ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, January 5, 1997 TAG: 9701070014
SECTION: BUSINESS PAGE: 7 EDITION: METRO
TYPE: ECONOMIC FORECAST
SOURCE: MAG POFF STAFF WRITER
Vacant office space in downtown Roanoke is the only soft spot in the valley's commercial real estate market, according to Edwin C. Hall of Hall Associates Inc.
Hall said 1996 was a good year in commercial real estate. He is looking for this year to be "as good or better" when it comes to leasing office, retail and industrial property.
"The biggest drawback is there's not as much inventory as I'd like, especially in the suburbs," Hall said. This means some businesses may have to look a long time to find suitable space to lease in northern and southern Roanoke County.
The situation is different in downtown Roanoke, although Hall described the market there as "holding steady," but not declining. An exception to the downtown doldrums is the City Market area, where retail space is at a premium.
Hall cited the vacant building on Jefferson Street formerly occupied by the Heironimus department store chain as an example of the large amount of unleased downtown space outside of the market district.
But if activity holds at current levels, he said, 1997 "will be another good year" in commercial real estate.
Millie Moore, retail specialist with Boone & Co., said retail activity is "outstanding" and promises to improve this year. She said growth will take place in the Valley View area. The U.S. 460 corridor will lag behind because of a lack of utilities.
She said a drugstore war is developing just like the supermarket wars of last year. With the arrival of Rite Aid, Moore said, Revco will expand into free-standing stores like the one that recently opened on Brambleton Avenue.
Several large national chains have signed contracts, or are about to sign them, for opening stores in the Valley View area this year. Moore credited this to private developers, who are creating leasing packages .
Home sales in the Roanoke Valley in 1996 lagged slightly behind 1995's, but business was up at Boone & Co.
Tim Garrison, manager of Boone's residential division, estimated home sales at his company increased 8 percent to 10 percent last year compared with 1995's.
Garrison attributed the good market for residential property to low mortgage rates.
When rates jumped above 8 percent in October and November last year, Garrison said, home sales dipped. The market recovered when rates dropped below 8 percent again.
The forecast calls for rates to remain low because inflation appears to be under control, Garrison said. If that happens, he said, the first six months of this year promise to be very good.
His company forecasts only six months at a time. But Garrison is "conservatively optimistic" about the second half of this year.
Real estate agents also have received a boost from the pending opening of many businesses in the valley, especially in Botetourt County, he said.
Right now, he said, Dynax Corp. is transferring executives here, and they are looking for homes in the Roanoke Valley as the company builds its new plant. The same is true of other new companies who have taken space at East Park in Botetourt.
These new industries are "a real positive thing" for the real estate market even though no single industry involves large numbers of people. Industrial development efforts, he said, "are coming to fruition."
Another positive development that will bring people to Roanoke is the plan to open a credit card center by First Citizens Bank, Garrison said. That will add 45 jobs.
Garrison said the Roanoke Valley has "a Muzak economy." Just as the background music service flattens out the high and low notes into a harmonious pitch, he said, Roanoke's economy is "the steady kind."
R. Lee Mastin of MKB Realtors Inc. said most forecasts that he has seen predict a good year for residential sales in 1997. Like Garrison, he attributed the good market to low mortgage interest rates.
He expects all of 1997 to be good, but the results in the second half depend on rates remaining low all year.
"But who knows?" Mastin said, noting that it could depend on something as simple as an after-dinner speech.
When Alan Greenspan, chairman of the Federal Reserve Board, last month addressed a Washington banquet decrying speculation on the stock market, Mastin said, the markets tumbled and mortgage interest jumped higher the next morning. Sales in the Roanoke Valley fell off because of the higher rates, Mastin said.
LENGTH: Medium: 85 linesby CNB