A rising tide
Port lifts Hampton Roads office, industrial markets
The Port of Virginia continues to drive commercial real estate activity in Hampton Roads as shipping and logistics companies seek footholds. The region’s office vacancy rate rose this year — from 8.1% at the end of the first quarter to 8.4% at the end of the second quarter — but is “relatively healthy compared to similar-sized markets,” according to Cushman & Wakefield | Thalhimer’s MarketBeat office market reports.
That’s largely because of a lack of new inventory, which is also driving rents up. But although the region’s office market reflects a lack of supply, its industrial real estate market is booming from new demand for warehouse space, driven by proximity to the port.
At the end of the second quarter, industrial leasing prices were up 25.3% year-over-year and have risen 9% since the start of 2023, with a 2.3% vacancy rate, Thalhimer reports.
Although the first quarter saw a slight slowdown in activity because of rising interest rates, demand for warehouses of 200,000 square feet increased as summer ended and interest rates stabilized, says Geoff Poston, a senior vice president with Thalhimer.
For local users such as HVAC suppliers, the market for warehouses of 20,000 to 50,000 square feet has stayed competitive, mainly because new development is focused on bigger warehouses.
“Our market [is] really a tale of two different worlds,” Poston says, now that shifting trade patterns have put the port — and Hampton Roads — on the national stage.