THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, January 18, 1996 TAG: 9601180452
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Medium: 54 lines
Hampton Roads' office real estate market, which brightened in 1995 as the specter of military downsizing faded, is expected to continue making strides this year, according to a national study released Wednesday.
The region's office vacancies fell for the third consecutive year to 11.2 percent in 1995, slightly better than the nation's rate of 11.9 percent, according to the real estate report. In 1994, office vacancies in Hampton Roads were 14.2 percent.
``It has been an excellent year for the office market,'' said Deborah K. Stearns, a senior vice president at Norfolk-based Goodman Segar Hogan Hoffler, which participated in the study. ``We will continue to see tightening in the market.''
Overbuilding in the '80s caused a glut in local office space that peaked during the recession of 1990-91, leaving some office parks looking like ghost towns. During the next few years the economy perked up, increasing demand for office space. Office rents have risen as companies gobble up available space.
Leasing agents who once lamented the glut in office space are now running out of space and are hoping for new construction, Stearns said.
The location of several new companies in the region - Panasonic, Avis, Trans World Airlines and others - should provide further gains in office space demand for 1996, according to the report by The Society of Industrial and Office Realtors and Landauer Real Estate Counselors. The study also predicts more newcomers, particularly those in the high-tech and service sectors.
Space in suburban markets is still going faster than office space in downtown areas, and top-quality offices are more popular than cheap ones.
While local real estate officials say industrial markets have improved in Hampton Roads, the total figures don't yet reflect that improvement due to reporting changes in 1995. Next year's survey should provide a better comparison.
The area's industrial vacancy rate was 10.8 percent in 1995, up from 4.6 percent a year earlier. Using last year's standards, the 1995 vacancy rate would be closer to 3 percent to 4 percent, thanks to newcomers like F.A.G. Bearings in Suffolk and expansions by other companies, said R.L. ``Abe'' Ellis, a real estate broker with Virginia Commercial Real Estate Services, which also contributed to the report.
For the first time in many years, local real estate officials are beginning to see signs of a resurgence in speculative building - industrial and office space built without tenants in place.
``I think there will be a lot more discipline and that it will be underwritten considerably,'' said William E. King, a vice president at Harvey Lindsay Commercial Real Estate in Norfolk and one of the report's contributors. ``I don't think anybody's looking for an '80s-type boom.'' by CNB