JLL recognizes Hampton Roads in national report
The Class A office towers in the downtown Norfolk and Virginia Beach Central Business Districts have caught the eye of a national commercial real estate company.
In JLL’s 2016 Skyline report, which focuses on the top end of the office leasing market in 52 major cities nationwide, eight buildings in Hampton Roads get a mention for the first time. They include 150 West Main Street, the World Trade Center, Dominion Enterprise building, Wells Fargo Center, Norfolk Southern Tower, and Dominion Tower in Norfolk and the Armada Hoffler Tower and 4525 Main Street in Virginia Beach.
The report notes that Hampton Roads is improving with a steady stream of absorption. Direct vacancy is down to 10.3 percent in 2016 as compared with 12.1 percent in 2015.
In terms of vacancy, Hampton Roads outperformed other markets around Virginia, including Northern Virginia where vacancy stood at 21.6 percent at the end of the second quarter, primarily because of the completion of a large new office tower at Tysons corner.
Trophy assets in Hampton Roads have been built or significantly renovated since1988 and offer strong locations and higher-quality finishes compared with other buildings in the area. Major attractions for these buildinss include the ability for tenants to walk to restaurants, shops, hotels and entertainment venues and, in downtown Norfolk, access to The Tide, Hampton Roads' light rail system.
“Our office recovery started in the suburbs, but is now filtering up to our urban core where you are seeing companies such as ADP relocate 1,800 people to downtown Norfolk, reenergizing the downtown economy,” Deborah Stearns, a senior vice president for JLL in Norfolk, said in a statement.
While the region's two central business districts are increasingly popular with millennials as the conversion of many older office buildings to multifamily housing continues in downtown Norfolk and development of new multifamily options continue at Virginia Beach Town Center, most office absorption during the recovery has been in value-priced, low-A to high-B suburban space.
“The inclusion of Hampton Roads in JLL’s Skyline report is a recognition of the quality and maturity of this market and a major signal to site selection specialists that this market has arrived,” added Stearns. “The number of multifamily units in downtown Norfolk is close to 5,000, with the conversion of old class B and C buildings to apartments. This is creating a sustainable live, work, play environment and offers the kind of quality of life major corporations are seeking for their employees but at a greatly reduced cost.”
According to the report, the Hampton Roads Skyline market is currently tenant-favorable, but it is not expected to last long. “There is no new Skyline-grade inventory planned, and while we are currently in a tenant-favorable market, the general trend of market indicators is leaning to landlords over the next 24 months, “said Gregg Christoffersen, a vice president with JLL.