Richmond, VA State of the Office Market Q4 2009

RICHMOND, VA--Fourth quarter highlights of the office market in Richmond, VA presented by Perry H. Moss, (top right photo) CCIM, MBA, Research Analyst, Jones Lang LaSalle Americas, Inc., are shown below:

Leasing activity


CBD

• Investment and banking firm, BB&T/Scott & Stringfellow leased

140,000 square feet of Class A space at Riverfront Plaza. This

space was formerly occupied by Wachovia Securities and was

transformed into sublet space upon Wachovia’s departure to St.

Louis in their merger with A.G. Edwards.

• Sands Anderson Marks & Miller, a law firm, inked a deal for 38,800

square feet at The Bank of America Tower. They should move in

early in 2010, while vacating a Class B, downtown property.

• Glave and Holmes, an architectural and design firm, signed a lease

for 14,600 square feet in Shockoe Bottom.

Suburban

• Title and closing services firm, Lawyers Title, leased 27,500 square

feet in Innsbrook Office Park in Henrico County.

• Bell Techlogix, an IT consulting firm, inked a renewal of 15,300

square feet in The Arboretum Office Park of Chesterfield County.

• Family law firm, Batzli Wood Stiles, signed a deal for 11,900 square

feet at Westerre Office Park in Henrico County.

Sales activity

Suburban

• 101 West Commerce Road (41,000 square feet, Class B), located in

South Richmond, sold for $4.74 million, or $116 per square foot. The

buyer was 101 West Commerce LLC, while the seller was Thomas

Carter Ryley Inc.

Construction activity

CBD

• MeadWestvaco’s new corporate headquarters is materially complete

along the James River. Foundry Park I will encompass some

330,000 square feet over nine stories of full glass exterior. The

packaging conglomerate will be vacating their West Broad location

upon completion. Recent layoffs have led to the subleasing of certain

floors at Foundry Park. A few employees have started to move in,

however, the full occupancy will not take place until February 2010.

At that time, some 700 employees will occupy the new building.

• The Williams Mullen Center on South 10th Street is also under

development, albeit not as far along as Foundry Park I. The property

is 63.0 percent pre-leased, primarily to law firm Williams Mullen. The

building should be ready next spring. Upon moving into their new

headquarters, Williams Mullen will be vacating 120,000 square feet

at James Center II.
 
 
Contact:   Perry H. Moss, CCIM, MBA, Research Analyst, Jones Lang LaSalle Americas, Inc., tel +804 200 6463, mobile +804 245 9774, perry.moss@am.jll.com

Richmond, VA Office Highlights Q3 2009

RICHMOND, VA--The silver lining of this office  market is that we have, or more appropriately will over the next six months, hit bottom, reports Perry Moss (top right photo)  of Jones Lang LaSalle Research in Richmond, VA.

 The upward turn will be slow and tenuous, but it will come. Mid-2010 to early 2011 should mark the arrival of true sustainable recovery and optimism. The local and national economies must return to a growth pattern, particularly employment, if commercial real estate is to substantially rebound. After all, the lifeblood of our industry is the employed workforce.

It really is a question of timing. What some consider the worst two-to-three
quarter stretch in the region’s history may finally be waning.

However, we are well into the full throws of the aftershocks. Commercial real estate is a classic lagging industry and this recession
no different.

A top headline, once again, is the virtual disappearance of the sales market. In the past three years, the sales count has fallen from 61 to 44 to 15 respectively.

Volume over the same time period has gone from $684 million to $358 million to $46 million. There remains a strong disconnect between buyers, sellers, and lenders.

Each has a radically different viewpoint on the market than they did just two years ago, which has resulted in a misalignment of goals, objectives and expectations.

The leasing market does not show this kind of falloff. In fact, leasing totals are relatively stable year-over-year for the past three years. The difference is found in the structure of the leases.

The clear trends are towards shorter terms, increased landlord incentives (free rent, TI, etc), and downward pressure on rental rates and escalations. Large block leases are also more scarce.

For a complete copy of the Richmond report, please contact:

Perry Moss, CCIM, +1 804 200 6463, Perry.Moss@am.jll.com

Alicia Moody, +1 804 200 6418, Alicia.Moody@am.jll.com

Hewlett Packard Renewal Helps Richmond, VA Industrial Market

RICHMOND, VA--Perry Moss, regional research director, GVA Advantis, reports the industrial leasing market appears better than in actuality as it was heavily buoyed by the Hewlett Packard renewal of 800,000 square foot at White Oak Technology Park in Eastern Henrico County.

The sales market is in a virtual free-fall due to credit and market instability.

Most key indices are down, including vacancy which is at its highest level in over two years, but look to recover later this year or early 2010.

A myriad of negative economic news forced the leasing market to slow considerably, however, received a one-time shot in the arm from the 800,000 square foot HP renewal. Most tenants are opting for short flexible leases.

The Qimonda AG computer chip memory production facility at White Oak is now closed costing some 1,500 high-tech jobs.

Tyson Foods expands by 180 positions at their Hanover County facility.

USF Holland Trucking shuts down its Belt Blvd. location affecting 350 jobs.

Contact: Perry Moss, PMoss@gvaadvantis.com

GVA Presents Richmond, VA Industrial Market 2008 Wrapup

RICHMOND, VA--Perry H. Moss, regional director, research, GVA Advantis, presents the 2008 review of the Richmond, VA industrial market:

MARKET SUMMARY

The market survived 2008, not the most pleasant of years. 2009 will be a continuation of last year.

The leasing market may show signs of continued sluggishness in 09 as the economic lag catches up to the industrial base.

The sales market on the other hand, which had a steep decline in 2008, will continue on the same path with the possibility of reaching a bottom by late 09.

MARKET REVIEW
2008 is over, it was challenging, and introduced market issues we haven’t seen in a long time.

The reliance of major corporate institutions upon federal funds and a virtual freezing of the credit market are two conditions that are rare, but far-reaching.

The industrial market suffered in the last 2/3’s of 2008, albeit not to the same degree as the office market.

It would be great to say that we’ve made it through 2008, and now the market can pull itself together and get back on a positive track.

2009 will be another challenging year. All market participants need to be prepared for a turbulent year.

Recurring trends for next year include: a continued shift in negotiating leverage towards tenants; willingness of landlords to make concessions to secure occupants; sale leaseback activity rising considerably; further declines in asset price points; and gradual deterioration of key fundamentals such as vacancy, absorption, and rental rates.

LEASING MARKET

Tenants are opting for renewals and shorter terms while pushing harder for concessions such as free rent and tenant improvements.

In 2009, landlords will be more willing to accept slightly lower rental income in order to provide occupancy to their assets. They will need the capital.

If owners attempt to tap into the near zero rate debt market, they will need evidence of their ability to re-pay the loan. This would be highly unlikely without a reasonable and reliable net operating income stream

SALES MARKET

2009 will be a great opportunity for well capitalized investors, those able to get financing, and bargain hunters.

Continued erosion of REIT and portfolio purchases will hold down volume for the next several quarters. Landlords will pay very close attention to the offer of sale leaseback opportunities as the infusion of capital will be of paramount importance.

Prices will fall in 2009, while cap rates rise. A mitigating factor for rising cap rates will be an erosion of operating income as reliable, long-term tenants will carry a tremendous premium due to their scarcity.

Contact: Perry H. Moss, Regional Director, Research, 804 644 4066, pmoss@gvaadvantis.com

GVA Shows 2008 Office Market Results in Richmond, VA

RICHMOND, VA--Perry H. Moss, (top right photo) regional director of research, GVA Advantis, Richmond, offers this analysis of the Richmond office market in 2008:

MARKET SUMMARY

We would all love to forget about 2008, put it behind us and move on. As 2008 fades into 2009, we will continue to see bumps in the road. Conditions will improve, however, the market has a cleansing period that it will have to endure before the stability of fundamentals is realistic.

MARKET REVIEW

Let’s get two things said and out of the way: the last 2/3’s of 2008 was extremely challenging, and 2009 will most likely be a continuation. Vacancies, particularly subleases are up and will rise. Development, leasing velocity, sales activity, rental rates, and absorption are all likely headed down. Major layoffs have been announced at MeadWestvaco, Genworth, LandAmerica, and Circuit City to name a few.

Yet, in this sea of despair, there are pockets of tremendous opportunity. Well positioned tenants will have great leverage in procuring or re-negotiating their leases. Landlord concessions will not be petty.

Well capitalized investors will be able to acquire properties are bargain basement prices. Cap rates will continue to climb as owners will be hungry for cash infusions.

The development cycle will stall and allow for equilibrium to return to the asset market. And owner-occupants with on-going business concerns will line up for the inevitable rush of sale leaseback offers as capital will be the ultimate motivator for businesses and landlords.

LEASING MARKET

While the quantity of leases was on par historically in 2008, the square footage volume dropped significantly. A clear indication of tenants opting for smaller leases leaving little probability for potential sublease space. Expansions are decreasing while renewals are increasing. Landlords do not have the luxury of turning down small lease offers as the larger ones are extremely sparse.

SALES MARKET

It is difficult to find the silver lining in these graphs, however, they do exist.

Well capitalized investors or those positioned well enough to procure financing will have their choice of assets at multi-year low prices with elevated cap rates.

An interesting debt note is that even though the fed has dropped interest rates to record lows, commercial lenders have actually raised their rates due to the scarcity of funds.

Contact: Perry H. Moss, Regional Director, Research, 804 644 4066, pmoss@gvaadvantis.com

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/

Richmond Industrial Market Shows Strong Leasing Demand

RICHMOND, VA--A stark differential in the key industrial statistical categories emerged this quarter in the Richmond market, according to Perry H. Moss, (top right photo) CCIM, MBA of GVA Advantis.

On one hand was a fantastic leasing trend and a nice fall in the warehouse/distribution/manufacturing segment vacancy rate. On the other, the sales market is having a rough time and the flex segment sees its usual steady performance stumble moderately.

Market Statistics & Summary

A second look at the first chart (at left) is very much warranted.

The leasing market, buoyed by several massive leases in the distribution segment has launched the year over year trend into greatly positive territory.

While this level of trend growth cannot realistically be expected to continue, it none the less, has given a strong statement to the stability and resourcefulness of the market. Flexible lease terms and landlord concessions helped pave the way for the strong leasing demand.

There was a bit of a trade-off with the flex market as that segment has an office/retail component which is more sensitive to immediate economic changes.

Flex spaces also tend to attract more smaller and local firms which cannot afford to risk the capital and don’t have the resources of major corporations.

The sales market fell sharply from last year as the scarceness of financing coupled with the economy revealed its darker side.

For more information, please contact Perry H. Moss, CCIM, Tel 804.672.4248, pmoss@gvaadvantis.com
GVA Advantis, 707 E. Main Street, Suite 1400, Richmond, Virginia 23219 gvaadvantis.com