THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Friday, February 7, 1997 TAG: 9702070517
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MEREDITH COHN, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: 71 lines
In the past few years, companies like Panasonic, QVC and Household Credit Services have built offices in Chesapeake, signaling what public and private observers say is a development trend: Leasing existing space is out, building-to-suit is in.
The city has several commercial office parks and buildings and, as in other suburban cities, most of them were built in the 1980s and after a slow period now are filled. A steady stream of companies looking for large office suites are still flowing into the city, but they are breaking ground.
``It has been a gradual process over the last 12 to 18 months,'' said Donald Crigger, director of office leasing for Goodman Segar Hogan Hoffler, LP, a Norfolk-based management company. ``It signals the market is adding incremental supply to incremental demand. It's a healthy sign.''
There are some offices available for lease in Chesapeake - about 5 to 8 percent of existing space, according to city real estate records. That's considered low, Crigger said.
Much of the space available in the Greenbrier area - now the city's hottest commercial spot - is in the city's largest office buildings, Greenbrier Tower I and II, twin six-story buildings that together comprise about 160,000 square feet of space. There is also some space in Greenbrier Point, a five-story building next to Greenbrier Mall, but neither has the contiguous 50,000-square-foot space required by many larger companies.
Virginia Beach and Norfolk also have low vacancy rates but have been ``in the mix'' for companies seeking new locations longer than Chesapeake, more of a residential town until about a decade ago.
Office vacancy rates have fallen in Hampton Roads for four consecutive years, according to the Society of Industrial and Office Realtors/Landauer survey. The overall rate was 9.2 percent in 1996, down from 11.2 percent the year before.
Now that the space is limited, and rental prices are rising, luring businesses to Chesapeake has gotten tougher, said Donald Z. Goldberg, economic development director for the city.
``We push what we have,'' he said. ``Every business likes to have a building in hand when they move, but builders need to have businesses in hand to build, so it's a bit of a Catch-22. We have to encourage them to speculate.''
Unlike the 1980s, builders cannot gain construction financing unless a portion - sometimes 100 percent - of the facility is rented in advance. Real estate watchers knew of only one new office project in the region that was 100 percent speculative, a building in Virginia Beach near Mount Trashmore Park.
Robert M. Pollard, an appraisal supervisor in the city's real estate assessor's office, said Chesapeake is still able to draw business because of its location along Interstate 64, rents that are competitive with those in downtown Norfolk and available space, work force, water and sewer.
Chesapeake has seen an upturn in leasing space and developing land over the past five years, Pollard said. In that time, the vacancy rate has dropped below 10 percent, from 14 percent.
``There's plenty more to develop,'' he said.
``If you come now, there are no 50,000-square-foot spaces available, but there are sizable vacant areas in Greenbrier. There really is no building pressure yet in Western Branch and Hickory,'' in the southern and western parts of the city, he said.
Bill Turner, property manager for Household Credit Services, one of the first to build an office in Chesapeake in 1989, said the company chose the Greenbrier area after a search of the eastern United States. Company officials were looking for a building with more than 100,000 square feet and extra parking space for their customer service facility.
``Buildings like those are not readily available, especially with the parking space, so we built to suit,'' he said. ``Chesapeake had the quality of life, educated work force and pro-business attitude we were looking for. . .
KEYWORDS: OFFICE SPACE VACANCY