1
Old Dominion University Hampton Roads Real Estate
Market Review and Forecast2005
Presented by: The Center for Real Estate
and Economic Development
Old Dominion University Hampton Roads Real Estate
Market Review and Forecast
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
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
2
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
Southside Peninsula Total
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%
Southside Peninsula Total
20032004
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
3
“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
“EYE ON THE MARKET”
→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
“EYE ON THE MARKET”
• 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