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Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and ForecastMarket Review and Forecast
20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
Executive CommitteeExecutive Committee
Chair:Chair: Joyce HartmanJoyce HartmanExecutive Director:Executive Director: John LombardJohn LombardVice Chair:Vice Chair: Tom DillonTom DillonPrograms Chair:Programs Chair: Stephanie SankerStephanie SankerPublications Chair:Publications Chair: Brian DundonBrian DundonMembership Chair:Membership Chair: Craig CopeCraig CopeCurriculum CoCurriculum Co--Chairs:Chairs: John Crunkleton and Brad SanfordJohn Crunkleton and Brad SanfordSponsorship Chair:Sponsorship Chair: Cliff MooreCliff MooreByBy--Laws Chair:Laws Chair: Andrew KeeneyAndrew KeeneyPast Chair:Past Chair: William E. KingWilliam E. KingAt Large:At Large: Jonathan Guion and Aubrey LayneJonathan Guion and Aubrey Layne
Sponsorship CommitteeSponsorship Committee
Cliff Moore, W.M. JordanCliff Moore, W.M. JordanBrad Sanford, Dominion Realty AdvisorsBrad Sanford, Dominion Realty AdvisorsLarry Colorito, Axial Advisory GroupLarry Colorito, Axial Advisory Group
Program CommitteeProgram Committee
Stephanie Sanker, GVA AdvantisStephanie Sanker, GVA AdvantisJoyce Hartman, Sperry Van NessJoyce Hartman, Sperry Van Ness
Peggy Koch, GVA AdvantisPeggy Koch, GVA AdvantisEva Wiggins, NAI Harvey LindsayEva Wiggins, NAI Harvey Lindsay
Publication Editing CommitteePublication Editing Committee
Brian Dundon, Brian J. Dundon & Assoc. Brian Dundon, Brian J. Dundon & Assoc. Sandi Sandi PrestridgePrestridge, City of Norfolk, City of Norfolk
Maureen Rooks, DivarisMaureen Rooks, DivarisJoy Learn, SunTrustJoy Learn, SunTrust
Lane Lane SheaShea, Harbor Group, Harbor GroupJoyce Hartman, Sperry Van NessJoyce Hartman, Sperry Van Ness
Bradley Sanford, Dominion Realty AdvisorsBradley Sanford, Dominion Realty AdvisorsBeth Hancock, City of ChesapeakeBeth Hancock, City of Chesapeake
John Lombard, ODUJohn Lombard, ODU
Our Proud SponsorsOur Proud SponsorsATLANTIC MORTGAGE AND INVESTMENT COMPANYATLANTIC MORTGAGE AND INVESTMENT COMPANY
AXIAL ADVISORY GROUP, LLCAXIAL ADVISORY GROUP, LLCBANK OF AMERICA REAL ESTATE BANKING GROUPBANK OF AMERICA REAL ESTATE BANKING GROUP
BB&TBB&TBBL DEVELOPMENT.BBL DEVELOPMENT.
CAVALIER LAND, INC.CAVALIER LAND, INC.CR RICHARD ELLISCR RICHARD ELLIS
CHESAPEAKE DEPARTMENT OF ECONOMIC DEVELOPMENT CHESAPEAKE DEPARTMENT OF ECONOMIC DEVELOPMENT CLANCY & THEYS CONSTRUCTION COMPANYCLANCY & THEYS CONSTRUCTION COMPANY
CLARK NEXSENCLARK NEXSENCMSS ARCHITECTSCMSS ARCHITECTS
COLLINS ENTERPRISESCOLLINS ENTERPRISESCONTINENTAL REALTY SERVICES, INC.CONTINENTAL REALTY SERVICES, INC.
COSTAR GROUPCOSTAR GROUPCREWCREW
DAVENTPORT GROUP / LEFCOE DEVELOPMENTDAVENTPORT GROUP / LEFCOE DEVELOPMENTDOMINION REALTY ADVISORS, INC.DOMINION REALTY ADVISORS, INC.
DRUKER & FALK, LLC.DRUKER & FALK, LLC.GREAT ATLANTIC MANAGEMENT COMPANYGREAT ATLANTIC MANAGEMENT COMPANY
GVA / ADVANTISGVA / ADVANTISHAMPTON DEPARTMENT OF ECONOMIC DEVELOPMENT HAMPTON DEPARTMENT OF ECONOMIC DEVELOPMENT
HARBOR GROUP INTERNATIONALHARBOR GROUP INTERNATIONALHAYES, SEAY, MATTERN & MATTERN, INC.HAYES, SEAY, MATTERN & MATTERN, INC.
KAUFMAN & CANOLES, A PROFESSIONAL CORPORATIONKAUFMAN & CANOLES, A PROFESSIONAL CORPORATIONLANDMARK DESIGN GROUPLANDMARK DESIGN GROUP
LAUREATE CAPITAL MORTGAGE BANKERSLAUREATE CAPITAL MORTGAGE BANKERS
2
Our Proud SponsorsOur Proud SponsorsLIBERTY PROPERTY TRUSTLIBERTY PROPERTY TRUST
MIDEASTERN BUILDERSMIDEASTERN BUILDERSTHE MORGAN REAL ESTATE GROUP, INC.THE MORGAN REAL ESTATE GROUP, INC.
NAI HARVEY LINDSAYNAI HARVEY LINDSAYNANCY CHANDLER ASSOCIATES, REALTORSNANCY CHANDLER ASSOCIATES, REALTORS
NEWPORT NEWS PLANNING AND ECONOMIC DEVELOPMENTNEWPORT NEWS PLANNING AND ECONOMIC DEVELOPMENTNORFOLK DEPARTMENT OF ECONOMIC DEVELOPMENTNORFOLK DEPARTMENT OF ECONOMIC DEVELOPMENT
PERRINE & WHEELER REAL ESTATE INVESTMENTSPERRINE & WHEELER REAL ESTATE INVESTMENTSPORTSMOUTH DEPARTMENT OF ECONOMIC DEVELOPMENTPORTSMOUTH DEPARTMENT OF ECONOMIC DEVELOPMENT
RESOURCE BANKRESOURCE BANKROSE & WOMBLE REALTY COMPANYROSE & WOMBLE REALTY COMPANY
THE RUNNYMEDE CORPORATIONTHE RUNNYMEDE CORPORATIONSAM SEGAR AND ASSOCIATES, INC.SAM SEGAR AND ASSOCIATES, INC.
SIGNATURE MANAGEMENT CORP./WAITZER PROPERTIESSIGNATURE MANAGEMENT CORP./WAITZER PROPERTIESS.L. NUSBAUM REALTY COMPANYS.L. NUSBAUM REALTY COMPANY
SOUTHERN TRUST MORTGAGESOUTHERN TRUST MORTGAGESPERRY VAN NESS COMMERCIAL REAL ESTATE ADVISORSSPERRY VAN NESS COMMERCIAL REAL ESTATE ADVISORS
SUFFOLK DEPARTMENT OF EC0NOMIC DEVELOPMENTSUFFOLK DEPARTMENT OF EC0NOMIC DEVELOPMENTSUNTRUST REAL ESTATE FINANCE GROUPSUNTRUST REAL ESTATE FINANCE GROUP
THALHIMER/CUSHMAN WAKEFIELDTHALHIMER/CUSHMAN WAKEFIELDTOWNE BANKTOWNE BANK
TRI CITY DEVELOPERS, LLC.TRI CITY DEVELOPERS, LLC.VANASSE HANGEN BRUSTLIN, INC.VANASSE HANGEN BRUSTLIN, INC.
VIRGINIA BEACH DEPARTMENT OF ECONOMIC DEVELOPMENTVIRGINIA BEACH DEPARTMENT OF ECONOMIC DEVELOPMENTWALL, EINHORN & CHERNITZER, P.C.WALL, EINHORN & CHERNITZER, P.C.
WILLIAMS MULEN WILLIAMS MULEN W.M. JORDANW.M. JORDAN
WEXFORD SCIENCE & TECHNOLOGY, LLC. WEXFORD SCIENCE & TECHNOLOGY, LLC.
Special thank you to
Inside Businessfor their sponsorship
over the past four
years.
Residential Review Residential Review –– J.V. Rose, Jr.J.V. Rose, Jr.
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
Residential Market ReviewResidential Market Review
J. Van Rose, Jr. MIRMPresident
Rose & Womble Enterprises
Principal Owner of Rose & Womble Realty
2004 Rose & Womble Sold 7,000 HomesEqualing $ 1 Billion in Volume
Lifetime Teacher & Motivator
Travels the country sharing his knowledge and unique perspective.
14 Year History of Resale and New Construction Closings
0
5 0 0 0
1 0 0 0 0
1 5 0 0 0
2 0 0 0 0
2 5 0 0 0
1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5
R e s a l e N C
Hampton Roads Housing Stats Hampton Roads Housing Stats –– 20052005
Permits Closings
2004 2005 2004 2005
5 4 4 8 5 0 9 27 2 6 5 7 7 7 8
•7,778 Building Permits
•5,092 Closed New Home Sales
3
•• Average Price of SF New Home Average Price of SF New Home •• $405,943$405,943•• An Increase of $91,138 and An Increase of $91,138 and
28.9% in one year28.9% in one year•• Average Price of SF Existing HomeAverage Price of SF Existing Home•• $252,844$252,844•• An Increase of $45,317 and An Increase of $45,317 and
21.8% in one year21.8% in one year
Hampton Roads Housing Stats Hampton Roads Housing Stats –– 20052005 Growth of Home Sizes andGrowth of Home Sizes andPrice Per Square FootPrice Per Square Foot
2002 $170K $79 SF
2150 SF
2003 $258K $104 SF
2480 SF
2004 $313K $118 SF
2647 SF
2005 $406K $145 SF
2800 SF
Market Share 1994 vs. 2005Market Share 1994 vs. 2005
2005
Resale Resale64%
36%
18%
82%
NC –36%
RESALE - 64%
NC – 17%
RESALE – 83%
1994 2005
$332,161
$473,205
$141,044
$280,078
$444,168
$164,090
$259,341
$390,187
$130,846
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
VB Ches SuffResale NC Diff
Southside Single - Family Detached Homes
Resale vs. New Construction Average Closing Prices for 2005
$159,485
$300,660
$141,175
$203,738
$344,739
$141,001
$292,667
$416,734
$124,067
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Ports Norf I/WResale NC Diff
Southside Single - Family Detached Homes
Resale vs. New Construction Average Closing Prices for 2005
$171,584
$298,914
$127,330
$194,880
$340,897
$146,017
$324,992
$390,523
$65,531
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Hamp NN YCResale NC Diff
Peninsula Single - Family Detached Homes
Resale vs. New Construction Average Closing Prices for 2005
4
$368,816$390,212
$21,396
$384,978
$261,559
($123,419)
($150,000)
($50,000)
$50,000
$150,000
$250,000
$350,000
$450,000
JCC WMSB
Resale NC Diff
Peninsula Single – Family Detached Homes
Resale vs. New Construction Average Closing Prices for 2005Average Consumer Lot Costs Average Consumer Lot Costs
ChesapeakeChesapeake
$722,595
$539,733
$789,000
$678,461
•Edinburgh - $275,000
•Ruth’s Glen - $250,000
•Emerald Forest - $285,347
•English Oaks - $178,778
Land Cost = 38%
Land Cost = 47%
Land Cost = 36%
Land Cost = 26%
Average Consumer Lot Costs Average Consumer Lot Costs SuffolkSuffolk
$612,372
$444,078
$676,557
•Governors Pointe - $182,000
•Nansemond River Estates -
$ 141,825
•The Riverfront - $368,505
Land Cost = 30%
Land Cost = 31%
Land Cost = 54%
Average Consumer Lot Costs Average Consumer Lot Costs Virginia BeachVirginia Beach
$713,837
$820,083
$720,000*
$694,604
Lago Mar – $211,690
Thoroughgood– $345,000
Victoria Park – $345,000
Indian River Plantation -$281,618
*Estimated Selling Price
Land Cost = 43%
Land Cost = 42%
Land Cost = 48%
Land Cost = 41%
Average Consumer Lot CostsAverage Consumer Lot CostsJames City CountyJames City County
$459,708
$563,999
$578,802
$524,902
Lake Powell Pointe – $166,201
Governors Land– $152,812
Fords Colony – $170,073
Landfall - $153,500
Land Cost = 36%
Land Cost = 29%
Land Cost = 29%
Land Cost = 29%
Average Consumer Lot Costs Average Consumer Lot Costs Hampton, Newport News, York Hampton, Newport News, York
County, WilliamsburgCounty, Williamsburg
$462,200
$407,940
$449,300
$958,400
H Howe Farms – $94,667
N Port Warwick – $159,724
Y Quartermarsh Est – $110,000
W Holly Hills - $385,106
Land Cost = 24%
Land Cost = 40%
Land Cost = 20.4%
Land Cost = 29%
5
1. Cautiously Optimistic
Residential Housing Residential Housing ForecastForecast
RESIDENTIAL HOUSING RESIDENTIAL HOUSING FORECASTFORECAST
REASONS:
1. Hampton Roads Economics
Hampton Roads Economic StatsHampton Roads Economic Stats20052005
The areaThe area’’s economy has outperformed thes economy has outperformed thecountrycountry’’s for the past s for the past 55 years years
The portThe port’’s growth and tourism provide a buffers growth and tourism provide a bufferto military cutbacksto military cutbacks
Median Family Income Median Family Income National AverageNational Average $ 57,511$ 57,511Virginia Beach Virginia Beach $ 61,230$ 61,230Chesapeake Chesapeake $ 58,701$ 58,701HamptonHampton $ 46,110$ 46,110James City CountyJames City County $ 66,171$ 66,171
Average MSA Military Pay $ 52,600Average MSA Military Pay $ 52,600More than 53,000 Retired Military in HRMore than 53,000 Retired Military in HR
RESIDENTIAL HOUSING RESIDENTIAL HOUSING FORECASTFORECAST
REASONS:
2. Hampton Roads Housing Demand
Percent of Households That Purchased A Home in 2005
Compared To The Total Number of Households In The MSA
C h a r l o t t e N C M S A
H a m p t o n R o a d s M S A
Total Closings = 38,803
12.8 % of HH
Total Households =
300,800
Total Closings = 29,390
4.9 % of HH Total Households =
587,975
R a l e i g h / D u r h a m M S ATotal Closings
= 43,4168.1 % of HH
Total Households =
535,200
RESIDENTIAL HOUSING RESIDENTIAL HOUSING FORECASTFORECAST
REASONS:3. Hampton Roads Housing Supply
6
Number of Homes Listed in December
1998-2005 and January 2006
8 5 8 2
6 9 0 2
6 4 4 95 2 0 0
4 0 8 22 9 2 5
2 7 6 4 2 8 0 9
5 7 3 2
0
2 0 0 0
4 0 0 0
6 0 0 0
8 0 0 0
1 0 0 0 0
1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6
RESIDENTIAL HOUSING RESIDENTIAL HOUSING FORECASTFORECAST
REASONS:4. Effects of Interest Rates
(Mortgage Instruments)
Interest Rate Affect On Housing AffordabilityInterest Rate Affect On Housing Affordability
1999 2000 2001 2002 2003 2004 2005
MI $39,704 $42,448 $51,000 $53,900 $56,302 $56,624 $59,100
IR 8.2% 7.3% 7.3% 5.5% 5.25% 6.0% 6.125%
= = = = = = =
TM $154,000 $173,000 $210,000 $260,000 $300,000 $275,000 $300,000
With Down Payment $400,000
Interest Only $425,000
Interest Only With Down Payment $525,000
RESIDENTIAL HOUSING RESIDENTIAL HOUSING FORECASTFORECAST
REASONS:5. Military Influence
Defense Spending In BillionsDefense Spending In Billions
1990 1990 -- 20062006
41
9.3
41
7
37
9.9
35
5.1
32
9
29
1
22
1
21
9
20
3
21
8
22
323
0
23
8
25
8
27
029
5
29
8
0
50
100
150
200
250
300
350
400
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
New Construction Closings By Price Points
2003, 2004, 2005
0
500
1000
1500
2000
<200 K 200-290K 300-390K 400-490K 500-590K 600-690K 700K +
2003 2004 2005
7
Multifamily Review Multifamily Review –– Aubrey LayneAubrey Layne
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
Multifamily Market ReviewMultifamily Market Review
Aubrey LaneAubrey LanePresident & Principal BrokerPresident & Principal Broker
Great Atlantic PropertiesGreat Atlantic Properties
Responsible for the operations and Responsible for the operations and administration of Great Atlanticadministration of Great Atlantic’’s s Property management functions, Property management functions, new business acquisition, capital new business acquisition, capital
improvement, banking and investor improvement, banking and investor relations.relations.
MBA MBA –– Old Dominion UniversityOld Dominion University
20062006Multifamily Market:Multifamily Market:
Review and AssessmentReview and Assessment
Aubrey L. Layne, Jr.Aubrey L. Layne, Jr.PresidentPresident
Great Atlantic Management Great Atlantic Management
GREAT ATLANTIC
20062006Multifamily Market:Multifamily Market:
Review and AssessmentReview and Assessment
••2005 Year in Review2005 Year in Review––Economic BackgroundEconomic Background––FundamentalsFundamentals
••Operational TrendsOperational Trends••Multifamily TransactionsMultifamily Transactions••Opportunities / CautionsOpportunities / Cautions••ConclusionConclusion
2005 Year in Review2005 Year in Review•• Economic BackgroundEconomic Background
–– HR (Hampton Roads) favorable unemployment HR (Hampton Roads) favorable unemployment rate of 3.6% (vs. 4.7% for US)rate of 3.6% (vs. 4.7% for US)
–– Demand exceeds supplyDemand exceeds supply2,595 units under construction and 1,764 proposed2,595 units under construction and 1,764 proposed
–– Long term interest rates historically low and Long term interest rates historically low and steadysteady
–– Home prices have increased significantly Home prices have increased significantly
•• FundamentalsFundamentals–– Vacancy 3.8%Vacancy 3.8%–– Average rent $785Average rent $785
•• Rent growth in excess of inflation Rent growth in excess of inflation
–– Strong fundamentals compared to Strong fundamentals compared to nearby regionsnearby regions
Source: Real Data
2005 Year in Review
(Continued)
8
Avg. Rents by City - 2005
500550600
650700750800
850900950
NN
Portsm
outh
Norfolk
Hampton
Williamsb
urg
HR avg.
Ches/S
uffolk York
Va Beac
h
$ pe
r m
onth
$785
$881
$700
Net Monthly Cost of Owning vs. Renting
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2000 2001 2002 2003 2004 20050%
10%
20%
30%
40%
50%
60%
70%
80%
avg rent
home P&I
owner %premium
73%
$1,341
$785
Sources: ODU Economic Forecasting Project and Real Data
Hampton Roads Avg. Rent and Median P&I for a Newly Purchased Home
Comparison to Nearby RegionsComparison to Nearby Regions
--7.8%7.8%6.5%6.5%13.8%13.8%2 yr. %2 yr. %Change Change
rentrent
$700$700$726$726$785$785Avg.Avg.RentRent
9.8%9.8%6.3%6.3%3.8%3.8%VacancyVacancy
RaleighRaleigh--DurhamDurham
RichmondRichmondHRHR
Source: Real Data
Operational TrendsOperational Trends•• Condo conversionsCondo conversions•• ““Renters by choiceRenters by choice””•• UrbanismUrbanism•• Life style amenitiesLife style amenities
–– Concierge ServiceConcierge Service–– Automated rent payments and web based Automated rent payments and web based
maintenance requestsmaintenance requests–– Business centerBusiness center–– CyberCyber--cafcaféé–– Hot tubs / tanning boothsHot tubs / tanning booths
Multifamily TransactionsMultifamily Transactions•• Per unit prices for multifamily properties have increased Per unit prices for multifamily properties have increased
significantly since 2001significantly since 2001
-- 2001, $36,7002001, $36,700-- 2004, $72,7002004, $72,700-- 2005, $68,600 2005, $68,600
•• Number of units traded increasedNumber of units traded increased-- 2001, 2,200 units2001, 2,200 units-- 2004, 4,000 units2004, 4,000 units-- 2005, 2,700 units2005, 2,700 units
Units Sold
Hampton Roads Apartment Units Sold and Average Price per Unit
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1999 2000 2001 2002 2003 2004 2005
apt.
units
sol
d
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
avg.
pric
e pe
r uni
t
# of units sold Avg. price per unit
$62,400
$36,700
Data: CBRE, reported broker transactions
$59,600
$72,700$68,600
9
Multifamily TransactionsMultifamily Transactions(Continued)(Continued)
•• Tenants in common (TIC)Tenants in common (TIC)•• Cap Rate CompressionCap Rate Compression
–– Interest rates are lowInterest rates are low–– Limited financial return alternatives for investmentsLimited financial return alternatives for investments
•• Financial returns significantly based Financial returns significantly based on property appreciationon property appreciation
HR Multifamily Cap Rates*
3
4
5
6
7
8
9
10
1998
1999
2000
2001
2002
2003
2004
2005
perc
ent
cap rates
and Interest Rates (10 years)
interest rates
* CBRE, broker supplied data
6.9%
4.2%
HR Multifamily Cap Rates*
3
4
5
6
7
8
9
10
1998
1999
2000
2001
2002
2003
2004
2005
perc
ent
cap rates
and international cap rates**
* CBRE, broker supplied data
NY, 6.9%London, 6.8%
Paris, 6.0%Tokyo, 5.4%
** GE Commercial Finance
6.9%
Opportunities / CautionsOpportunities / Cautions
••National perspective National perspective •• BRAC BRAC •• Interest ratesInterest rates••VacancyVacancy
ConclusionConclusion
•• Multifamily economics remain strongMultifamily economics remain strong•• Valuations questionableValuations questionable•• Watch fundamentalsWatch fundamentals
GREAT ATLANTIC
Office Review Office Review –– Don Don CriggerCrigger
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
10
Office Market ReviewOffice Market Review
Donald Crigger, CCIMDonald Crigger, CCIMSenior Director, Office PropertiesSenior Director, Office Properties
Advantis Real Estate Services CompanyAdvantis Real Estate Services Company
Directs the leasing operations for nearly 2.5 Directs the leasing operations for nearly 2.5 million square foot portfoliomillion square foot portfolio
Specializes in landlord and tenant Specializes in landlord and tenant representation, leasing and salesrepresentation, leasing and sales
Since 1987, transaction volume exceeds Since 1987, transaction volume exceeds $225 Million$225 Million
B.A. College of William and Mary B.A. College of William and Mary
2006 Office Market Review2006 Office Market Review
Presented by:Presented by:Donald R. Crigger, CCIMDonald R. Crigger, CCIM
Senior Director, Office PropertiesSenior Director, Office PropertiesGVA AdvantisGVA Advantis
7.80%9.70%
11.80%
14.30%13.10%
10.10%8%
0.00%
5.00%
10.00%
15.00%
20.00%
1999 2000 2001 2002 2003 2004 2005
Vacancy Rate
HAMPTON ROADS HISTORICALHAMPTON ROADS HISTORICALVACANCY RATE TRENDSVACANCY RATE TRENDS
804,000
608,000657,000
551,000
343,000
823,000
384,000
0
200,000
400,000
600,000
800,000
1,000,000Sq
uare
Fee
t
Net Absorption 823,000 343,000 657,000 384,000 551,000 804,000 608,000
1999 2000 2001 2002 2003 2004 2005
HAMPTON ROADS HISTORICAL HAMPTON ROADS HISTORICAL ABSORPTION TRENDSABSORPTION TRENDS
The Real Estate CycleThe Real Estate CycleAbsorption ofExcess Supply
DecliningPrices, Rents,Construction
HighVacancies
Oversupply
Accelerated NewConstruction
Increasing Pricesand Rents
LowVacanciesFirst Half First Half
of the 90sof the 90sTodayToday
Landlord or Tenant Market?Landlord or Tenant Market?
Scarcity of Choice SitesScarcity of Choice Sites
Rapidly Increasing Land PricesRapidly Increasing Land Prices
Construction Costs Up 25% to 30% Construction Costs Up 25% to 30% (Since 2003)(Since 2003)
New Construction Rental Rates Up 15% to 20%New Construction Rental Rates Up 15% to 20%
Modest to Moderate Office DemandModest to Moderate Office Demand
11
Development Response to Development Response to ““TightTight”” MarketMarket
Continued Measured Approach to Adding Continued Measured Approach to Adding New SupplyNew Supply
Limited Speculative Development Will Be Limited Speculative Development Will Be RewardedRewarded
Larger Tenants Must Plan Further Ahead Larger Tenants Must Plan Further Ahead (18 to 24 months)(18 to 24 months)
Visuals Visuals –– Architectural Plans and RenderingsArchitectural Plans and Renderings
AMERIGROUP BuildingAMERIGROUP Building
Fall 2006 CompletionFall 2006 Completion
The GalleryThe Gallery
April 2006 DeliveryApril 2006 Delivery
Liberty ThreeLiberty Three
December 2006 DeliveryDecember 2006 Delivery
Innovation Research ParkInnovation Research Park
Delivery Spring 2007Delivery Spring 2007
Trader CenterTrader Center
January 2007 CompletionJanuary 2007 Completion
12
Commander Corporate CenterCommander Corporate Center
Spring 2007 DeliverySpring 2007 Delivery
Bridgeway Technology Center IIIBridgeway Technology Center III
Summer 2006 DeliverySummer 2006 Delivery
300 Exploration Way300 Exploration Way
Fall 2006 DeliveryFall 2006 Delivery
300 Exploration
Way
National Institute
of Aerospace
Delivered 2005
One City CenterOne City Center
Delivery 2006
Office Market ForecastOffice Market Forecast
Vacancy Continues Gradual DeclineVacancy Continues Gradual Decline
Rental Rates Will Surge UpwardRental Rates Will Surge Upward
Relatively Strong Net AbsorptionRelatively Strong Net Absorption
LARGER Volume of New Construction LARGER Volume of New Construction Later in 2006Later in 2006
Retail Review Retail Review -- Christopher E. Christopher E. RouzieRouzie
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
13
Retail Market ReviewRetail Market ReviewChristopher E. RouzieChristopher E. Rouzie
Senior Vice PresidentSenior Vice PresidentThalhimerThalhimer
Managing Broker for Thalhimer Managing Broker for Thalhimer Newport NewsNewport News
Specializes in Retail Site Selection Specializes in Retail Site Selection for National Retailersfor National Retailers
Recipient of the 2001, 2003, 2004 Recipient of the 2001, 2003, 2004 CREC Gold Award and Top CREC Gold Award and Top
Hampton Roads Producer for Hampton Roads Producer for Thalhimer in 2001 and 2003Thalhimer in 2001 and 2003
RETAIL MARKET REVIEW
13.11%12.83%
11.64% 11.19%
9.41%
7.55%
5.00%
7.00%
9.00%
11.00%
13.00%
15.00%
2001 2002 2003 2004 2005 2006
Hampton Roads – Retail Vacancy
New Projects
Williamsburg Marketcenter
14
Williamsburg Marketcenter Williamsburg Marketcenter
Windsormeade Marketplace
Windsormeade Marketplace
Windsormeade Marketplace
Jefferson Commons
15
Jefferson Commons Jefferson Commons
Patrick Henry Mall
Patrick Henry Mall
Courthouse Marketplace
Courthouse Marketplace
16
Courthouse Marketplace
Berkley Commons
Berkley Commons Berkley Commons
Edinburgh Commons
Edinburgh Commons
Proposed
17
Edinburgh Commons
Cahoon Commons
Cahoon Commons Cahoon Commons
Redevelopment
Mid-City Shopping Center - PortsmouthBefore
After
18
Tidewater Shopping Center - NorfolkBefore
Crossways Center - Chesapeake
After
Crossroads Center at Chesapeake Square - Chesapeake Janaf Shopping Center - Norfolk
Power Plant - Hampton Shops at Yorktown - YorktownBefore
After
19
Governor’s Green - WilliamsburgBefore
After Town Centers
New Town - Williamsburg City Center – Newport News
Coliseum Mall - Hampton Peninsula Town Center - HamptonColiseum Mall - Hampton
20
Virginia Beach Town Center – Virginia Beach Dean Plaza – Virginia BeachBefore
City Walk at Virginia Beach – Virginia Beach Towne Place at Greenbrier - Chesapeake
Harbour View Station Town Center - Suffolk
Pipeline
21
Landstown Commons
Red Mill Walk
Mt. Pleasant Marketplace
Bennett’s Creek
Hanbury Village
Indian River & Ferrell Pkwy.
Benn’s Grant
The Marquis
The Market @ Harbor Heights
Industrial Review Industrial Review –– Clay Clay CulbrethCulbreth
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
Industrial Market ReviewIndustrial Market Review
Richard C. Culbreth, Jr., CCIM, SIORRichard C. Culbreth, Jr., CCIM, SIORSenior Director, Industrial PropertiesSenior Director, Industrial Properties
Advantis Real Estate Services CompanyAdvantis Real Estate Services Company
Since 1989 has concentrated exclusively on Since 1989 has concentrated exclusively on marketing, selling and leasing industrial marketing, selling and leasing industrial
properties.properties.1991 Co1991 Co--founded Virginia Commercial Real founded Virginia Commercial Real
Estate Services in Virginia Beach. Estate Services in Virginia Beach. 1995 formed Old Dominion Commercial Real 1995 formed Old Dominion Commercial Real
Estate Services.Estate Services.Since 1992 to present has been a Tidewater Since 1992 to present has been a Tidewater
Associates of RealtorsAssociates of Realtors’’ Million Dollar Million Dollar Producer. Producer.
Bobby BeasleyKen BenassiCharles DickinsonWorth RemickPat MumeyChip WorleyRon Biesecker Abe Ellis
Bill Throne
Billy King
Charles Dickinson
Stephanie Sanker
Trip Ferguson
Gross Square Feet 1997 Gross Square Feet 1997 -- 20052005
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
Hampton Roads Industrial Market Hampton Roads Industrial Market Vacancy Rate Vacancy Rate
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
13.5
10.910.2
12.3
10.8
9.28.7
8.6
7.3 7.6
6.4
7.4 7.5
6.25
5.24
22
5.245.246.256.25TotalTotal5.05%5.05%6.88%6.88%Williamsburg Extended AreaWilliamsburg Extended Area
4.72%4.72%7.39%7.39%Oakland/Upper PeninsulaOakland/Upper Peninsula
4.08%4.08%5.13%5.13%Oyster Point/Middle PointOyster Point/Middle Point
8.80%8.80%17.43%17.43%Copeland/Lower PeninsulaCopeland/Lower Peninsula
0.00%0.00%0.68%0.68%Isle of WightIsle of Wight
4.72%4.72%6.13%6.13%SuffolkSuffolk
23.04%23.04%9.13%9.13%PortsmouthPortsmouth
7.23%7.23%3.39%3.39%Airport Industrial ParkAirport Industrial Park
1.85%1.85%2.45%2.45%Greenwich/Cleveland Street Greenwich/Cleveland Street
AreaArea
3.85%3.85%3.31%3.31%LynnhavenLynnhaven AreaArea
6.33%6.33%6.43%6.43%West Side/Midtown Norfolk West Side/Midtown Norfolk
AreaArea
2.87%2.87%4.07%4.07%Norfolk Industrial ParkNorfolk Industrial Park
2.82%2.82%2.91%2.91%Norfolk Commerce ParkNorfolk Commerce Park
9.25%9.25%8.14%8.14%Cavalier Industrial ParkCavalier Industrial Park
0.00%0.00%5.60%5.60%Bainbridge/S. Elizabeth River Bainbridge/S. Elizabeth River
1.13%1.13%2.12%2.12%GreenbrierGreenbrier
2005 Vacancy Rate2005 Vacancy Rate2004 Vacancy Rate2004 Vacancy RateSubmarketSubmarketTOTAL ABSORPTION FROM 2000TOTAL ABSORPTION FROM 2000--20052005
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,000
2000 2001 2002 2003 2004 2005
1,000,000
2,800,0003,000,000
2,100,000
2,270,000
1,826,000
Bay WarehouseBay Warehouse($13.2 million/ $44.00 ($13.2 million/ $44.00 per square foot)per square foot)
Gateway BuildingGateway Building($14.1 Million/$33.44 per square foot)($14.1 Million/$33.44 per square foot)
1920 1920 CampostellaCampostella RoadRoad
Ashley Capital Acquisition Ashley Capital Acquisition -- 20052005GE FacilityGE Facility
Some Leases Worth NotingSome Leases Worth Noting
BridgewayBridgeway Commerce CenterCommerce Center
Ward CourtWard Court
Gateway Distribution FacilityGateway Distribution FacilityIf You Build It, They Will Come!
23
C. Jones Hooks, C. Jones Hooks, CEcDCEcDPresident & CEO President & CEO
Hampton Roads Economic Hampton Roads Economic Development AuthorityDevelopment Authority
Russell YoungRussell YoungDirector, Economic Development Director, Economic Development
Virginia Port AuthorityVirginia Port Authority
Greedy BrokerGreedy Broker The increase in port activity The increase in port activity will generate a need for will generate a need for “…“…between 20 and 60 million between 20 and 60 million square feet of additional square feet of additional distribution center space in distribution center space in the regionthe region…”…”
MoffattMoffatt & Nichol Report dated June 2005& Nichol Report dated June 2005
Modern TerminalsModern Terminals
Portsmouth Marine TerminalPortsmouth Marine Terminal
NIT NorthNIT North
CraneyCraney Island BuildIsland Build--Out 2032Out 2032 Newport News Marine TerminalNewport News Marine Terminal
MaerskMaersk Terminal SiteTerminal Site
24
CraneyCraney Island Island Industrial Developers Circling the Market
DevonDevon’’ssEnterchangeEnterchange at Suffolkat Suffolk
DevonDevon’’s s EnterchangeEnterchange at Hamptonat Hampton
Liberty Property TrustLiberty Property Trust’’ssBridgewayBridgeway Commerce CenterCommerce Center
American Port ServicesAmerican Port Services’’Northgate Commerce ParkNorthgate Commerce Park
25
Regional CompaniesRegional Companies’’Virginia Regional Commerce ParkVirginia Regional Commerce Park
Ashley CapitalAshley Capital’’ss2601 Indian River Road2601 Indian River Road
Investment Review Investment Review –– Jonathan Jonathan GuionGuion
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast20062006
Presented by: E.V. Williams Center
for Real Estate and Economic Development
Investment Market ReviewInvestment Market ReviewJonathan S. Guion, SIORJonathan S. Guion, SIOR
Senior AdvisorSenior AdvisorSperry Van NessSperry Van Ness
18 Experience in Commercial Real Estate 18 Experience in Commercial Real Estate specializing in Industrial Properties and specializing in Industrial Properties and
Commercial Investment SalesCommercial Investment Sales
Sperry Van Ness is the third largest Sperry Van Ness is the third largest commercial real estate investment commercial real estate investment brokerage company in the nationbrokerage company in the nation
2005 Commercial Sales exceeded2005 Commercial Sales exceeded$6 Billion Dollars$6 Billion Dollars
Investment MarketInvestment Market
Jonathan Guion, SIORJonathan Guion, SIOR
National Market InfluencesNational Market Influences
Inflow of Foreign Capital
Interstate Flow of Capital
Condo Conversion Rush
26
Inflow of Foreign Capital
Others30%
Mid East10% Germany
20%
Australia40%
Interstate Flow of CapitalInterstate Flow of Capital
$ $$
$$
$
$$
$
$$
$$
Condo Conversion RushCondo Conversion Rush
FOR
SALE
ForForRentRent
Hampton Roads MarketHampton Roads Market
Increase in portfolio sales
Increase in out-of-state buyers
For Sale150 West Main St
Norfolk
$50,500,000
SOLD
Hampton Roads TransactionsHampton Roads Transactions
Cedar Shopping Centers$93.8 million
First Potomac Realty Trust$68 million
Branscan Real Estate Opportunity Fund$25.5 million
27
Investment MarketInvestment Market
Jonathan Jonathan GuionGuion, SIOR, SIOR
Special thank you to
Inside Businessfor their sponsorship
over the past four
years.
Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate
Market Review and ForecastMarket Review and Forecast
Please Join Us for the ReceptionPlease Join Us for the Reception
Presented by: E.V. Williams Center
for Real Estate and Economic Development
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