SOUTHEAST SNAPSHOT, MAY 2005

Hampton Roads Retail Market

Ed Kimple 1st Vice President Thalhimer/Cushman & Wakefield

The other major trend enveloping the Hampton Roads retail market is the recent popularity of lifestyle/mixed-use projects. Currently, six of these type developments are under construction, and one more is on the drawing board.

As a result of these trends, several significant projects are heavily impacting the retail market. City Center at Oyster Point, being developed by Harvey Lindsay, is a true mixed-use project. The development features a variety of amenities, including more than 1 million square feet of office space, a 256-room luxury Marriott Hotel with a 60,000-square-foot conference center (scheduled to open summer 2006) and 600 luxury residences. In addition, the property will include an 8-acre city park featuring a 5-acre grand fountain as its centerpiece. The retail component at City Center is bringing a number of first class retailers to the greater Newport News/Peninsula area. Featuring 250,000 square feet of retail space, City Center boasts specialty shopping and dining as well as an entertainment district.

West Hartford, Connecticut-based Developers Realty Corporation is constructing New Town in Williamsburg, which is the region’s only true lifestyle center. The year-round residents of Williamsburg have been waiting a long time for a shopping destination of this type in their own backyard, as previously they would have to travel more than 30 miles to find such a development. Specialty retail shops, restaurants and entertainment venues comprise the tenants in the mixed-use town center, which offers 600,000 total square feet of commercial space. The development is anchored by a 12-screen Consolidated Theatres, which is planned to open this summer.

Additionally, Virginia Beach Town Center is an extremely significant project in its area. Its development has extended the trade area west of the site, which previously was not considered desirable for development. In effect, the project has caused the surrounding real estate to change dramatically for the better, as every piece of adjacent property is being redeveloped or has plans for redevelopment. The retail component features well-established restaurants such as California Pizza Kitchen, Ruth’s Chris Steakhouse, The Cheesecake Factory, Bravo and P.F. Chang’s China Bistro.

Finally, Goodman Company is developing Jefferson Commons, located in the Jefferson Avenue corridor. The project is a 450,000-square-foot power center anchored by Kohl’s.

Restaurant development has been exploding in the area, as is demonstrated by the plethora of restaurant retailers that are new to the area. Among them are Smokey Bones, The Cheesecake Factory, Bravo, Romano’s Macaroni Grill, Red Robin, Bonefish Grill, Carrabbas and Baja Fresh. Ellis Gibson, Kahn Development, Frontier Development and Armada Hoffler are some active retail developers in the market.

Nearly every submarket in the Hampton Roads MSA has some type of major retail or mixed-use project underway. This trend is indicative of the region’s strong and positively-leaning economy. Resulting from these positive market trends, vacancy rates throughout the Hampton Roads retail sector remain low.  According to the Old Dominion University Center for Real Estate, the overall market vacancy is 9.4 percent, with the Southside maintaining an 8.87 percent vacancy rate, and the Peninsula sector retaining a rate of 10.44 percent.

On the horizon, several new developments are being considered adjacent to the Virginia Beach Town Center, and more projects certainly will be considered resulting from the redevelopments going on in the area. In addition, north Suffolk is primed for ancillary development. High-tech, Department of Defense contractor jobs and available land set for residential growth has put this area on the radar for many developers. However, retailers have found difficulty identifying a central location to design projects, due to the road systems that service this growing area. Yet as more land is removed from available inventory, the Harbor View sector ultimately is poised to be the destination of choice for retailers and consumers. A 16-screen Consolidated Theatre already is in place, and it is simply waiting for national retailers that surely will come to support it in the future.

As restaurant and retail development continues to thrive in the Hampton Roads retail market, expect more of these types of developments to be constructed. Developers obviously have seen the positive opportunity in the area, and judging from the vacancy rates, tenants have seen the same opportunity. This positively growing market is flourishing now, and shows promising signs of continuing this trend.

— Ed Kimple, 1st vice president, Thalhimer/Cushman & Wakefield

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