
DATE: Sunday, September 7, 1997             TAG: 9709010175

SECTION: BUSINESS                PAGE: D5   EDITION: FINAL 

TYPE: HAMPTON ROADS ALMANAC '97

SOURCE: BY MEREDITH COHN, STAFF WRITER 

                                            LENGTH:  102 lines

REAL ESTATE ON MORE SOLD GROUND AFTER DECADE'S SLOW START

When it comes to commercial and residential real estate markets, the 1990s have brought some ups and downs, with the second half of the decade looking better than the first.

On the commercial side, dozens of new and expanding businesses have filled much of the glut of property produced in the 1980s.

The vacancy rates for industrial property - manufacturing sites and warehouses - have been declining in recent years, with Chesapeake and Suffolk experiencing the most significant drops.

For example, the vacancy rate in the Greenbrier area in Chesapeake, one of the hottest commercial real estate markets in the region, decreased from 9 percent in 1996 to 7.4 percent this year. And Suffolk's industrial areas went from a 14.1 percent vacancy rate last year to a 7.4 percent rate this year.

This decline can partially be attributed to companies such as Dollar Tree expanding into larger quarters and leaving behind empty buildings. Some larger blocks of space - more than 50,000 square feet - are more readily available than smaller sites.

Overall, Hampton Roads' industrial space vacancy rate was about 9.9 percent in July, which was about the same as Virginia and its neighbors but higher than the national average of 7.1 percent.

Businesses also are leasing office space in Hampton Roads. Suburban locations, at a vacancy level of 8.9 percent in January for all classes of space, are going faster than city sites.

Gee's Group built a 100 percent speculative office building this year in the Pembroke area of Virginia Beach, becoming the first developer in recent years to acquire financing for unleased space. Industry watchers say other developers may follow, but conservative bankers may still be requiring some signed leases before construction begins - especially since Pembroke Office Park filed for Chapter 11 bankruptcy protection in August.

Mostly, new and expanding companies still are following the build-to-suit trend.

In general, commercial and residential developers are not securing building permits at nearly the rate they did in the 1980s, but some real estate agents say the market is improving.

In the latter half of the 1990s, home builders are putting up more single-family homes, townhouses and duplexes, most heavily in Virginia Beach and Chesapeake. That has left the rental market tight.

Apartment managers and owners say apartment buildings, except for subsidized developments, are scarce because apartment rental rates in the area aren't high enough to cover construction costs. Other property managers said people prefer houses.

Construction and sale of new homes, and resale of homes, declined some in the first half of 1997, following a pattern of small dips and peaks in the 1990s. But real estate brokers said they are optimistic that new and expanding business will increase the number of buyers later in the year.

Interest rates, around 7 1/2 percent in recent months, also should make home buying attractive. MEMO: BUSINESS ALMANAC ILLUSTRATION: Photo

IAN MARTIN/The Virginian-Pilot

Townhouses, such as the Sand Spur Villas in Virginia Beach...

Graphics

The industrial vacancy rate in Greenbrier is 7.7%, down from 9%

last year. In Suffolk, the vacancy rate improved from 14.1 percent

to 7.4 percent.

Hampton Roads' overall industrial vacancy rate, 9.9 percent, is

on par with Virginia but slightly higher than the nation's average.

In the latter half of the 1990s, home builders have been putting

up more single-family homes, townhouses and duplexes, most heavily

in Virginia Beach and Chesapeake.