Recovery time
Commercial real estate looks past pandemic
Published
More than a year into the pandemic, the commercial real estate market in Hampton Roads isn’t hurting.
“The pandemic wasn’t as bad as we feared it might be for commercial real estate,” says Larry Colorito Jr., chair of the board of directors and a senior managing director for national appraisal firm Valbridge Property Advisors.
Geoff Poston, who heads up Cushman & Wakefield | Thalhimer’s industrial brokerage team in Hampton Roads, says the area’s industrial real estate market is “hotter than it’s ever been,” with a 1.5% vacancy rate, far below the historical average of 6% to 6.5%. (For the same time period, the region’s industrial vacancy rate was 3.1% in 2019 and 2.5% in 2020.)
In the hard-hit retail sector, shopping centers with grocery stores as anchors are performing well and other retail sectors are picking up steam. “Confident consumers are doing their part to help push the retail demand in the market,” according to second-quarter regional market reports from Cushman & Wakefield | Thalhimer. The retail vacancy rate in Hampton Roads was 5.2% for the second quarter, about the same as it was pre-pandemic.
Compared with how it was prior to the pandemic, the region’s office market has been “anemic,” Poston says, but it picked up some this spring and summer as more people became vaccinated against COVID-19. While the impact of hybrid and remote work schedules is still being determined, there hasn’t been an exodus of companies from office space, he adds. For the second quarter of 2021, the region’s office vacancy rate was 9.2%, compared with 8.1% for the same period in 2020 and 8.6% in 2019.
Upcoming construction projects that will be important in the region include the two casinos under development in Norfolk and Portsmouth and the redevelopment of Military Circle Mall in Norfolk. Construction on Norfolk’s casino, alongside Harbor Park, should be completed by 2023. The planned Rivers Casino Portsmouth could open as soon as late 2022. Norfolk is weighing three proposals to redevelop Military Circle Mall into a multi-use project including an entertainment arena and office space.
