Richmond, VA Office Market Vacancy Holding Steady at 12.88%

RICHMOND, VA--Perry Moss, (top right photo) Regional Director of Research at the Richmond, VA office of GVA Advantis, says "It may be difficult to find the silver lining during these difficult times. With almost all key market matrixes on the decline and a chaotic economic and political backdrop, it is easy to point out the negatives.

"A deeper look reveals a few bright spots and gives validity to the future recovery of the market. These are challenging times. No question, however, optimism of a 2009 rebound is certainly reasonable.

MARKET SUMMARY

In a swirl of negative news, the vacancy rate is actually holding relatively steady. The market rate is 12.88%, whereas 12 months and 24 months ago it was 12.03% and 14.54% respectively.

The market is indeed better off then two years ago. Of course, vacancy is only one piece of a larger puzzle and cannot be viewed in a vacuum. The overriding trends in leasing velocity, sales activity, net absorption, sublet space are all definitively negative.

When layered with the area’s economic issues such as the Circuit City bankruptcy filing and loss of 800 jobs, the LandAmerica buy-out by a Florida competitor, the slow-down in Philip Morris’s business, and a 150 basis point jump in unemployment, it makes finding the silver lining a bit more difficult. Metro Richmond, however, is well diversified and has a long record of resiliency; the market will improve with time.

Over the last 3 quarters, we have witnessed a rather intense slowing in leasing volume. However, the quantity of leases is steady, if not improved. This is due in large part to companies opting for the renewal versus thenew lease or expansion of space. The tenant motto is “wait and see."

Organic leasing growth and new leases from out of market areas are all but non-existent. Of particular interest was that both the SWQ and NWQ class A leasing percentages of inventory
were sub 10 percent.

This magnifies the lower ratio of leasing volume to inventory which is almost entirely a result of the leasing volume as inventory changes generally occur in small increments (for example, the total suburban inventory has increased 3.48% over the past 12 months).

LEASING LAST 12 MONTHS AS A % OF INVENTORY

􀂄 A worldwide leading tobacco leaf concern, Universal Leaf, leases nearly 47,000 square feet at the Stony Point Office Park off Forest Hill Avenue. Universal Leaf will be vacating their owner-occupied space on North Hamilton Street upon moving.

􀂄 In Chesterfield, near Courthouse Rd. and Midlothian Turnpike, the Virginia Department of Energy Management Services renews their nearly 34,000 square foot lease on Trade Court in the Southwest Quadrant (SWQ).

􀂄 The Virginia Schools of Technology signs on for just over 31,400 square feet at the Ukrop’s Westmoreland Complex.

􀂄 Insurance provider, Tabb, Brockenbrough & Ragland procures 16,000 square feet at Wilton Park on Dickens Road.

CONTACT:

Perry H. Moss, CCIM, MBA, Regional Director of Research, Advantis Real Estate Services Company, 707 East Main Street, Suite 1400, Richmond, VA 23219, Tel 804.672.4248,
Fax 804.783.1920.
E-mail pmoss@gvaadvantis.com

http://www.gvaadvantis.com/