While some budget cuts were retroactively amended post sequestration, long-term effects of reduced defense spending were somewhat convoluted for a region with a large military presence. Outside of the defense bubble, a decision not to privatize the Port of Virginia added stability to the heavy developed port network in Hampton Roads.
However, questions lingered on operational oversight as the governor suggested reorganization of the VPA and VIT boards, the ports’ current operator and regulator. Additionally, restructured tax laws will provide the area with greater tax revenue to repair and expand the neglected transit infrastructure. These transit upgrades were considered a high priority in anticipation of the completed Panama Canal Expansion in
2014 and current growth shown by a 9.8 percent increase in cargo traffic in 2012.
Space demand centered around 3PL and distribution firms with high demand for Class A industrial space while defense contractors remained inactive. Although occupiers sought out blocks of space with close proximity to the port, large blocks of Class A space were non-existent.
Rumors circulated that two 1.0 million-square-foot build-to-suit proposals were sent out in the first quarter, all located in South Suffolk’s
CenterPoint Intermodal Park. CenterPoint’s ability to offer low triple-net rents continued to draw prospects to this development over others in the
Hampton Roads market, however its location outside the port network was a major concern. Additionally, a 150,000-square-foot requirement for a retail distribution hub remained active in the first quarter. Despite this uptick in leasing activity two midsized blocks of sublet space came back online. Coastal Logistics and Sparta, Inc. both placed 80,000 square feet of distribution space back on the market in North Suffolk submarket. Coastal logistics planned to relocate its operation while
Sparta, Inc. is expected to completely vacate the Hampton Roads market due to its contract loss.
Sales activity remained most active in the owner-user segment while investment sales maintained a trend toward small-scale take downs with fully-leased assets with freshly signed leases. Construction activity was quiet in the first quarter with no major deliveries occurring since the third and fourth quarter of 2012. No speculative construction was planned in the first quarter, however developers are lowering preleased thresholds to 50.0 percent rater than fully leased projects. A 500,000-square- foot project in this category was still being assessed in the first quarter of 2013.
Arrows represent change from prior quarter
Huntington Ingalls leased 202,004 square feet at 5201 City
Tecnico renewed for 40,766 square feet at 5201 City Line Road.
Swisslog Logistics, Inc. expanded by an additional 42,500 square feet at 161 Enterprise Drive.
Acosta, Inc. leased 63,350 square feet at 5820 Ward Court .
Transnational Foods Inc. renewed for 141,050 square feet within the Diamond Hill Distribution Center (1920 Campostella Road).
Pack Rat leased 27,722 square feet at 3524 Business Center Drive .
Alorica Inc. leased 33,358 square feet at 2510 Walmer Avenue.
Acosta, Inc. leased 27,240 square feet at 2551 Etham Avenue.
Givens Inc. leased 49,801 square feet at 2620 Indian River Road.
Norfolk Industrial (Norfolk)
General Forwarding American Inc. leased 109,180 square feet at
1157 Production Road.
Bauer Compressors signed a lease to expand by 31,000 square feet at 1328 Azalea Garden Road.
Tenants in the market
A retailer is seeking 150,000 square feet of distribution space on the Southside region.
A manufacturing firm is looking for 30,000 to 50,000 square feet to purchase from Richmond International Airport to Virginia Beach.
A building supply firm is seeking 30,000 to 35,000 square feet of warehouse space.
A distribution firm is looking for 10,000 to 15,000 square feet of flex space near Oceana and Rosemont.
A manufacturing firm is looking for a 10,000- to 15,000-square- foot facility to purchase in the Suffolk, Chesapeake, and
A 3PL firm is looking to take down 30,000 square feet in the
Newport News area.
A small user is looking for 4,000 square feet of flex space in the
Newport News and Hampton area.
Cleveland (Virginia Beach)
Parrott Properties, LLC., purchased 3666 Progress Road for $2.8 million or $33 per square foot. The 82,964-square-foot warehouse was fully occupied and recently leased by Tidewater Fleet Supply.
Lynnhaven (Virginia Beach)
2820 Crusader Drive sold for $5.5 million ($35 per square foot) to
Architectural Graphics in an owner-user sale.
South Suffollk (Suffolk)
1013 Obici Drive sold for $1.5 million or $52 per square foot. The
30,525-square-foot, manufacturing building was purchased by
Superwatt Power International in an owner-user transaction.
A 31,000-square-foot addition was underway at 1328 Azalea
Garden Road. Bauer Compressors will expanded into the space upon completion in the fourth quarter of 2013.
Jones Lang LaSalle • Hampton Roads Industrial Highlights • Q1 2013 2
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