Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 2, 1994 TAG: 9402020085
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
Meanwhile, prime office space is in short supply, especially downtown, while plenty of lower-grade Class B space is available both downtown and in the suburbs.
The conclusions come from the annual national survey, released Tuesday, of the Society of Industrial and Office Realtors, a commercial realty organization. The report shows a 17 percent office vacancy rate, an average from measuring commercial real estate in 118 North American markets and a 10.3 percent average vacancy of industrial property in 149 markets.
In Roanoke, the industrial survey was made by M. Dale Poe of Waldvogel, Poe and Cronk Real Estate Group Inc.; the office survey was by Stuart L. Meredith and Edwin C. Hall of Hall Associates Inc.
Hall said the rental situation for Class A space in the suburbs is improving. Space is a little tighter downtown than in the suburbs.
Affecting the market in the past year, Hall said, was that First Union National Bank largely filled First Union Tower, a building that had reported significant vacancies a year earlier. Hall said the bank would like to sublease the unoccupied 21st floor, but at only 14,000 square feet it is not considered much of a drag on the office market.
Also downtown, the Crestar and Signet buildings are nearly full, he said, and Franklin Plaza has a high occupancy rate.
In the suburbs, Hall said, north Roanoke County "is a much smaller and more shallow market." Buildings in that area, he said, tend to be office-warehouse combinations or single-story structures.
Southwest Roanoke County and Roanoke's central business district are large office markets with much better occupancy figures, he said.
Hall said he has no question but that the commercial real estate market is getting better, but industrial and retail properties are recovering faster than office space, because the overbuilding of office space was driven by easy credit rather than actual market forces of supply and demand.
The office market is just starting to come back, he said. Hall predicted a shortage of space in about 2 1/2 years.
The report said the demand for office space increased last year because of growth in the region's finance, medical and government sectors.
"Demand for sales of small single-user office buildings has also increased," the report said.
"Expansions are starting to occur, but have yet to make a major impact."
"The combination of low market rents and the lack of available mortgage money will curtail speculative development in 1994," the society said. "What new construction does take place will be strictly build-to-suit."
In the industrial real estate market, the society found that the dollar volume of sales and lease transactions rose as much as 10 percent in some segments of the Roanoke market.
Tenants leased more than 1 million square feet in suburban buildings, lowering vacancy to an extremely tight 1.4 percent.
"A shortage now exists for space under 40,000 square feet and especially for properties 20,000 square feet and smaller," the report said.
Nevertheless, the society said, financing constraints continue to limit development.
If credit eases, the report said, there could be speculative consturction in the latter half of the year. Build-to-suit activity should continue at a faster pace than last year.
by CNB