THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 22, 1996 TAG: 9601200181
SECTION: BUSINESS WEEKLY PAGE: 14 EDITION: FINAL
SERIES: Forecast 1996
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Medium: 66 lines
The rebound in local commercial construction should continue in 1996, thanks in part to an explosion in retail expansion, but the forecast for home building is hazy, economists said.
After a long lull, commercial construction picked up in the last half of 1995 in Hampton Roads as big-box retailers like discounter Super Kmart and grocer Hannaford Brothers Co. moved into the market and began to build dozens of new stores. Workers also broke ground on several new shopping centers in the area.
While office building is still lagging, vacancy rates have fallen in Hampton Roads as the economy recovered from the recession of 1990-91.
Local real estate officials say office construction will pick up if the region's office vacancy rate continues to fall.
In the first 11 months of 1995, the number of nonresidential building permits in Hampton Roads rose 5 percent to 30,637, according to the Builders & Contractors Exchange Co. of Norfolk. The permits' value jumped 35 percent to $508 million from January to November compared to the same period last year.
The Hampton Roads figures include the cities of Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, Suffolk and Virginia Beach.
While commercial building is booming, the immediate future for home building isn't as clear.
For the first 11 months of 1995, residential permits fell 12 percent to 4,820 from 5,458 in the same period in 1994. Their value decreased about 10 percent to $443 million.
The biggest declines in residential construction were in Chesapeake and Newport News - both of which had 31 percent decreases from January to November 1995. Newport News' permits fell from 772 to 532, while Chesapeake's home-building permits dropped from 1,896 to 1,309 in the 11-month period.
The sheer number of permits in Chesapeake, combined with the city's drastic drop, were enough to throw off the entire region's performance. Even home-building jumps in Suffolk, Portsmouth and Virginia Beach weren't enough to compensate.
Nationwide, the home-building industry slammed on the brakes in 1995. But some building officials thought things could only get better this year.
``Building should see some slight improvement in 1996, if interest rates remain in the current 7.5 percent range and the overall economy shows some growth,'' said Jim Irvine, president of the National Association of Home Builders.
Roy Pearson, director of the Bureau of Business Research at the College of William and Mary, sees a small rebound in residential construction for Hampton Roads. ``I'm more optimistic about the housing industry,'' he said.
John W. Whaley, director of economic services at the Hampton Roads Planning District Commission, isn't so sure. While he anticipates interest rates declining, he's ``not sure consumers will be in the position to take advantage of the favorable interest rates.''
``I don't see it getting much better or much worse,'' Whaley said. ``I think it will be pretty much the same picture.'' ILLUSTRATION: File photo
No major project like Norfolk's World Trade Center is anticipated in
Hampton Roads this year.
KEYWORDS: HOME CONSTRUCTION COMMERCIAL CONSTRUCTION by CNB