old dominion university real estate centers hampton roads ...€¦ · hampton roads real estate...

1

Old Dominion University Hampton Roads Real Estate

Market Review and Forecast2005

Presented by: The Center for Real Estate

and Economic Development

University of PennsylvaniaSamuel Zell and Robert Lurie Real Estate Center at Wharton

University of California BerkeleyFisher Center for Real Estate and Urban Economics

Virginia Commonwealth UniversityVirginia Real Estate Center

Virginia Tech UniversityVirginia Center for Housing Research

Old Dominion UniversityCenter for Real Estate and Economic Development

Johns Hopkins UniversityAllan L. Berman Real Estate Institute

University of ConnecticutCenter for Real Estate and Urban Economic Studies

Real Estate CentersReal Estate Centers

VOLUNTEER EFFORT

PROFESSIONALISM

Executive CommitteeExecutive Committee• Ron Bray• Craig Cope• John Crunkleton• Tom Dillon• Brian Dundon• Joan Gifford• Cliff Moore• Jonathan Guion

• Warren Harris• Joyce Hartman• Andrew Keeney• Billy King• John Lombard• Van Rose• Brad Sanford

SponsorshipSponsorshipCommitteeCommittee

Cliff Moore, ChairLarry Colorito

Programs CommitteePrograms Committee

Joyce Hartman, Chair

Jonathan Guion

Ron Bray

Stephanie Sanker

Eva Wiggins

2

Research & Editorial CommitteeResearch & Editorial Committee

Brian Dundon, ChairBeth Hancock

Joy LearnSandi PrestridgeMaureen Rooks

Lane SheaBrad Sanford

Special thank you to

Inside Businessfor their sponsorship

over the past three

years.


Market Review and Forecast2005




Market Review and Forecast

Multi-Family MarketPresented by

Wendy Drucker

Multifamily Market Overview

Wendy C. Drucker - Drucker & Falk, LLC - Newport News, VA

2,178 apartments under construction in Hampton Roads with an additional 1,256 proposed

3

Apartment Distribution by City

6%5%Yorktown/Wmbg/JCC9%9%Chesapeake/Suffolk

11%10%Hampton

21%23%Newport News

16%16%Norfolk

8%6%Portsmouth

28%31%Virginia Beach

20042000City

4

Bondale Apartments

5

Bondale Apartments Bondale Apartments

Bondale Apartments Bondale Apartments

Bolling Square Bolling Square

6

Bolling Square

• Rents in Hampton Roads have increased 43% since 1997

• Vacancies still below 5%

Income/Expense Comparison - Per Unit Basis

$311$19 (6.5%)$292RE Taxes$190$127 (202.0%)$63Insurance

$6,938$685 (11.0%)$6,253Total Income2003Variance2000101-180 Units

$1,046$107 (11.4%)$939Payroll$1,547$253 (19.5%)$1,294Total Expenses

$1,625$296 (22.3%) $1,329Total Expenses$982$116 (13.4%) $866Payroll$477$128 (36.0%) $349RE Taxes$166$52 (45.0%) $114Insurance

$8,112$1,636 (25.0%) $6,476Total Income2003Variance2000181–250 Units

Insurance Rates

Taxes Payroll• Management personnel has

shifted from caretaker to that of Asset Manager

• State and Federal Certifications

• Growing building industry competing for these same maintenance people

7

2004 Sales Activity

Low Interest Rates

Sales Prices $21,393 – $135,938 per Unit

Low Cap Rates

6.86% - 9.04

%

What’s Driving our Market• Military Growth• Government Contractors• Modeling and Simulation• Bio Technology• New Industry• Growth at the Port• Dollars available for Real Estate Investment

& Development• Retirees• Lack of Available Land

Where are the Opportunities? What are the Challenges?

What’s in the Future?Old Dominion University

Hampton Roads Real Estate Market Review and Forecast

Office MarketPresented by

John Profilet

8

70

75

80

85

90

95

100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Downtown Norfolk

Class A B C Office Space

Percentage Occupancy

Perc

enta

ge

Year

70

75

80

85

90

95

100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Southside



Perc

enta

ge

Year

70

75

80

85

90

95

100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Peninsula



Perc

enta

ge

Year

CENTRAL BUSINESS PARK

BATTLEFIELD

9

AMERIGROUP AMERIGROUP

VIRGINIA BEACH TOWN CENTER



Residential MarketPresented by

Van Rose

10

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 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

R e s a l e N e w C o n s t r u c t i o n

10 Year History of Resale and New Construction Closings

• 7,265 Building Permits• 5330 Closed New Home Sales

Permits Closings2003 2004 2003 2004

7049 72654843 5330

Hampton Roads Housing Stats - 2004

Hampton Roads Housing Stats - 2004

•Average Price of SF New Home

$313,972•An Increase of $56,624 or 22 %

in one year•Average Price of SF Existing Home

$207,527•An Increase of $34,654 or 20 %

in one Year

Growth of Home Sizes & Price Per Square Foot

2002 $170K $79 SF

2150 SF

2003 $258K $104 SF

2480 SF

$313K $118 SF

2004

2647 SF

2005 $398K $142 SF

2800 SF

Market Share 1994 vs. 2004

1994 2004

NC NC

Resale Resale

64%

36%14%

86%

$270,338

$365,384

$95,046

$225,871

$333,778

$107,907

$220,339

$314,936

$94,597

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

VB Ches Suff

Resale NC Diff

Southside

Resale VS. New Construction Average Closing Prices for 2004

Single-Family Detached Homes

11

$124,354

$242,101

$117,747

$164,984

$248,363

$83,379

$256,795

$310,230

$53,435

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Ports Norf I/W

Resale NC Diff

Southside



$118,791

$240,363

$121,572

$156,825

$258,726

$101,901

$320,599 $300,018

$20,581

$277,145$299,073

$22,664

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

H NN JCC YC

Resale NC Diff.

Peninsula



Average Consumer Lot CostsChesapeake

$483,879

$461,433

$493,420

$807,068

•Greystone - $117,146

•Ravenna - $127,509

•Cahoon Plantation - $151,300

•Edinburgh - $181,805

Average Consumer Lot CostsSuffolk

$700,000*

$354,418

$354,146

$533,316

•Governors Pointe - $199,492

•Nansemond River Estates - $87,996

•Hillpoint Greens - $125,916

•The Riverfront - $179,591* Projected Average Price

Average Consumer Lot CostsVirginia Beach

$555,655

$661,379

$656,328

$654,516

Lago Mar – $169,698

Mansfield Farms – $272,766

Bay Hill – $279,000

Indian River Plantation -$194,529

Average Consumer Lot CostsPeninsula

$336,689

$326,900

$476,382

$423,782

H Howe Farm– $85,825

N Port Warwick – $91,661

J Fords Colony – $129,028

Y Running Man - $89,717

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RESIDENTIAL HOUSING FORECAST

1. Extremely Positive!!!


REASONS:

1. Hampton Roads Economics

Hampton Roads Economic Stats - 2004

Employment has Grown Faster in Hampton Roads Than In The U.S. and Virginia Since Late in 2000 Hampton Roads Has Been Buffered from Recession by Increases in Military Pay and Housing AllowancesMedian Family Income

National Average $ 43,300Chesapeake $ 55,900Virginia Beach $ 60,611

Average MSA Military Pay $ 52,600Estimated 53,000 Retired Military in HR


REASONS:

2. Hampton Roads Housing Demand

Percent of Households That Purchased A Home in 2004

Compared To The Total Number of Households In The MSA

Charlotte NC MSA

Hampton Roads MSA

Total Closings = 32,985

11 % of HH

Total Households =

273,561

Total Closings = 28,630

5 % of HH Total Households =

581,578

Raleigh/Durham MSATotal Closings

= 43,5878 % of HH

Total Households =

506,000


REASONS:

3. Hampton Roads Housing Supply

13

Number of Homes Listed in December

1998-2004 and January 2005

8582

69026449

52004082

2925 2764 2401

0

2000

4000

6000

8000

10000

1998 1999 2000 2001 2002 2004 2004 2005


REASONS:4. Effects of Interest Rates

(Mortgage Instruments)

Interest Rate Affect On Housing Affordability

1999 2000 2001 2002 2003 2004

MI $39,704 $42,448 $51,000 $53,900 $56,302 $56,624

IR 8.2% 7.3% 7.3% 5.5% 5.25% 6.0%

= = = = = =

TM $154,000 $173,000 210,000 $260,000 $300,000 $275,000

With Down Payment $375,000

Interest Only $400,000

Interest Only W/ Down Payment $500,000


REASONS:5. Military Influence

Defense Spending In Billions1990 - 2005

417

379.

9

355.

1

329

291

221

219

203

218

22323

0

238

258

27029

5

298

-30

20

70

120

170

220

270

320

370

420

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

500

1000

1500

2000

2500

3000

3500

100K 100K-199K 200-299K 300K-399K 400K-499K 500K +

2000 2001 2002 2003 2004

New Construction Closings By Price Points

2000, 2001, 2002, 2003, 2004

- 222

- 2209

+1105

+1056

+439 +250

14



Industrial MarketPresented by

Abe Ellis

Presented By:

R.L. “Abe” Ellis, SIORVice President / Industrial Specialist

Thalhimer / Cushman & Wakefield

2005 ODU Real Estate ReviewIndustrial Market Forecast

SPECIAL THANKS TO ALL OF OUR REPORTERS:

Advantis GVA CB Richard EllisKen Benassi, SIOR R. Worth RemickTrip FergusonMichael Shapiro

NAI Harvey Lindsay Sperry Van NessBobby Beasley Jonathan Guion, SIORCharles Dickinson Joyce HartmanBilly King, SIORChip Worley

Thalhimer / Cushman & WakefieldBetsi BarteeRon BieseckerChristine KaempfePatrick Mumey, SIORBobby Phillips

2004 Summary of Data

2004 Key Industrial Sales

Dexter Street, Portsmouth, Virginia

15

Suffolk Shell Building Continental Pickett’s Line RoadNewport News

Lakeview Parkway, Suffolk

What Was New In 2004 ?

Stihl, International Parkway, Virginia Beach Pro-Pak, Taylor Farm Road, Virginia Beach

16

Taylor Farm Industrial Development SARA LEE EXPANSION

What’s New for 2005 ?

Triumph Industrial Center, Suffolk

BRIDGEWAY COMMERCE PARK Maersk Grows in Portsmouth

17

ASHLEY CAPITAL

Hampton Roads from a Regional and a

National Comparison



Retail MarketPresented by

Blount HunterH. Blount Hunter

Retail & Real Estate Research Co.

RETAIL SALES GROWTH

• Southside: Expect to surpass $10.0 Billion• Peninsula: Approaching $4.5 Billion• Steady increases during military

deployment—very different from Gulf War experience in early 1990s

• 2004: “Market caught its breath”• 2005-2006: significant new development

RETAIL SALES GROWTH

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

1996 1997 1998 1999 2000 2001 2002 2003 2004

SouthsidePeninsula

18

RETAIL OVERVIEW

• 46 million SF GLA (shopping centers)• 30 million SF Southside (65 percent)• 16 million SF Peninsula (35 percent)

Square footage and population are “balanced” within regionRegion has 29 SF per capita compared to national average of 22 SF

MARKET DYNAMICS

CONSTRUCTION: DOWNNEW TENANTS: DOWNABSORPTION: DOWNBIG BOX VACANCY: DOWNOCCUPANCY: UPRENT: UP

AVERAGE RENT

$13.46 $13.88$13.18 $13.36

$0.00$2.00$4.00$6.00$8.00

$10.00$12.00$14.00$16.00$18.00$20.00

Southside Peninsula

20032004

NEW CONSTRUCTION

419500

271600 330000

185000

749000

456600

0

100000

200000

300000

400000

500000

600000

700000

800000

Southside Peninsula Total

20032004

SPACE ABSORPTION

419100 341700 412000

84300

831000

426000

0100000

200000300000

400000500000600000

700000800000

900000


20032004

VACANCY RATE

0.105

0.089

0.126

0.104

0.119

0.094

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%


20032004

19

VACANCY BY PRODUCT TYPE

0.098

0.127

0.066

0.135

0.049

0.037

0 00.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Neighborhood

Community

Regional

Power

Freestanding

Specialty

Festival

Outlet

“BIG BOX” VACANCY

2.6 million SF “Big Box” vacancy– 61 percent of total retail vacancy– Disproportionate problem on Peninsula

• 43 percent of “big box” vacancy is on Peninsula• 69 percent of Peninsula’s vacancy is in “big boxes”

– Reflects 30 percent drop in vacancy from 2003

– Absorption: re-leasing and re-use

“BIG BOX” VACANCY

Big Box Vacancy per Square Foot

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,000

1997

19

98

1999

20

00

2001

20

02

2003

20

04

Vaca

nt S

quar

e Fe

et

SouthsidePeninsulaTOTAL

NOTABLE SALES IN 2004

Greenbrier Mall sold (again) for $102 million or the equivalent of $115 PSFSmaller centers throughout the market generally sold for $70 - $95 PSF

“SWEET SPOTS”

“Sweet Spots” exist throughout the region:WilliamsburgNorthern Newport NewsColiseum CentralNorthern Suffolk/Isle of Wight/Route 17Pembroke/Town CenterVictory Crossing/Midtown in PortsmouthDowntown Norfolk/GhentGreenbrier

“EYE ON THE MARKET”

• Nationally and locally, department stores will be under pressure to perform

• More regional shopping centers will add non-traditional uses and anchors to increase their appeal

• “Lifestyle centers” continue to be the project du jour; strong co-tenancy of retailers, restaurants, and entertainment is critical for success

20


→Suffolk doesn’t have an emerging “central place” for shopping center development

→Williamsburg is getting broader retail offering—just not in mall format

→“Workhorse” retail areas such as Janaf and Coliseum are being overlooked despite strong sales and new investments

→Town Center’s challenge is to become more than a restaurant park


• Lord & Taylor’s departure provides good merchandising opportunity for Lynnhaven

• MacArthur Center’s sales continue to rise—opportunities exist for enhanced tenant quality and “third anchor”

• Northern Newport News will soon surpass Greenbrier as region’s highest density retail node

THANK YOU!





University of PennsylvaniaSamuel Zell and Robert Lurie Real Estate Center at Wharton

University of California BerkeleyFisher Center for Real Estate and Urban Economics

Virginia Commonwealth UniversityVirginia Real Estate Center

Virginia Tech UniversityVirginia Center for Housing Research

Old Dominion UniversityCenter for Real Estate and Economic Development

Johns Hopkins UniversityAllan L. Berman Real Estate Institute

University of ConnecticutCenter for Real Estate and Urban Economic Studies

Real Estate CentersReal Estate Centers

Executive CommitteeExecutive Committee• Ron Bray• Craig Cope• John Crunkleton• Tom Dillon• Brian Dundon• Joan Gifford• Cliff Moore• Jonathan Guion

• Warren Harris• Joyce Hartman• Andrew Keeney• Billy King• John Lombard• Van Rose• Brad Sanford

SponsorshipSponsorshipCommitteeCommittee

Cliff Moore, ChairLarry Colorito

21

Programs CommitteePrograms Committee

Joyce Hartman, Chair

Jonathan Guion

Ron Bray

Stephanie Sanker

Eva Wiggins

Research & Editorial CommitteeResearch & Editorial Committee

Brian Dundon, ChairBeth Hancock

Joy LearnSandi PrestridgeMaureen Rooks

Lane SheaBrad Sanford

Special thank you to

Inside Businessfor their sponsorship

over the past three

years.





old dominion university real estate centers hampton roads ...€¦ · hampton roads real estate...

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