUTHSIDE TOTALS

12,777,358 289,628 48,194 4,942,754 4,926,966 8,470,272 31,455,172 3,452,073 10,230,494 6,241,825 6,093,435 3,766,094 378,840 2,693,366 3,663,213 9,818,780 8,917,988 2,202,255 5,638,711 10,515,066 3,027,359 76,639,499 108,094,671

637,773 0 0 76,409 80,129 55,802 850,113 99,070 176,838 137,439 130,590 84,129 0 80,306 26,222 184,908 160,245 0 100,156 71,683 32,580 1,284,166 2,134,279

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 80,000 0 0 15,479 0 0 95,479 95,479

499,300 0 0 (208,218) 21,438 81,855 394,375 34,472 86,454 (132,113) (80,186) 26,461 (138,800) 4,198 8,250 (99,498) (25,193) (73,500) (10,380) 8,437 (104,547) (495,945) (101,570)

* RENTAL RATES REFLECT ASKING $PSF/YEAR

HT= HIGH TECH

MF = MANUFACTURING OS = OFFICE SERVICE W/D = WAREHOUSE/DISTRIBUTION

Thalhimer The Town Center of VA Beach 222 Central Park Avenue, Suite 1820 Virginia Beach, VA 23462 www.thalhimer.com

For more information, contact: Oscar Gomez Financial Analyst 804 697 3498 oscar.gomez@thalhimer.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.

MARKET HIGHLIGHTS
SIGNIFICANT Q3 2013 LEASE TRANSACTIONS 1112 Cavalier Boulevard 1119 Cavalier Boulevard 1709 Endeavor Drive 5200 City Line Road SIGNIFICANT Q3 2013 SALE TRANSACTIONS 131 Hanbury Road 323 Alexander Parkway SIGNIFICANT Q3 2013 CONSTRUCTION COMPLETIONS 3432 Airline Boulevard SIGNIFICANT PROJECTS UNDER CONSTRUCTION 1505 Taylor Farm Road SUBMARKET Chesapeake Chesapeake Williamsburg Hampton SUBMARKET Chesapeake Williamsburg SUBMARKET Portsmouth SUBMARKET Lynnhaven TENANT Kempsville Building Materials DESMI Inc. FDCP, Inc. Schmidt Baking Company BUYER Hanbury Road Partners LLC Enterprise Holdings MAJOR TENANT R.E. Michel MAJOR TENANT Speculative PROPERTY TYPE Warehouse Warehouse Distribution Warehouse PURCHASE PRICE / $PSF $2,300,000/ $104 $1,100,000/ $86 COMPLETION DATE Q3 2013 COMPLETION DATE Q4 2013 SQUARE FEET 40,000 37,000 18,760 17,000 SQUARE FEET 22,098 12,800 BUILDING SQUARE FEET 15,479 BUILDING SQUARE FEET 22,000

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS

Thalhimer The Town Center of VA Beach 222 Central Park Avenue, Suite 1820 Virginia Beach, VA 23462 www.thalhimer.com

For more information, contact: Oscar Gomez Financial Analyst 804 697 3498 oscar.gomez@thalhimer.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.

You might also like