In 2003, three leases totaling  14,315 SF are signed for office space  in Norfolk's Main Street Tower.

Hampton Roads Office Market Remains Resilient

HAMPTON ROADS, VIRGINIA – in 2003, the office market in Hampton Roads, unlike much of the country, remained stable, seeing a fairly large amount of lateral movement by local companies.  But with the completion of several office projects over the past year such as The Town Center of  Virginia Beach, the Oyster Point Town Center in Newport News and the 150 West Main building in Norfolk, locals are predicting an upturn in the area’s office market over the next 12 to 18 months.

Area companies are benefiting from low interest rates by improving their office environments.  Tenants are taking advantage of an opportunity to move or expand from older to newer buildings, without increased rental rates.  “Over the past year we are seeing Class B tenants now able to afford Class A space for the first time in a couple of years,” says Vivian Turok, vice president of Divaris Real Estate Inc.’s office leasing division in Virginia Beach.

Hampton Roads includes seven major cities: Chesapeake, Hampton, Newport News, Portsmouth, Suffolk and Virginia Beach.  Historically, the region’s office market has been a strong one.  However, since the tragedies of September 11th, the entire nation’s office growth activities have faltered somewhat.

But in Hampton Roads, 2003 may have been the catalyst the office industry has needed for its major return.  Companies are growing confident for the first time in over two years.  The area’s total market vacancy rate decreased over a full point to 13 percent due in part to a considerable amount of movement and expansions in the area over the last 12 months.

Much of this movement can be attributed to the recent development of large Class A office projects throughout the Hampton Roads area, including The Town Center of Virginia Beach.  Divaris Real Estate’s office leasing team of Maureen Rooks and Keith Pezzella are handling the leasing for The Town Center.  The Tower building currently has a 90 percent occupancy rate and interest in the building’s remaining space is red hot.

“We were resilient, even with the poor market and economy.  Now we are helping to bring it back,” says Rooks.  “The Town Center has stolen the show because it is a new and exciting place and it is in the center of things.”

According to a study conducted by Old Dominion University, downtown Norfolk’s vacancy rates increased slightly from 15.7 percent to 17.6 percent, as a result of the new office towers in Norfolk and Virginia Beach.  Some who have remained in downtown Norfolk moved to other properties in the city.  For instance, SunTrust Bank recently moved from the SunTrust Tower to the new Class A 150 West Main Street building.

While the vacancy rates did increase slightly for downtown Norfolk in 2003, Divaris Real Estate was successful in leasing second generation Class A and Class B product in downtown Norfolk.  In Norfolk’s Main Street Tower, Divaris leased space to three new tenants.  Stratum New Media, Inc., a marketing and information media firm, leased 3,997 square feet.  A lease for 4,846 square feet was signed by John Robert Powers, a modeling, talent and corporate training company.  And, the fleet services division of Enterprise Rent-A-Car, Enterprise Leasing Company, signed a lease for 5,472 square feet in the building.

Another indicator of an improvement in the local office market is the increase in interest from outside the area.  “There seems to be more inquires about the region from companies that currently do not operate in Hampton Roads.  Many are seeing this area as one that is developing,” states Turok.

Several tenants in the Town Center of Virginia Beach have come here for the first time from outside areas.  Benefit Center of America came from Florida.  Both Fidelity National Title and TransCommunity Bankshare arrived from Richmond, Virginia, to join The Town Center.