ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 7, 1996 TAG: 9601110138
SECTION: BUSINESS PAGE: D5 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
The real estate industry is banking on low interest rates to spur activity throughout the new year.
``1996 will be a good year," said Walter White of Owens & Co., new president of the Roanoke Valley Association of Realtors. He based his prediction on the expectation that the Federal Reserve Board will keep pushing rates down.
"That will spur people to continue to buy homes," White said. "I'm pretty optimistic."
Home sales were good in 1995, according to White. He said the number of homes sold ran close to 1994, but the dollar amount of the sales exceeded the prior year.
Although the market responds primarily to low mortgage rates, White said, "people seem to have a little more confidence in the economy" and are more willing to invest in new homes.
Doug Sawyer of Sawyer Properties Inc. also forecast a good year. He is president-elect of the realty association.
Interest rates are definitely coming down, Sawyer said, although he doesn't know how far they will fall. But any break in the cost of mortgages prods activity in commercial and residential real estate.
He also expects Congress to pass legislation this year that would lower the capital-gains tax from 28 percent to perhaps 19 percent. Such an event, Sawyer said, "would be a great boon for investment property."
In Roanoke, he said, "we don't grow very fast." Instead of people moving in and creating a demand, Sawyer said, the local market seems to churn with businesses moving from one location in the valley to another.
An example was the shifting of office tenants in downtown Roanoke a few years ago when First Union Tower opened. Sawyer said businesses simply started changing locations as the new building filled.
On the other side of the coin, he said, "you don't have withdrawal" from overbuilding like the "gut-wrenching" decline in values in commercial property in the Washington, D.C., area a few years ago.
Edwin C. Hall of Hall Associates Inc. predicted "a really exciting first quarter," but "after that, it's hard to say." If something unexpected should happen, "this business could head south fast," he said, noting that slower-than-expected retail sales in December could be the forerunner of a slowing economy by the end of the year.
He expects demand to boost the leasing of retail space. Right now, there is no surplus of such space on the market, Hall said.
In office space leasing, he said, "the suburbs are making an excellent comeback. There's a lot of interest in the suburban market." Downtown Roanoke, however, is not equalling that performance. There is, Hall said, "a lot of work to do downtown" on filling office space.
Mike Waldvogel of Waldvogel, Poe & Cronk Real Estate Group Inc. said he doesn't expect to see much construction of office space this year, but he predicted good absorption of existing buildings.
For warehouse and industrial space, the demand exceeds the supply in the Roanoke Valley, Hall said.
The valley has a shortage of small industrial space, Waldvogel said, and space in the 5,000- to 10,000-square-foot range is hard to find. With interest rates low, he said, some new developments may occur in that category.
Although recruiting of new industries gets wide publicity, more space is being occupied through expansion of existing businesses, he said. Roanoke has had some economic development success, he said, and local industries' increasing in size and space is an important factor.
Waldvogel said he is pretty positive about the prospects for this year. Interest rates "are at a reasonable level or lower," he said, and a lot of buying and leasing is occurring now.
LENGTH: Medium: 71 lines ILLUSTRATION: GRAPHIC: graph - 1995 Roanoke Valley Home Sales color STAFFby CNB