2011 Hampton Roads Real Estate Market Review - College of ...

General Overview
TThe Hampton Roads office market ended 2010 with relative
stability and with statistical performance reflecting a slow yearend
turn towards recovery and potential growth in 2011.
Representing a tenant-oriented marketplace driven by economic
incentives, a notable inventory of new supply, and stagnant leasing
activity, the Hampton Roads office market is looking to market
performance during the first two quarters of 2011 as an important
predictor of overall market recovery characterized by positive
absorption and decreasing vacancy rates.
The overall office vacancy rate for Hampton Roads remained
a steady 14.6 percent at year-end 2010 bearing little traction from
the year-end 2009 vacancy rate of 14.5 percent for the region. However, Hampton Roads did outperform the National Office
Market vacancy of 16.2 percent and demonstrated relative market strength in comparison with other regional markets
The information in this report relies on market reports from the Brookings Institution, CoStar
METHODOLOGY and individual interviews of local office brokers. The methodology or parameters of size included
in the report for all of Hampton Roads were 19,000 SF and higher for the largest completed
lease transactions in 2010; 5,000 SF and higher were included for the top completed office building sales transactions
in 2010; approximately five acres and higher were included for the top completed office land sales transactions in 2010; and
19,000 SF and higher were included for top new construction deliveries in 2010.
OFFICE MARKET ACTIVITY LIKELY TO PICK UP IN 2011
Economy
The economy in Hampton Roads has remained resilient, and was recently recognized in a study by the Brookings Institution
as a top performing region in the United States. The study analyzed economic performance during the recession and
during post-recession recovery, focusing on data representing employment and economic output. Unemployment in Hampton
Roads has dropped to 7.0 percent, from its peak rate of 7.4 percent in August 2010.
The dust has started to settle around the disestablishment of United States Joint Forces Command (USJFCOM), and
initial fears have subsided as the potential consequences may prove to be less of an economic impact than initially anticipated.
Uncertainty following the announced disestablishment of the USJFCOM prompted tenants and investors in the market to
step back and observe how the market would be affected. There is still a level of residual uncertainty surrounding a potential
spike in vacancy from tenants tied to USJFCOM causing some government contractor office tenants to close, downsize,
or discontinue any expansions planned for fourth quarter 2010 and the first half of 2011.
2011 Hampton Roads Real Estate Market Review
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