2015 Real Estate Market Review

retail 2015 hampton roads real estate market review Author David Machupa Cushman & Wakefield | THALHIMER Survey Collection Luisa Lucero E.V. Williams Center for Real Estate and Economic Development Old Dominion University Data Analysis/ David Chapman, Ph.D. Layout Old Dominion University Financial The E. V. Williams Center for Real Estate and Economic Support Development (CREED) functions and reports are funded by donations from the CREED membership, organizations, and individuals. Disclosure The data used for this report are deemed reliable; however, neither Old Dominion University, the E. V. Williams Center for Real Estate and Economic Development, nor sponsoring companies and/or individuals make any representation or warranty as to its accuracy. 2015 retail 13 2015 retail d e f i N i T i o ns o f T e rms Asking Rates: The market rate per square foot of a retail property (excluding freestanding buildings and malls), exclusive of additional rents that may be paid under a triple net lease. Interpretation of average retail rates in General Overview different product types and submarkets should be viewed cautiously given the tremendous variability in rates for like products and for properties located within the same submarket. Factors such as visibility, co-tenancy, and accessibility, are some of the many sources of variation in market rates which should be considered. his report analyzes the 2014 retail real estate conditions Big Boxes: Contiguous retail space that is at least 23,000 square feet and located in any one of the identified within the Virginia Beach-Norfolk- product types. Retailers occupying big boxes include, but are not limited to, the following: category killers, specialty Newport News, Virginia Metropol- stores, discounters, furniture stores, grocery stores and theaters. Bowling alleys, automotive uses, roller rinks and itan Statistical Area (MSA) which is ice-skating rinks were not included. commonly referred to as HamptonT Roads. The report examines supply, CAM: Common Area Maintenance. vacancy, construction, absorption, and rent data to provide a comparison of data for the Product Types: Properties were classified according to one of the following nine retail product types. The specific submarkets and product types located within the Southside and Peninsula regions of the Hampton International Council of Shopping Centers defined the first six categories. Three additional categories were included Roads MSA. Southside properties surveyed for the purpose of this report included those located in the cities of to accurately categorize the remaining properties. Chesapeake, Norfolk, Portsmouth, Smithfield, Suffolk and Virginia Beach. Peninsula properties surveyed are located in the cities of Gloucester, Hampton, Newport News, Poquoson, Williamsburg, and York County. Neighborhood Center 30,000 to 150,000 square feet; supermarket anchored This survey is recognized as the most comprehensive analysis of retail real estate trends in the Hampton Community Center 100,000 to 350,000 square feet; discount department store, Roads MSA. The report includes information on all retail property types including regional malls, supermarket or drug store anchored freestanding buildings and strip centers of various classifications. The scope of the report also includes Fashion/Specialty Center 80,000 to 250,000 square feet; fashion anchored a summary of new retail construction activity, an analysis of absorption, and a review of selected retail Power Center 250,000 to 600,000 square feet; category killer, home improvement investment sales that have occurred in the region in 2014. and discount department store anchored Theme Festival Center 80,000 to 250,000 square feet; restaurants, entertainment anchored METHODOLOGY Outlet Center 50,000 to 400,000 square feet; manufacturer’s outlet store anchored This survey gathered information about strip shopping centers and regional malls located in the Hampton Roads Freestanding Individual building not considered a shopping center MSA that were generally 30,000 square feet in size or larger. Additionally, information on retail-oriented freestanding Mall Shopping center with area designed for pedestrian use only buildings at least 23,000 square feet and freestanding buildings that contained furniture stores, discounters, Other Any center that does not fit into a typical category grocery stores or category killer retailers that met the established size criteria were included in the survey. Automotive uses and buildings containing “downtown storefronts” were not included. Although available retail Regional Mall Node: Submarket anchored by regional mall. space in many submarkets (e.g. Ghent) is best described as a collection of small specialty shops, storefronts or Small Shop: In-line retail space usually less than 10,000 square feet located in a multi-tenanted shopping center. freestanding buildings, practical limitations dictated that the focus of the survey be on larger product types. Submarkets: Hampton Roads is divided into 35 retail submarkets (25 Southside submarkets and 10 Peninsula The survey data were collected between November 2014 and January 2015. Questionnaires were mailed to owners, submarkets) which reflected general concentrations, pockets or corridors of retail product type. Geographical leasing agents and property managers responsible for retail properties meeting the selection criteria. Direct contact boundaries of the retail submarkets were influenced by density of existing retail product, physical or geographical 2015 was utilized as a follow-up to the mailing to encourage participation. Information on square footage for freestanding obstacles, existing transportation networks, municipal boundaries, population concentrations and retailers’ per- buildings was obtained from building owners, tax records, store managers and retail real estate representatives. ceptions of the MSA. Final determination of specific boundaries of each submarket was made by a subcommittee retail Sales information was obtained from property owners, real estate agents, appraisers and real estate assessors. of retail real estate professionals who are actively involved in the MSA. Also highlighted were specific submarkets that are anchored by regional malls. A map which identifies the general location of each submarket is included in the centerfold of this report. Triple Net Lease: Type of lease under which a tenant pays its pro-rata share of real estate taxes, insurance and common area maintenance. 14 2015 Hampton Roads Real Estate Market Review 15 2015 retail YEAR IN REVIEW 2014 HAMPTON ROADS MARKET SURVEY Overall 2014 was an active year in the retail market for Hampton Roads. We saw activity from existing grocery The Hampton Roads retail market contained stores, entry into the market by new tenants, expansion and relocations of existing tenants as well as multiple new approximately 53,190,105 square feet of gross developments. On a national level, the retail market rebounded as it did here in Hampton Roads. The financing market leasable area (“GLA”) in 425 properties with an is active and stable with lenders seeking opportunities. We are seeing capitalization rates decreasing therefore average asking rental rate of $16.34 with triple net increasing overall sales price but we are not seeing a great deal of Investment Sales or opportunities in Hampton charges (Common Area Maintenance, Real Estate Roads. There are many investors interested in the Hampton Roads area. Taxes and Insurance) running $2.85 per square foot. The US Census Bureau indicates the popula- Grocery Stores led the way in 2013 did so again in 2014. Kroger and Wal-Mart Neighborhood Market were tion of Hampton Roads is approximately 1.7 Million very active. Wal-Mart opened in the Pembroke area of Virginia Beach with a Super Center as well as multiple resulting in a 31.29 square feet of retail supply per Wal-Mart Neighborhood Market concepts throughout Hampton Roads. Harris Teeter opened in the Red Mill area of person. Certain methodological differences (e.g., Virginia Beach and Wards Corner area of Norfolk. Kroger opened its 124,000 square foot Marketplace concept in the inclusion of freestanding buildings and malls in Portsmouth and Northern Suffolk. Whole Foods is under construction at the Tech Center of Oyster Point in this survey) make it difficult to compare per capita Newport News and The Fresh Market opened in the Ghent section of Norfolk. CVS and 7-Eleven both continued supply in the MSA to a national average statistic. aggressive expansion within the market. Simon Properties has Lake Wright under contract and is working to bring an outlet mall to the Norfolk site. MarketSquare, formerly Lynnhaven Shopping Center, a mostly vacant property along Hampton Roads consists of two markets, the Southside and Peninsula. The Southside market has approximately Virginia Beach Blvd has been redeveloped and opened with the first Hobby Lobby in the market as well as a 35,585,486 square feet, roughly 66% of the total square footage in the market, in 289 properties. The average Wal-Mart Neighborhood Market and One Life Fitness. Virginia Beach Town Center, long a successful restaurant asking rent for small shop space increased $.36 over 2013 numbers to $16.92 triple net. The increase in rental location, really hit its stride in 2014 with the addition of Lululemon, Anthropology, and Free People. Additional rates can be attributed to consistent demand as vacancy rates decreased further to 6.30% in 2014. While 202,940 national retailers including

Load more