Office Highlights
Leasing Activity, Cont’d
Lease expirations drive leasing
activity; sale volume declines
The Hampton Roads economy slowed in the third quarter, but still
managed to add 5,900 new positions from the second quarter.
Government-related employment posted seasonal year-over-year
losses while the financial sector led employment gains with a 9.4
percent increase in the payroll base over the trailing 12 months. Overall,
the office-using employment sectors added 6,800 positions in the trailing
12 months.
Despite overall employment gains, defense-related industries
maintained a wait and see approach. Layoffs from Fort Eustis coupled
with the next round of sequestration cuts did not inspire confidence.
Contract cancelations and rebids delayed long-term decision making for
smaller firms, while more established firms renewed long-term with
freshly awarded contracts-such as SRA International's 16,462-squarefoot renewal and expansion at 530 Independence Parkway. Interest in
rental rate reductions and downsizes through subleases were a
common theme in the third quarter. Outside the sectors dependent on
federal and state funding, financial services firms led leasing volume,
but were primarily driven by lease expirations. One new firm, Palladium
Partners, LLC., took down 10,348 square feet at Dominion Tower (999
Waterside Drive), the first new deal over 10,000 square feet at the
Downtown tower since Regus’s 13,624-square-foot lease in the second
quarter of 2012. Increased executive-suite leasing at the Dominion
Tower led to Regus taking down a second location at Crossways
Commerce Center I (7023 Harbour Boulevard ), a new 14,789-squarefoot deal in the third quarter.
Construction activity was unchanged from the previous quarter. Armada
Hoffler’s new tower in the Virginia Beach CBD rose an additional floor
for a total of 15 planed with eight stories completed this quarter. Clark
Nexsen agreed to lease nearly four floors for a total of 83,000 square
feet and Virginia Beach Department of Economic Development leased a
single floor for 22,400 square feet. Additionally, a lease for the 15th floor
was under negotiations in the third quarter of 2013. Of the 197,400
square feet of office space roughly 66.0 percent was preleased in the
third quarter. The Federal Bureau of Investigations headquarters at 509
Resource Way in Chesapeake was nearing completion with an expected
delivery early in the fourth quarter. The 131,000-square-foot office
building was owned and developed by Walsh Construction. Additionally,
Stratford University’s build to suit at 555 S Independence Boulevard
neared competition and was expected to deliver next quarter. The
75,000-square-foot office building near the Virginia Beach Town Center
was 100.0 percent preleased by Stratford University.
Hampton Roads . Q3 2013
Tour activity
Leasing volume
Rents
Concessions
Sales volume
Construction
deliveries
Construction
starts
Arrows represent change from prior quarter
Sale volume declined in the third quarter with only one significant
investment sale. 421 Butler Road traded for roughly $5.0 million or $89
per square foot. The 56,564-square-foot office building was 64.5 percent
leased at the time of the sale. Lexington Realty Trust traded the asset to
Baylor Corporation, a local real estate firm.
Leasing activity
Peninsula
Oyster Point
• The Boeing Co. renewed for 10,362 square feet at 11820
Fountain Way (Two City Center).
Southside
Battlefield
• SRA International exercised a renewal option after a short-term
extension and expanded by 1,117 square feet for a total
footprint of 16,462 square feet at 530 Independence Parkway
(Battlefield Technology Center II).
• BECO Asset Management renewed for 5,969 square feet at 609
Independence Parkway (BECO Corporate Center).
Churchland
• Keller Williams relocated to 3207 Churchland Boulevard and
took down 8,000 square feet.
Downtown Norfolk
• Palladium Partners, LLC. leased 10,348 square feet at 999
Waterside Drive (Dominion Tower) in a new deal.
• Wilbanks, Smith & Thomas Asset Management, LLC. renewed
for 10,275 square feet at 150 W Main Street (150 W Main).
• WTC Financial Associates downsized by 1,272 square feet for a
total footprint of 5,748 square feet at 101 W Main Street (World
Trade Center).
Jones Lang LaSalle • Hampton Roads Office Highlights • Q3 2013 2
Leasing Activity Cont’d
Greenbrier
• Regus leased 14,789 square feet at 1545 Crossways
Boulevard (Crossways Commerce Center I).
Harbourview/N Suffolk
• General Dynamics renewed for 10,233 square feet at 7023
Harbour Boulevard (Bridgeway Technology Center)
Newton/Witchduck
• QinetiQ North America, Inc. extended its lease short-term for
a total of 4,600 square feet at 6325 North Center Drive
(James Building).
Virginia Beach CBD
• Strayer University renewed for 13,909 square feet at 249
Central Park Avenue (Virginia Beach Town Center).
• Faggert & Frieden PC renewed for 10,398 square feet at 222236 Central Park Avenue (Armada Hoffler Tower).
• Johnson, Mirmiran & Thompson extended its lease at 272
Bendix Road and maintained a footprint of 7,418 square feet.
Construction activity
Southside
Virginia Beach CBD
• Armada Hoffler’s 221,600-square-foot office tower in the
Virginia Beach Town Center was under construction in the
Virginia Beach CBD. Penned Main Street Tower (4525 E
Main Street), the property is anchored by Clark Nexsen and
Hampton University. Structural work was completed for eight
floors at the end of the third quarter.
• TechnoCenter II was under construction at 555 S
Independence Boulevard. The 75,000-square-foot build-tosuit for Stratford University was expected to deliver late in the
fourth quarter this year.
Sales activity
Peninsula
Hampton Roads Center
• 421 Butler Road traded for $5.0 million, or $89.19 per square
foot (56,564 square feet). Lexington Realty trust sold the 64.5
percent leased property to Baylor Corp.
Construction activity
Peninsula
Downtown Newport News
• The Huntington Ingalls Apprentice School was under
construction at 3101 Washington Avenue. The 151,307square-foot building is expected to deliver in the first quarter
of 2014.
Southside
Greenbrier
• The U.S. Federal Bureau of Investigation’s new regional
headquarters was under construction at 509 Resource Row
in Chesapeake. The 131,000-square-foot structure was 100.0
percent leased by the FBI for 20 years.
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