THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, January 21, 1995 TAG: 9501210161
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 81 lines
Next time you get off Interstate 64 and head south on Battlefield Boulevard, look left. Three huge stores sit alongside each other: a Wal-Mart, a Home Quarters Warehouse Inc. and a Sam's Club.
It's the wave of the future. Retailers like these are building new outlets because they have to: Hampton Roads is running out of large blocks of retail space.
According to a recent market survey conducted by Old Dominion University's Real Estate Center in conjunction with local real estate firms, vacancies in retail real estate dropped to 9.9 percent in 1994. The survey covered 20 million square feet of total leasable space from 192 retail centers on both the Peninsula and the Southside.
The lack of space and new shopping centers has pushed occupancy levels up. As a result of the tightening market, average monthly rents have risen and incentives have decreased.
Proposed shopping centers like Cousins/New Market Development Co.'s Greenbrier Market in Chesapeake are evidence of the increasing activity. Four other strip shopping centers, some anchored by grocery stores, have been proposed on the Peninsula and the Southside, Carmichael said.
Vacancies have fallen consistently since 1992 when more than 14 percent of retail space was unoccupied. The 1993 Community and Neighborhood Shopping Center Survey conducted by Harvey Lindsay Commercial Real Estate showed that 13.5 percent of local strip center space was unoccupied in 1993.
``We're in a slow growth mode in this area,'' Carmichael said. ``We've seen a diminishing of space for the last few years.''
Chesapeake, Virginia Beach, Poquoson and Yorktown show significant leasing activity, according to the retail survey. Older, poorer cities like Portsmouth, Norfolk and Newport News showed the most vacancy.
Most leasing activity has centered on malls and strip centers. Tenants and developers are paying more money to be near these ``power centers,'' Carmichael said.
Another trend driving this sector of the real estate market has been retailers who pass up leasing small retail stores about 3,000 square feet in size, called ``local'' space. Instead, they're opting to build, Carmichael said.
For example, Lowe's built a new, bigger store on Chesapeake's Battlefield Boulevard down the street from home-improvement competitor HQ. HQ built itself a new, larger store in Virginia Beach's Princess Anne Plaza down the street from an older store.
Retailers build these warehouse-style centers to fit their expansion needs or gain a better location. It's also worthwhile for them to tear down older structures and to rebuild at the same location where traffic patterns and consumer centers are established.
Older centers that do not renovate are left in crisis when these retailers move out.
Some particularly active retail areas are the Greenbrier and Chesapeake Square mall areas in Chesapeake, the Lynnhaven mall area in Virginia Beach and the Peninsula's Patrick Henry mall and Kiln Creek area.
In addition to the retail sector, industrial real estate shows signs of improvement as well. Vacancies fell to 4.5 percent in 1994, down from 5.4 percent in 1993, said Robert M. Thornton, a vice president with Morton G. Thalhimer Inc. Realtors, who oversees the industrial sector for the ODU Real Estate Center Board. Industrial real estate consists of warehouse and distribution, manufacturing, and high-technology/research and development facilities.
Because inventory is so scarce, more companies are building to suit their specific industrial needs. That helps explain the increase in the number of commercial construction permits.
Office real estate brokers seem more optimistic. Office vacancy in Hampton Roads is at 14 percent, said Deborah K. Stearns, a senior vice president at Goodman Segar Hogan Hoffler. Vacancy in downtown Norfolk has declined to 21 percent, but the rest of the Southside is at 12 percent. Vacancy on the Peninsula is also 12 percent. ILLUSTRATION: Color map
Commercial vacancy rates in Hampton Roads
For complete information see microfilm
KEYWORDS: COMMERCIAL REAL ESTATE by CNB