Our Proud Sponsors - ODU · 9More than 53,000 Retired Military in HR RESIDENTIAL HOUSING FORECAST REASONS: 2. Hampton Roads Housing Demand Percent of Households That Purchased A Home

1

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



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


$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


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


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


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


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


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





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





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





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



Jefferson Commons

15

Jefferson Commons Jefferson Commons

Patrick Henry Mall

Patrick Henry Mall

Courthouse Marketplace


16


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





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





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

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over the past four

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Market Review and ForecastMarket Review and Forecast

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Our Proud Sponsors - ODU · 9More than 53,000 Retired Military in HR RESIDENTIAL HOUSING FORECAST REASONS: 2. Hampton Roads Housing Demand Percent of Households That Purchased A Home