2018 ODU Market Review

2018 HAMPTON ROADS REAL ESTATE MARKET REVIEW & FORECAST

David Ring

Executive Vice President Commercial Banking Group Executive

John Asbury

Chief Executive Officer

John Stallings Bank President

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The Xenith Bank acquisition made Union Bank & Trust the largest regional financial institution based in Virginia. We’re excited to be in Hampton Roads and look forward to serving you. For fast, fair personal and commercial banking, financial platter_horz_2_graphic platter_general_brand graphic guidance and investment services, call Union today at 800.990.4828.

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HAMPTON ROADS REAL ESTATE MARKET REVIEW & FORECAST

ONT NTS Message From The Center...................

Executive Committee...........................

Advisory Board.....................................

E.V. Williams Center for Real Estate Members...........................8 Sponsors.............................................10 Economic Trends................................1 Office.................................................. 1 Industrial...........................................20 Retail.................................................2 Multifamily........................................28 Investment.......................................

Residential........................................ 8 Sentiment......................................... 2

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M SSA

FROM T E CE TER

W

elcome to t e 2018 am ton oads eal state arket evie orecast. or over t o decades, t e .V. Williams enter for eal state as been orking it am ton oads industr leaders to roduce t e arket evie . is ear s re orts e amine eig t areas of interest in t e am ton oads real estate markets economic trends, o ce, industrial, retail, mul famil , investment ro er es, residen al, and market sen ment. ank ou to t is ear s s eakers for s aring t eir industr e er se and contribu ng t eir valuable me and leaders i to t is event and to t e enter.

As art of ld ominion niversit s trome ollege of Business, t e .V. Williams enter for eal state strives to connect t e am ton oads real estate communit to t e researc , curriculum, and students at t e niversit . roug our dedicated members i , com rised of communit leaders and industr e erts, e educate and em o er t e ne t genera on of rofessionals and leaders. We ould like to t ank our gro ing members i for su or ng t e enter, and for assis ng in t e engagement and educa on of our students. 2017 as an e ci ng ear for t e enter as it announced t e ne B. .B.A. in eal state and t e iring of ne full me Wendell . ranklin ecturer in ro ert anagement, ic ard Bu on. e enter ould not be able to ac ieve its mission it out t e dedica on of its ecu ve ommi ee, Advisor Board, and members. roug out t e ear, t e .V. Williams enter orks to engage its members, t e communit and students b os ng net orking events and conduc ng researc . o learn about our u coming events or to become more engaged it t e .V. Williams enter lease contact, irector, And ansz, ansz odu.edu, or, Assistant irector, Natalie Boe m, nmcgaug odu.edu. ank ou for attending t e 2018 arket evie orecast and for su orting t e .V. Williams enter for eal state. We look for ard to seeing ou at future events.

J. Andrew Hansz, . ., A , A obert . tanton air in eal state, inance e artment, trome ollege of Business irector, .V. Williams enter for eal state Lawrence J. Colorito, A air, .V. Williams enter for eal state ecu ve Board enior anaging irector, Valbridge ro ert Advisors Natalie M. Boehm Assistant irector, .V. Williams enter for eal state o ditor, am ton oads eal state arket evie

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1/22/18 3:16 PM

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llie Bullion ld ominion niversit , trome ollege of Business . Andre ansz ld ominion niversit , .V. Williams enter for eal state *ODU Association of Real Estate Alumni (AREA) Committee

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o obtain addi onal co ies of t is re ort, lease visit our ebsite .odu.edu business center creed ontact . Andre ansz, . ., A, A irector, .V. Williams enter for eal state trome ollege of Business ld ominion niversit 215 onstant all, Norfolk, VA 2352 ansz odu.edu • 757. 83.3505 The vie s expressed in this report do not represent the official position of Old ominion niversity E.V. Williams or any generous sponsors or donors.

2018 HAMPTON

ROADS

REAL ESTAT E MARKET R EVIEW & FO RECAST

W

for

real

estate

J. Scott Adams CBRE Hampton Roads

Craig Cope Commonwealth Commercial Partners

Pam Ellyson* Farmers Bank

Jeff Ainslie Ainslie Group

Hahns L. Copeland* DARVA Group Construction LLC

Margaret R. Flibotte Frye Properties, Inc.

Christopher Ambrosio Vandeventer Black LLP

Krista Costa Divaris Real Estate, Inc.

William Gambrell Right Coast Consulting Corp.

Stephen Armbruster Cherry Bekaert LLP

Ann K. Crenshaw Kaufman & Canoles, P.C.

Julie Gifford BECO

Matthew J. Baumgarten Tidewater Community College

John H. Crouse Saunders + Crouse Architects

Anthony Beck CenterPoint Properties

Jon R. Crunkleton Old Dominion University

Brian E. Gordineer City of Hampton, OfďŹ ce of the Real Estate Assessor

Ann Bolen Love Funding Corp.

Kim Curtis Tidewater Home Funding

Denise Brown BayPort Credit Union

Edward Denton Denton Realty Company

M. Albert Carmichael Harvey Lindsay Commercial Real Estate

Michael B. Divaris Divaris Real Estate, Inc.

Thomas Clemens Wells Fargo Business Banking Gail Coleman Howard Hanna Real Estate Services

8

Nancy Dove* Valbridge Property Advisors Helen E. Dragas The Dragas Companies

Howard E. Gordon Williams Mullen Dennis Gruelle Appraisal Consultation Group Janice M. Hall RRMM Design Build LLC Michael Hall Belfor Property Restoration

W

for

Carl L. Hardee The Lawson Companies Catherine Harris Harbor Tax Group Jeffrey S. Harris Harris Property Advisors Warren D. Harris Virginia Beach Economic Development Aimee Hower Kevin Hughes City of Suffolk Michael A. Inman Inman & Strickler P.L.C. Lynn Jernell Fulton Financial Corporation Jerry Jones All Access Property Management

real

estate

Larry Lombardi County of Currituck Economic Development Janet Moore S.L. Nusbaum Realty Co.

Jeff Stone BECO Robert M. Stanton Stanton Partners, Inc.

Thomas O’Grady Clancy & Theys Construction Company

G. Stewart Tyler Right of Way Acquisitions & Appraisals, Inc.

Victor L. Pickett Grandbridge Real Estate Capital

Samuel A. Walker, Jr. Pembroke Commercial Realty

F. Craig Read Read Commercial Properties, Inc.

Ed Ware, III Norfolk Redevelopment & Housing Authority

Brenda Reid Howard Hanna Real Estate Services Mark Richardson The Timmons Group, Inc. J. Randy Royal Kimley-Horn and Associates, Inc.

Robert Kerr Kerr Environmental Services

Tara Saunders Old Dominion University Real Estate Foundation

Frank Kollmansperger Entry Guard Systems

John Soscia Soscia & Company, Inc.

Robert T. Williams Tri-City Developers LLC Eddie Winters CRE Appraiser Steven Wright Chesapeake Department of Economic Development Michael P. Zarpas S.L. Nusbaum Realty Co

2018

10

sponsors

2018

STAGING

sponsors

MEDIA

11

rovided by

ampton Roads lanning istrict Commission.

ONOM TR NDS W Deputy Director, Dragas Center for Economic Analysis and Policy Strome College of Business, Old Dominion University

ANN A N A AN

A The ampton Roads economy is expected to gro at a much higher rate in . than in . . But regional gro th in ill once again be slo er than the historical annual average of . seen over the last thirty years and slo er than that of the nation.

Whereas real in ation ad usted .S. ross omestic roduct gre annually at a compounded rate of . from to ampton Roads real actually fell by . over the same period.

W

A N

N

A

A

, 2001

2017

3% 2%

1.62%

2.12%

2.25%

2.17% 1.49%

0.80%

1%

-0.04%

0%

-1.09%

-1% -2% 2001 to to 2009

2009 to to 2015

2015to to 2016

2016 to to 2017e e

nited tates Ham ton oads â– United States â– Hampton Roads ou ce u eau of Economic Anal sis an t e Ol Dominion Uni e sit Economic o ecastin o ect Data on D inco o ates latest EA e isions in e tem e o U D is a ance EA estimate ile am ton Roa s D is ODU estimate

A

A

N

A

N N 2017

, 2000

25.0 25.0

19.7

20.0 20.0 Billions of Dollars Billions Dollars

19.3

19.9

15.0 15.0

10.0 10.0 10.0

2017 2017

2016 2016

2015 2015

2014 2014

2013 2013

2012 2012

2011 2011

2010 2010

2009 2009

2008 2008

2007 2007

2006 2006

2005 2005

2004 2004

2003 2003

2002 2002

0.0 0.0

2001 2001

5.0 5.0

2000 2000

The t in blo s of the reat Recession and stagnation in epartment of efense o spending since signi cantly contributed to the region s lac luster economic performance. o spending in the region increased at a . annual rate from to and has not gro n since . Coupled ith anemic private sector ob gro th the ampton Roads economy has simply limped along hile the .S. accelerated ahead.

ou ce U De a tment of Defense an t e Ol Dominion Uni e sit Economic o ecastin o ect * nclu es e e al Ci ilian an ilita e sonnel an ocu ement Data fo a e estimates an ata fo a e fo ecasts

1

A

Ca s on e ense iscre onar

N

N

NA

endin ,

to

N N ,

2012

2021

700 700

Billions of dollars

600 600

550 550

500 500 450 450

FY12 FY12

FY13 FY13

FY14 FY14

FY15 FY15 FY16 FY16 FY17 FY17 FY18 FY18 FY19 FY19 FY20 FY20 FY21 FY21 s ra ion 2012 BB 2013 B 2015 for as Sequestration ATRA2012 BBA 2013 BA 2015 forecast

ou ce u et Cont ol Act of O e uest ation Re o ts ( a ious ea s) u t e E tension of Continuin A ource B A2011,Budget e uests for 1 , B e uestra on date e ort and t e ld ominion niversit conomic orecas ng ro ect.

Act ( R ) an t e Ol Dominion Uni e sit Economic o ecastin o ect

V

N

A

,V

A

N A

N A, AN

A

N

A

A

4% 2%

o iations

B 2007 2017 6.78% 4.69%

0% -2%

-2.44%

-4%

States nitedUnited tates

irVirginia inia

116 121 126

-8%

36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 1111

-6%

Hampton Ham tonRoads oads

ou ce u eau of a o tatistics seasonall a uste ata an Ol Dominion Uni e sit Economic o ecastin o ect ea e Recession Dates a e ul ( am ton Roa s) anua (Unite tates) an A il ( i inia) Data a e t ou Decem e fo A an R an anua fo U

l

N

AN

N

an N inA ri a n s ri s in a

VA lo N or A , 2007 1n on oa s 2007

N 2017 1 N

1 o 2017

1 1 1

Professional and ScientiďŹ c rof ssional an i n ifi Management ana n ofof Companies o ani s Utilities ili i s Admin and Support in an or Real al Estate sa nfor a ion Information ol sal Trade ra Wholesale ail Trade ra Retail ons r ion Construction

-11 -15 15

19

4

-1 -2 -3 -4 -5 -5 -6 -7

Financean and Insurance inan ns ran

an fa rin Manufacturing

AN

1

Health Carean and Social al ar o ial Assistance ssis an Transportation and Warehousing rans or a ion an ar o sin

1

N

Pre-Recession Peak Dates: U.S.: January, 2008 Virginia: April, 2008 Hampton Roads: July, 2007

6%

Accommodation and Food o o a ion an oo

nli e the dra do n in defense spending in the s the private sector has yet to ll in the gap in ampton Roads. The uarterly Census of Employment and Wage reports that during First uarter of total private sector obs in ampton Roads ere about belo pea employment observed in rst uarter of . E orts to spur private sector gro th through innovation and entre preneurship are crucial to building a robust gro ing private sector in the region.

N

8%

1 6 11 16 21 26 31

The reat Recession impacted ob mar ets throughout the nited States. Compared to pea employment prior to the recession the .S. and the Common ealth lost . and . of obs through February . Since the trough in the .S. and Virginia have steadily added obs. In anuary the .S. had . more obs than prior to the reat Recession Virginia . . ampton Roads on the other hand lost . of obs during the reat Recession and has not yet recovered all the lost obs. At the end of ecember ampton Roads as still . obs belo pea employment observed in .

650 650

Billions of Dollars

Congress has yet to pass appropriations bills for Fiscal ear F ho ever the most recent Continuing Resolution CR that expires on March contains good ne s. The CR suspended the debt ceiling until March removing this potential stumbling bloc from Congressional negotiations. More importantly the CR raised the discretionary spending caps introduced by the Budget Control Act of by billion over the next t o scal years.

This is not a trivial amount as the national defense caps rose by billion and the non defense caps by billion. With a large federal presence in ampton Roads to include over active duty personnel and federal employees the rise in spending ill li economic activity in the second half of and into . epending on the nal composition of the appropriations bills real gro th may rise from an initial forecast of . to . or more .

-10 10

-5 5

00

55

10 10

15 15

20 20

25 25

ou ce i inia Em lo ment Commission Co e e Em lo ment an a es i ate O ne s i an t e Ol Dominion Uni e sit Economic o ecastin o ect

N

A

B

a

N V A N A ,1 2017 r of n i i als lo on oa s 1999 o 2017

Thousands of Individuals

als

820 820

o san s of n i i

800 800 780 780 760 760 740 740 720 720

721

700 700

N

AN

N

A

A

N N

A

2016

2017e

2015

2014

2013

2012 2012

2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011

1999

660 660

2001 2001 2002 2002 2003 2003 2004 2004

680 680

ou ce U De a tment of a o AU ata an t e Ol Dominion Uni e sit Economic o ecastin a uste Data ill e e ise in a c A il

o ect ot seasonall

N A ,V , 2007 2017

N A,

12 12

10.0%

10 10

7.9%

88 66

4.1

7.3%

44

4.1

22

United a s States

ou ce u eau of a o tatistics seasonall a uste a e t ou Decem e

Virginia ir inia

Jul-16 l 16

an 17 Jan-17 Jul-17 l 17

Jan-16 an 16

l 14 Jul-14

an 15 Jan-15 Jul-15 l 15

Jul-13 l 13

Jan-14 an 14

l 12 Jul-12 Jan-13 an 13

an 12 Jan-12

Jul-11 l 11

Jul-10 l 10

Jan-11 an 11

Jul-09 l 09

Recession ni ssion

Jan-10 an 10

Jan-07 an

Jul-08 l 08 Jan-09 an 09

3.7

00

l 07 Jul-07 Jan-08 an 08

Unemployment Rate n lo n (%) a

nemployment rates at the national state and local level all rose in response to the reat Recession. Since the end of the recession ho ever e have seen mar ed declines in unemployment rates. The .S. economy is near full employment and e are seeing the beginnings of age increases because of labor shortages. The anemic performance of the ampton Roads economy can also be seen in the unemployment rate. rior to the reat Recession ampton Roads unemployment as belo that of Virginia. Recently at the end of the ampton Roads unemployment rate as the same as the .S. and higher than Virginia.

796 802

797

792

2000 2000

Even though the ob situation in ampton Road has been uite grim for the last ten years an examination of data from ocal Area nemployment Statistics A S provides a slightly di erent and rosier picture of the labor force and number of individuals employed. About more individuals are in the regional labor force today than in .

The number of individuals stating that they are actively employed has also risen by about over the same period. The divergence bet een these t o sets of information on the labor mar et could be explained partly by a possible reduction in the number of part time obs and due to the emergence of the gig economy here more and more individuals simply prefer to be self employed.

Roads a Hampton on oa s

ata an t e Ol Dominion Uni e sit Economic o ecastin

o ect Data

1

O

Vice President, Divaris Real Estate, Inc.

The ampton Roads office mar et experienced leasing activity similar to the previous t o years ith a vacancy rate of . at the end of the fourth uarter. This vacancy rate as do n from . at the beginning of the year. Overall as ing rents increased in the past months by . in the region

hich remain belo their pre recession pea . The year ended ith positive absorption totaling s uare feet in . There is minimal ne office construction on the hori on.

Space available for sublease is ust under s uare feet a little more than of the total available space in the mar et.

Sublease space available is do n from s uare feet at the beginning of the year.

AC A N C L

L

Vacanc 16.00%

1 .00

14.00%

1 .00

12.00%

12.00

10.00% 10.00 8.00% 8.00 6.00% .00 4.00% .00 2.00% 2.00

2005 20052 2005 3 2005 200 20061 200 2 200 3 200 2007 20071 2007 2 2007 3 2007 2008 1 2008 2008 2 2008 3 2008 200 1 20092 200 200 3 200 2010 1 2010 2010 2 2010 3 2010 2011 1 2011 2011 2 2011 3 2011 2012 1 2012 2012 2 2012 3 2012 2013 1 20132 2013 2013 3 2013 201 1 20142 201 201 3 201 2015 1 20152 2015 2015 3 2015 201 1 201 20162 201 3 201 2017 1 2017 20172 2017 3 2017

0.00% 0.00

Total

otal

A

A

B

B

ou ce Co ta

1

ou

There ere several signi cant lease transactions in that ent under the radar as most ere rene als. e to the mar et Wisconsin

hysicians Service Insurance Corporation removed a big bloc of sublease space at the beginning of and further committed to ampton Roads by signing a direct lease.

L A Tenant

Building

Date

US Coast Guard

Main Street Tower 300 E Main Street, Norfolk, VA

4th Qtr

129,968

Expansion/renewal

WPS MVH

400 Butler Farm Road Hampton, VA

1st Qtr

100,632

New to market, sublease/direct lease

US Air Force

Research Quad III 300 Exploration Way, Hampton, VA

4th Qtr

97,490

Renewal

Amerigroup

Corporate Center V 4425 Corporation Lane, Virginia Beach, VA

2nd Qtr

70,760

Renewal

Optima Health

Military Circle 824 N Military Highway, Norfolk, VA

1st Qtr

45,000

New lease

ampton Roads o ered many office investment opportunities in .

With sales prices so high in primary and secondary mar ets ampton Roads has proved acceptable to national investors. Total office building sales activity as up compared to . The price per s uare foot

AL Building

Square Footage

Square Footage

Lease Type

averaged . . Capitali ation rates ere lo er in thus ma ing properties more expensive averaging . compared to the same period in hen they averaged . . The largest transaction that occurred as the ac uisition of The A Building in orfol at a cap rate.

A N AC

N

Sales Price

Price Per Square Foot

The ADP Building 2 Commercial Place, Norfolk, VA

288,662

$57,000,000

$197.46

Concourse at Northampton 5800 Northampton Blvd, Norfolk, VA

302,186

Part of $1,300,000,000 Portfolio Sale

$174.74 - Portfolio Price

42,000 44,377

$18,352,000 $20,048,000

$437.00 $452.00

129,183

$15,900,000

$123.08

225 Clearfield Avenue 229 Clearfield Avenue, Virginia Beach, VA Smithfield Building 6160 Kempsville Circle, Norfolk, VA

W The absorption of office space in suburban submar ets outpaced the central business districts. As vacancy tightened rents in the suburban mar ets increased by an average of . per rentable s uare foot.

Modest to limited ne construction and strong absorption led to very fe large bloc s of space available. As rents rise only slightly

there is a lac of support for the cost to occupy ne construction.

We entered ith ve pro ects totaling s uare feet under construction. The largest of the ve is the s uare foot ollar Tree Office To er on the company s acre campus on Volvo ar ay in Chesapea e. It ill be occupied by ollar Tree. Building One Tech Center is an s uare foot speculative office building under construction in the Oyster oint submar et of e port e s.

1

A

V

out eigh the costs of renovations. A prime example is East Main Street in o nto n orfol . Office buildings ill attac the concept of placema ing adding seating areas to once sparse office lobbies to create more alternative shared or spaces.

22 1.8 1.8 1.

1.6

emand for medical office buildings remains high. The historical stability ma es medical office buildings attractive to investors. ealthcare services ill also move into nontraditional locations including struggling retail centers to reduce costs and ma e these services more readily accessible to patients.

1.4 1.

Millions of SF illions of

1.2 1.2 11

0.8 0.8 0.6 0.

0.4 0.

0.2 0.2 00

2005 2006 200 2007 2008 200 2010 2011 2012 201 2015 201 2017 2005 2007 2008 2009 2010 2011 2012 2013 2013 2014 2015 2016 2017

ou ce Co ta

ou

As unemployment rates remain lo scarcity of uali ed or ers is ta ing its toll on the area s gro th. ampton Roads businesses are no competing for or ers ho are being lured by big cities companies. Firms are indicating that office locations ith the ideal ive Wor and lay environments are critical in the recruitment and retention of employees. rban and Institute reported that at . ampton Roads had the highest gro th in millennial residents since compared to more than urban areas Time maga ine une . The gro th as attributed in signi cant part to the military but no doubt can be credited to the lifestyle bene ts of the region s climate and proximity to beaches and ma or cities.

W The nation s office mar et continues to hover near business cycle highs for occupied space. ationally rents gre at about . and ere almost per s uare foot higher than pre recession pea s. office vacancy ended at . across the country.

Overall ob gro th slo ed in most mar ets. The unemployment rate fell to . in October a rate not seen since ecember .

Sales of office buildings ere also do n from a year earlier although volume as still ell above the historical average.

W Older Class A buildings ill renovate as there is a lac of ne office inventory in the mar et and costs of ne construction far

18

ocally executive suites are at capacity and e could see other national shared office space companies and co or ing facilities enter the ampton Roads mar et.

The pace of office leasing in ampton Roads ill slo in due to lac of available space. Expansion and relocation of professional services healthcare and defense government contracting sectors should drive demand.

Office relocations are most li ely to be fueled by lease expirations. Companies loo ing to capture and retain employees ill expect to upgrade office premises. Amenities such as co or ing spaces nearby apartments restaurants and shops ithin al ing distance ill be critical to tenants.

The e ect of the transoceanic cables transforming the region into a high speed data hub is beginning to sho momentum. ata centers and other high speed internet consumers ill enter the mar et in .

Aside from a fe build to suits ne office construction ill be limited allo ing fundamentals to continue to recover in the near term. The limited supply of ne properties ill favor landlords and lead to the rene al of current leases. With continued modest absorption vacancy rates are expected to decline further. Average rents should increase slightly in but that does not mean it is a landlord s mar et. ro ected rent gro th is approximately . As e approach e uilibrium landlords ill continue to o er free rent he y tenant improvement pac ages and other incentives to retain and attract tenants hile trying to maintain face rate rentals.

We elcome the ne normal.

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BUILDING LEGACIES FOR A THRIVING FUTURE. S I T E D E V E L O P M E N T | D E S I G N - B U I L D | H E AV Y C I V I L C O N S T R U C T I O N

ND STR A

W Senior Vice President, CBRE | Hampton Roads

HAM # of Buildings >20,000 Square Feet

N

A

N

AL MA

NA H

Total Square Footage (SF)

2017 Net Absorption (SF)

Vacancy Rate

Average Asking NNN Lease Rate

Completed New Construction (2017 SF)

Southside Industrial

717

56,277,297

1,654,915

4.9%

$4.38

1,142,290

Peninsula Industrial

193

23,603,795

449,333

3.2%

$5.92

150,000

Hampton Roads Total

910

79,881,092

2,104,248

4.4%

$4.68

1,292,290

ou ce Co ta

Industrial mar et fundamentals improved across the board for ampton Roads in as expanding businesses absorbed over . million s uare feet of industrial space. Since the vacancy rate has plummeted from . to . the lo est industrial vacancy on record. uring the last ve years net absorption totaled over . million s uare feet averaging nearly . million s uare feet annually.

AC A N C A N A B

10.0% 10.0%

11,980,000 980 000

9.0% 9.0%

11,760,000 760 000

8.0% 8.0%

11,540,000 540 000

7.0% 7.0%

11,320,000 320 000

6.0% 6.0%

11,100,000 100 000

5.0% 5.0%

880,000 880 000

4.0% 4.0%

660,000 660 000

3.0% 3.0%

440,000 440 000

2.0% 2.0%

220,000 220 000

1.0% 1.0%

20

2013 2013

2014 2014

2015 2015

2016 2016

am ton Roa s Resea c

N

22,200,000 200 000

00

C RE

2017 2017

Net Absorption Net Absorption Square Footage Square Footage (Left Axis) (Left Axis)

Industrial Vacancy Industrial Rate- (Right Axis) RateVacancy (Right Axis)

0.0% 0.0%

ou ce C RE

am ton Roa s Resea c

Of ampton Roads ma or transactions in several ere expansions by current arehouse users including Center oint roperties expansion of the Ace ard are Import Redistribution Center by s uare feet in Su ol and ife et ealth s s uare foot lease of a portion of the t o building ondon Bridge complex in Virginia Beach.

L A Company Name

Location

SF

Comments

Ace Hardware CenterPoint Intermodal Center - Suffolk 475,020

138,060 SF Expansion of Class A Single-Tenant Building

Welspun USA

Virginia Regional Commerce Park-B - Suffolk

200,880

Indian company, new to market

U-Play Corporation

1440 London Bridge Rd. - Virginia Beach

200,000

Chinese company, new to market

Georgia Partners

Commonwealth Commerce Center - Suffolk 120,800 Cold Storage LLC

LifeNet Health 1440 London Bridge Rd. - Virginia Beach 100,000

Cold storage industry veteran new venture Expansion by Virginia Beach based company

The s uare foot Virginia Regional Commerce ar B as the rst pure speculative development in ampton Roads in over years and landed a s uare foot lease ith India based Welspun SA. Another foreign company China based lay Corporation leased s uare feet also at ondon Bridge.

Overall seven pro ects totaling . million s uare feet delivered in the most s uare footage completed since . million s uare feet opened in .

i inia Re ional Comme ce a

De elo e

anattoni De elo ment Com an

Sales activity in included value add investors ac uiring long vacant buildings ith plans to renovate and improve the assets as ell as numerous o ner users see ing to o n and improve property in support of their operations. The table belo highlights several investor and o ner user sales.

21

B L N

AL

Property

Year Built

Bldg SF

Sale Price

S/SF

Buyer Type

1440 London Bridge Rd. - Virginia Beach

1996

400,000

$8,500,000

$21.25

Investor

300 & 400 Port Centre Parkway - Portsmouth

1997

76,781

$6,850,000

$89.21

Investor

1569 Diamond Springs Rd. - Virginia Beach

1980

100,000

$6,100,000

$61.00

Investor

1715 Merrimac Trl - Williamsburg

1978

146,710

$4,820,000

$32.85

User Buyer

3801-03 E. Princess Anne Rd - Norfolk

1971

83,275

$1,800,000

$21.62

User Buyer

W early . million s uare feet of ne industrial buildings ere completed in the largest being Center oint roperties s uare foot Class A distribution arehouse for Emser Tile follo ed by anattoni s Virginia Regional Commerce ar B s uare feet InterChange s ortsmouth ogistics Center s uare feet rintpac s s uare foot expansion in Oa land Industrial ar in e port e s the s uare foot expansion of Ace ard are by Center oint roperties and the o ner occupied build to suit for I IT in Chesapea e s uare feet .

Consistent ith the long term trend for industrial logistics development in ampton Roads ve of the seven completed pro ects ere build to suit for a single user. The lion s share of build to development over the last years . million s uare feet as developed by Center oint roperties at the acre Class A industrial par Center oint Intermodal Center Su ol . Other than anattoni evelopment InterChange roup is the only developer to build a speculative building during the last ten years delivering the s uare foot InterChange ortsmouth ogistics Center in . InterChange hedged development ris by leasing of the building to a developer o ned business.

ANN AL N

AL N

C N

C

N B L N

A

A

C M L

2 000 000 2,000,000

In ecember lobal Technical Systems TS a Virginia Beach based advanced engineering solutions company announced a planned . million investment for a ne s uare foot manufacturing facility o Bird ec Road in Virginia Beach. According to plans announced

by TS the ne plant hich ill produce advanced batteries to po er machinery data centers and other uses is scheduled to open in March and ill eventually employ people.

1 800 000 1,800,000 1 600 000 1,600,000

1,400,000 1 400 000 1,200,000 1 200 000 1,000,000 1 000 000 800,000 800 000 600,000 600 000 400,000 400 000 200,000 200 000 00

22

2008 2008

2009 2009

2010 2010

2011 2011

2012 2012

2013 2013

2014 2014

2015 2015

2016 2016

2017 2017

With only . of all industrial properties vacant ne and expanding businesses ill have to invest in building ne arehouse and manufacturing facilities or on renovations and upgrades to their existing buildings. In order for s . million s uare feet of net absorption to be generated in the region s leading developers bro ers and sta eholders must partner ith state local and ort of Virginia economic development teams to in more ma or ne arehouse and manufacturing investments across ampton Roads.

1 350 000 1,350,000

10.0% 10.0%

1 200 000 1,200,000

9.0% 9.0% 8.0% 8.0%

1 050 000 1,050,000

7.0% 7.0%

900 000 900,000

6.0% 6.0%

750 000 750,000

Port of Virginia

ort of Loaded VirginiaImport LoadedTEUs I port s Industrial Vacancy Rate (Right Axis)

5.0% 5.0%

600 000 600,000

4.0% 4.0%

450 000 450,000

3.0% 3.0%

300,000 300 000

2.0% 2.0%

150,000 150 000

00

Industrial Vacancy Rate (Right Axis)

1.0% 1.0%

2013 2013

2014 2014

2015 2015

2016 2016 ou ce

2017 2017

0.0% 0.0%

e o t of i inia C RE

am ton Roa s Resea c

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Vice President, S.L. Nusbaum Realty Co.

The ampton Roads retail mar et has continued to sho positive trends during . The end of year overall retail vacancy rate in the region as . . Shopping centers had a vacancy rate of . . o er centers had a vacancy rate of . . Specialty centers had a vacancy rate of . . Malls contrary to popular belief had a vacancy rate of . . eneral retail had the lo est vacancy rate at only . .

per s uare foot. The po er center category is comprised of centers containing s uare feet ith an as ing rate of . per s uare foot. The specialty center category doubled to four centers ith a total of s uare feet of space. The mall category is comprised of regional malls super regional malls and lifestyle centers ith an as ing rate of . per s uare foot. eneral retail properties house buildings totaling s uare feet ith an as ing rate of . per s uare foot.

There is a total of retail buildings and centers ith a total of s uare feet in the ampton Roads region. Of that total there are shopping centers containing s uare feet ith an average as ing rate of .

s uare feet of ne retail product came online in .

The grocery sector has continued to develop at a rapid pace. idl Aldi roger Wegmans and ublix announced ne stores in the region last year.

N

AB

N, N

L

AC A N C 8.0%

Forecast

1.0

7.5%

0.8

7.0%

0.6

6.5%

0.4

6.0%

0.2

5.5%

0.0

5.0%

-0.2

4.5%

-0.4

2012

2013

2014

2015

2016

2017

2018

2019

2020

■ Net Absorption ■ Net Deliveries ■ Vacancy ■ United States Vacancy

2

2021

4.0%

Vacancy

Absorption & Deliveries in Millions SF

1.2

Top 5 Retail Leases in 2017

1)

s uare feet Wegmans Virginia Beach

2)

s uare feet Walmart illtop S uare Virginia Beach

3)

s uare feet One ife Fitness am ec Crossing Virginia Beach

4)

s uare feet

5)

s uare feet Floor

eMans arting Victory West ortsmouth cor eninsula To n Center ampton

Top 5 Retail Sales

1)

reenbrier S uare

s uare feet Chesapea e

2)

arbour Vie Mar etplace

3)

ramer Tire or olio

4)

Mercury la a

5)

Tide ater

s uare feet Su ol s uare feet

s uare feet or olio

ampton Roads

ampton

s uare feet

ampton Roads

Top 5 Retail Developments

1)

s uare feet

orfol

2)

s uare feet Waterside istrict

3)

s uare feet Fox Mill Centre hase II

4)

s uare feet

5)

s uare feet Shops at Centerbroo e Village Su ol

idl

remium Outlets hase I

orfol

orfol loucester

ampton Roads multiple locations

W The

ampton Roads retail mar et pea ed in . There is signi cant discussion both inside and outside of the mar et that retail is a dying breed. This is anything but true. Retail investment sales activity fully blossomed in . Capitali ation rates ho ever ere inching up locally in averaging . .

This rate rise as partly due to higher interest rates and partly due to category shi s in purchases made. ampton Roads as a tertiary mar et became more desirable due to the lac of product and historically lo cap rates in ma or mar ets.

2

Store closings are nothing ne in the retail arena. This trend continued in ampton Roads last year. Mattress Firm Farm Fresh Toys R s regg Mart oe s Crab Shac Family Christian Boo stores Wet Seal Radio Shac Bebe American Apparel and ayless Shoe Source among others all announced store closings in the region. e store opening announcements ere made by I EA One ife Fitness Big ots Floor cor Belo Tuesday Morning ome oods idl Aldi ublix and Wegmans among others. e stores out eighed closings in ith a positive net absorption of s uare feet.

W According to ac leinhen Chief Economist for the ational Retail Federation the economy as in great shape going into the holiday season and retailers had the right mix of inventory pricing and staffing to help them connect ith shoppers very efficiently. The stoc mar et sa record highs. American consumer con dence hit a year high in . The unemployment rate as lo ered to . at year end the lo est level since . e tax cuts ere announced and signed o on before year end. All are great attributes for the .S. consumer and the retail real estate mar et as a hole.

W Ama on s purchase of Whole Foods last year as one of the most tal ed about nancial ne s stories of . Ama on oins the li es of Apple Warby ar er Bonobos ac uired by Walmart last year asty al Everlane and Birchbox ho have all found that physical retail stores are a must for continued success. Other online retailers ill adopt this strategy. Many ey ampton Roads retailers have found that e commerce is the perfect complement to their full line stores. Walmart Staples Macy s The ome epot Best Buy and ordstrom are all among the top ten e commerce retailers in the .S. Clic and collect is a ne driving force for retail sales. The addition of entertainment elements in retail se ngs is another trend that continues to gain momentum. Mobile pla orms arti cial intelligence AI augmented reality AR and virtual reality VR are all elements that are sho ing up in retail se ngs as ell. As technology continues to improve retail sales ill continue to rise.

Retail landlords and tenants are nimble and can change to meet the ever changing demands of the retail consumer.

2

etail a ocal se t ink not. o ever, e ave entered t e da n of a ne era in retail real estate due to un recedented tec nological advancements. e use of A , A , V , and com uter en anced logis cs is c anging t e face of retail in magni cent a s. mni c annel retailers ill be t e clear leaders in 2018 and be ond. ustomer service and engagement ill return on a muc larger scale. e investment sales sector ill see strong ac vit again t is ear it ac vit ta ering o at t e end of 2018 and into 201 . is e ecta on is due to rising interest rates, bank tem erament, and lack of available roduct.

e tradi onal s o ing center ill con nue to lag ot er retail segments. edical, o ce, and entertainment tenants ill be suited on a larger scale t is ear. o er centers ill face t e c allenge of reduced bo sizes. ecialt centers ill con nue to be a reference for man consumers. Bargain s o ing as become muc more t an a cult enomenon at t is uncture. eneral retail ill con nue to e and as tenants seek freestanding buildings to meet t e needs of toda s consumers uickl . e ca rates on t ese ro er es ill con nue to be market leaders. 2018 ill see a con nued evolu on in retail environments to suit t e needs of t e ever c anging consumer.

2

M T AM

President of Operations, The Franklin Johnston Group

Moderation as a recurring theme in nearly every national multifamily outloo for . A er a sustained period of historically strong apartment fundamentals driven by a favorable supply demand imbalance follo ing the recession construction activity ramped up and ne deliveries began to outpace absorption beginning in . The accretive e ect of surplus demand became increasingly muted over several consecutive

years as the level of ne deliveries substantially exceeded the long term average and slightly outpaced the rate of absorption.

Conse uently occupancy levels and e ective rent gro th are currently trending to ards their respective historical averages.

The favorable but tempered expectations of ere largely reali ed and promises more of the same. The sector as a hole should continue to see steady albeit modest gro th hile speci c asset classes and locations have an opportunity to outperform due to strong demand from underserved lo er and middle income renters.

S U P P LY & D E M A N D T R E N D S - U N I T E D STAT ES

Supply & Demand Trends - United States 375,000 375,000 325,000 325,000

Forecast

275,000 275,000

Units Units

225,000 225,000 175,000 175,000 125,000 125,000 75,000 75,000 25,000 25,000 (25,000) 25,000

2005

2006 200

2007 2007

2008 2008

Deliveries eliveries

2009 200

2010

2011

Absorption Net Net Absor on

2012

2013 201 2014 2015 2015 201 2016 2017 2017 2018 2018 201 2019 2020 2020 2021 2021 2022 2022 2013 Deliveries istHist Avg.Avg.eliveries

Hist. Net Avg.Absor Net Absorption ist. Avg. on

ou ce Co ta

28

ou

Decem e

M U LT I FA M I LY F U N DA M E N TA L S - T R E N D BY Q UA RT E R - U.S.

Forecast

94.0% .0

4.0% .0

Occupancy

Occupancy

93.5% 3.5

2.0% 2.0

93.0% 3.0

0.0% 0.0

92.5% 2.5

-2.0% 2.0

92.0% 2.0 91.5% 1.5

-4.0% .0

91.0% 1.0

-6.0% .0

2005Q11 200 2006Q11 2007 2007Q11 2008 2008Q11 200 2009Q11 2010 2010Q11 2011 2011Q1 1 2012Q1 2005 2012 1 2013Q1 2013 1 2014Q1 201 1 2015Q1 2015 1 2016Q1 201 12017Q1 2017 12018Q1 2018 12019Q1 201 12020Q1 2020 12021Q1 2021 12022Q1 2022

ccu anc Occupancy

ist Hist Avg.Avg. cc Occ

Effective Rent Growth

ec ve ent ro t

Hist Avg. Eff Rent Growth

ist Avg.

ou

Decem e

underperforms hen the national multifamily mar et is in an early to mid expansion period falls in line during late expansion and outperforms through the recession and early recovery phases. As the national mar et entered the later stages of the most recent expansion it is not surprising to see apartment fundamentals in ampton Roads begin to converge ith the broader mar et. As e loo to ards the broader national mar et is experiencing mean reversion hich has traditionally set the stage for ampton Roads to outperform. There is absolutely an opportunity to reali e this scenario but there are some genuine challenges to overcome.

D E L I V E RY T R E N D - H A M P TO N ROA D S

W

Delivery Trend - Hampton Roads

3,500 3,500

Forecast

3,000 3,000 2,500 2,500 Units Units

The total inventory of apartments in ampton Roads increased by approximately since . That is a signi cant increase but is substantially in line ith gro th at the national level over the same period. e deliveries each year from to surged to levels ell in excess of the mar et s historical average. evelopment activity decreased signi cantly in hich contributed to improved fundamentals last year. o ever ne deliveries are expected to ramp up again in before a more protracted taper from to .

1

ent ro t

ou ce Co ta

While at occupancy and decelerating rent gro th characteri ed the national mar et ampton Roads tic ed up slightly in both categories bet een and . istorically spea ing ampton Roads has en oyed very lo volatility regarding apartment fundamentals. The region does not experience the double digit rent gro th occasionally seen in speci c supply constrained core mar ets but it also rarely endures negative rent gro th. The reality is that ampton Roads o en

Eective Rent Effective Rent Growth Growth

.0 6.0%

.5 94.5%

2,000 2,000 1,500 1,500 1,000 1,000 500 500 2005 200 2006 2007 2007 2008 2008 200 2009 2010 2010 2011 2011 2012 2005 2012 2013 2013 2014 201 2015 2015 2016 201 2017 2017 2018 20182019 201 2020 20202021 20212022 2022 Deliveries eliveries

Hist eliveries Avg. Deliveries ist Avg.

ou ce Co ta

ou

Decem e

2

Before giving too much or too I NInventory V E N TO RY GGrowth ROW T H 2013 little import to the anticipated 2013TOto2017 2017 spi e in deliveries it is Virginia essential to bear in mind that the Virginia Beach Beac Newport dilutive impact of ne supply is Ne ortNews Ne s Norfolk experienced more at the micro Norfolk City it Hampton neighborhood level than it is at am ton City it Chesapeake the macro submar et or mar et esa eake level. Multiple pro ects leasing Portsmouth ortsmout up in relatively close proximity James ames City it ill invariably have an adverse York ork e ect on the communities in Suffolk u olk that immediate area and on Williamsburg Williamsburg similar product in ad oining Isle Wightt sle of Wig neighborhoods. o ever ne Poquoson o uoson City it supply in and of itself does Gloucester loucester not necessarily represent a 5,000 10,000 15,000 20,000 25,000 30,000 5,000 10,000 15,000 20,000 25,000 30,000 deterioration of fundamentals at EOY 2012 Inventory 2013 2013 to 2017 the mar et or submar et level. In 2012 nventor Units Added nits Added to 2017 addition to surplus demand the ou ce Co ta ou Decem e appropriate distribution of ne pro ects both geographically ithin a mar et and by product type can and ill insulate the broader mar et submar et against the deleterious e ects of a hyper supply environment.

Virginia Beach and orfol are prime examples of this. They ere number one and t o respectively in terms of gross units added over the last ve years but the relative change to each of their respective inventories as roughly in line ith the mar et average.

The ne supply as generally ell distributed across multiple submar ets ith relatively strong demand. While there assuredly are poc ets ithin those submar ets that have seen some short term dilution as a result of the ne supply both submar ets currently have higher occupancy rates than the ampton Roads average.

A N N UA LJob J O BGrowth G ROW T H Annual There is perhaps no variable more directly correlated to multifamily performance than ob gro th.

Conse uently it is signi cant that Moody s Analytics currently estimates that ampton Roads lost obs in a . reduction versus the prior year.

Since total employment in ampton Roads gre at an average rate of . annually hile the broader .S. mar et gained . per year. For better or orse the ampton Roads economy is still highly sensitive to expansion and contraction in the si e of the .S. military and closely related levels of defense spending. espite gradual diversi cation represented by gains in the areas of trade professional and business services education and health services and leisure and hospitality services the area s short term employment outloo continues to be ea .

0

2.5 2.5%

Forecast

2.0 2.0% 1.5 1.5% 1.0 1.0% 0.5 0.5% 0.0 0.0% 0.5 -0.5% 2011 2012 2012 2013 2013 201 2014 2015 2015 201 2016 2017 2017 2018 2018 201 2019 2020 2020 2021 2021 2022 2022 2011 Roads amHampton ton oads ou ce

United States nited tates oo

s Anal tics

ecis

et o Decem e

While the impact on multifamily is not uite as pronounced as employment gro th increases and decreases in population household formation rate and personal income ill also have an impact on the multifamily demand. All else e ual more people see ing housing ith more money to spend reduces vacancy and allo s for rent gro th. ampton Roads has generated positive gures for each of these variables but still the rate of gro th has materially lagged the nited States average over the past six years.

It is important to note that the apparent convergence bet een the nited States and ampton Roads averages during the forecast period is a product of the metrics deteriorating at a national level rather than any mar ed improvement in ampton Roads economic fundamentals. Some degree of uncertainty in regards to the e ectiveness of current .S. policy ma ing decisions is leading to muted expectations on gro th.

Bearing all of this in mind Moody s Analytics concludes that ampton Roads gap ith the .S. ill shrin in and gro th could surprise on the upside if Congress li s the cap on defense spending. Consumer services ill recover and trade ill be a pillar of strength. ... o ever longer term ampton Roads ill slightly lag the .S. due to an overreliance on federal spending.

A N NAnnual UA L P OPopulation P U L AT I O NGrowth G ROW T H 0.9% 0.

0.8% 0.8 0.7% 0.7 0.6% 0.

0.5% 0.5 0.4% 0.

0.3% 0.3 0.2% 0.2 0.1% 0.1 0.0% 0.0

Forecast

2014 2015 201 2016 2017 2018 201 2019 2020 2021 2022 2011 2012 2013 201 Hampton am tonRoads oads

Source: Moody's Analytics / Precis Metro / December 2017

ou ce

oo

United States nited tates

s Anal tics

ecis

et o Decem e

A N NAnnual UA L P EPersonal RS O N A L Income I N C O M Growth E G ROW T H 7.0% 7.0

Forecast

6.0% .0 5.0% 5.0 4.0% .0 3.0% 3.0 2.0% 2.0 1.0% 1.0 0.0% 0.0 -1.0% 1.0

2011 2012 2013 2014 2016 2017 2018 201 2019 2020 2021 2022 201 2015 201 Hampton am tonRoads oads

ou ce

oo

Unitedtates States nited

s Anal tics

ecis

et o Decem e

EFFECTIVE SOLUTIONS

FOR YOUR

COMMERCIAL REAL ESTATE

TRANSACTIONS

Vandeventer Black attorneys represent local, national, and international companies that purchase, sell, lease, finance, and/or manage commercial real estate. Our firm also acts as legal counsel to commercial lenders financing projects secured with real estate collateral. Our experience in the legal and business aspects of your industry translates to practical, timely, and cost-effective legal solutions for your transaction, in the following areas:

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As cap rates continue to tighten to historically lo levels in the core national and regional multifamily mar ets secondary regional mar ets li e ampton Roads have become an attractive alternative for many investors searching for yield. While the vast ma ority of transactions as recently as ve years ago included mostly local and regional players some large institutional groups have entered the mar et and are actively loo ing to ac uire and expand. The increased demand over the last couple years has spurred higher deal volume and driven the average cap rate bac under . .

$800,000 800,000 $700,000 700,000 $600,000 00,000 $500,000 500,000 $400,000 00,000 $300,000 300,000 $200,000 200,000 $100,000 100,000 0$0

8.0 7.0% 7.0 6.0% .0 5.0% 5.0 4.0% .0 3.0% 3.0 2.0% 2.0 1.0% 1.0 0.0% 0.0 8.0%

(Sales Volume (000s)

Sales Volume (000s)

Sales Volume and Cap Rate Trend SA L ES VO LU M E A N D C A P R AT E T R E N D - H A M P TO N ROA D S Hampton Roads

2005 2006 20072008200 2007 2008 2009 2010201120122013201 2010 2011 2012 2013 2014 2015201 2015 2016 2017 2017 2005200 Volume Volume

Cap Rates ist. Avg Volume

a

Hist Avg. Volume

ou ce Co ta

ou

ates Decem e

N OTA B L E 2017 T R A N SAC T I O N S Property Name

# Units

Built

Location

Price

$/Unit

Sale Date Buyer

Reections at Virginia Beach

480

1987

Virginia Beach

$60,750,000

$126,563

Dec-17

The Breeden Company

Banyan Grove

288

2003

Virginia Beach

$46,000,000

$159,722

Aug-17

Bentall Kennedy/Croatan

Sterling Manor

207

2008

Williamsburg

$33,600,000

$162,319

Aug-17

Chaucer Creek Capital

Steeplechase Apartments

220

1986

James City County

$30,000,000

$136,364

Aug-17

Somerset Apartment Mgmt.

Cove Point at the Landings

122

2015

Norfolk

$24,350,000

$199,590

Aug-17

Bonaventure Realty Group

The Reserves at Arboretum

143

2009

Newport News

$21,900,000

$153,147

Sep-17

Lakeside Capital Advisors

Heather Lake

252

1971

Hampton

$21,400,000

$84,921

Dec-17

Artcraft Management

The Courts at Yorkshire Downs

202

1987

York County

$19,655,200

$97,303

Nov-17

Harbor Group International

Legacy Farms at Tech Center

156

1969

Newport News

$19,200,000

$123,077

Oct-17

K2 Real Estate Partners

Luna Pointe Apartments

210

1986

Hampton

$18,000,000

$85,714

Jul-17

Croatan Investments

2

M U LT I FA M I LY F U N DA M E N TA L S - T R E N D BY Q UA RT E R - N O R F O L K

Multifamily Fundamentals - Trend by Quarter - Norfolk .00 6.00%

94.50% .50 94.00% .00

5.00 5.00%

93.50% 3.50

4.00% .00

93.00% 3.00 92.50% 2.50

3.00% 3.00

92.00% 2.00

2.00% 2.00

91.50% 1.50 91.00% 1.00

1.00% 1.00

90.50% 0.50

0.00% 0.00

ccu Occupancy anc

Avg. Occ istHist Avg. cc

Effective Growth ec Rent ve Growth ent ro t Hist Avg. Eff Rent ist Avg.

is shaping up to be a remar ably average year for multifamily in ampton Roads. Much li e despite ob population and income gro th gures that lag .S. averages the mar et s broad existing renter pool should enable it to absorb the uptic in ne supply hile simultaneously generating e ective rent gro th that is roughly in line ith the historical average for the mar et.

2017Q3

2017Q1

ent ro t

ou ce Co ta

espite underperforming the national average relative to several ey economic and demographic indicators the ampton Roads multifamily mar et as a hole as still able to increase occupancy and e ective rental rates in a year hen it as expected to be at to slightly do n. The eys to the short term success included a brief lull in ne supply and a disproportionately large renter population evidenced by a higher than average percentage of the ampton Roads population being in the vital renter cohort of to year olds. The latter is a positive byproduct of the heavy military presence in the area. onetheless average occupancy levels in ampton Roads continue to lag both the .S. average and the long term average for the mar et hile the e ective rental rate gro th is in line ith the national average but still belo the historical average.

-1.00% 1.00

2017 3

2017 1

3

2016Q3

1

2016Q1

201

2015Q3

201

2015Q1

2015 3

2015 1

2012014Q33

2012014Q11

2013 3 2013Q3

2013 2013Q11

2012 2012Q33

2012 2012Q11

2011 2011Q33

2011 2011Q11

2010 2010Q33

2010 2010Q11

2002009Q33

2002009Q11

2008 2008Q33

2008 2008Q11

2007Q33 2007

2007Q11 2007

2002006Q33

2002006Q11

2005Q33 2005

89.5% 8 .50

2005Q11 2005

90.00% 0.00

ou

Decem e

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W

W

a sense that no particular timetable clearly de nes the current mar et cycle. There is a gro ing belief that e are experiencing more of a secular cycle style pattern versus the boom and bust cycles e have become accustomed to ith the S crises the dot com bust and the reat Recession of . The slo pace of gro th age stagnation lo or er productivity mar et discipline ith e uity and debt and supply and demand remaining in balance all continue to strengthen this outloo . o ever a lo unemployment rate a policy shi to ard Fed tightening high asset prices in real estate and stoc mar et highs or to counterbalance the so landing vie point.

begins the eighth year of the current real estate cycle ith many potential impacts on commercial real estate on the hori on. The passage of the ne tax la potential infrastructure legislation capital spending and a tight ob mar et could all have profound impacts. According to the Emerging Trends in Real Estate Report published by C and the rban and Institute most investors are not ready to proclaim that cyclical ris is no longer applicable but most have

ANN A

A

AN

N

W

,

N AN

V B

N

Annual real GDP growth 5.0% 4.5%

Annual total employment growth

4.5%

4.0% 3.5%

4.3%

4.0%

3.6%

3.5%

3.0%

2.7% 2.4%

2.5%

2.2% 1.9%

2.0% 1.5% 1.0%

0.7%

0.7%

0.7%

0.5% 0.0%

1975-1980 59 months

1980-1981 13 months

1982-1990 93 months

ote

ont s mont s of

1991-2001 121 months

o t

e c cle t ou

2001-2007 74 months

2009-September 2017 101 months

to ea as i enti e

ou ce U u eau of Economic Anal sis t e ational u eau of Economic Resea c

W ■ ■ ■

■

■

W

For RE usinesses set up as pass-throu h entities the deduction will oost a er ta -income.

The li e- ind e chan e remains in place.

For RE private e uity rms the holdin period o investments or carried interest is e tended rom one year to three years.

The Bill caps the usiness deduction or de t interest payments at o earnin s e ore interest ta es depreciation and amorti ation EBITDA .

Most orecasts show a asis point increase in economic rowth in .

The amount of available capital for U.S. real estate investment remains robust, but favors a more conservative distribution of risk among both equity and debt investors. With the rise in real estate asset valuations over the last several years, capitalization rates are expected to remain flat for the foreseeable future.

Investors will continue to focus more on property cash flows A

to drive returns with less emphasis on speculative returns of capital through capitalization rate compression. Equity investors are showing more selectivity as rent recoveries have matured in many markets and property valuations have risen past previous peak levels. Note the decrease in sales velocity since 2015.

A

A

$600 Entity $500 Portfolio

US$ billion

$400

Individual

$300

$200

$100

$0 2001

ote

ont s

2002

2003

2004

2005

ase on in e en ent e o ts of

2006

2007

o e ties an

2008

o olios

Lenders remain reluctant to lend on speculative development and Loan-to-Value ratios are still averaging between 55% - 65% for most transactions. This phenomenon holds true even in strong sectors, such as multifamily, or favored regions in sections, such as the Southeastern U.S. With borrowers still seeking to

2009

2010

million an

2011

i e

2012

efo e

2013

RCA

2014

2015

2016

2017 1H

ou ce Real Ca ital Anal tics ima il ca tu e sales alue at million an a o e

maximize loan proceeds, there is an increased opportunity in the middle of the capital stack for mezzanine lenders and preferred equity. Low leverage, moderate assumption, and accurate risk pricing will continue to shape capital markets for years to come.

W The search for yield is driving investors to see better returns outside of primary mar ets here there is an ade uate ris return pro le. For many investors this means the continued trend of investing in the hour cities and robust secondary mar ets. Access to a talented labor pool is becoming more critical for companies hen choosing their locations. MSA s that o er a lo cost living high uality of life and amenities ill

continually attract the educated or force that rms are loo ing for as demographics continue to shi and the overall labor pool tightens. Results of the Best erforming Cities report by the Mil en Institute ran ed the top cities according to a fact based set of metrics such as ob creation age gains and technology developments to evaluate relative gro th of metropolitan areas. Virginia Beach orfol as ran ed out of .

W

TO P 25 B EST-P E R F O R M I N G L A R G E C I T I ES

RA

ACCO R D

O

DE

Metropolitan Statistical Area (MSA)/Metropolitan Division (MD) Provo-Orem, UT (MSA)

Raleigh, NC (MSA)

Dallas-Plano-Irving, TX (MD)

San Francisco-Redwood City-South San Francisco, CA (MD) Fort Collins, CO (MSA)

North Port-Sarasota-Bradenton, FL (MSA)

Orlando-Kissimmee-Sanford, FL (MSA) Nashville-Davidson-Murfreesboro-Franklin, TN (MSA)

Austin-Round Rock, TX (MSA)

Salt Lake City, UT (MSA)

San Jose-Sunnyvale-Santa Clara, CA (MSA)

West Palm Beach-Boca Raton-Delray Beach, FL (MD)

Charlotte-Concord-Gastonia, NC-SC (MSA)

Atlanta-Sandy Springs-Roswell, GA (MSA) Tampa-St. Petersburg-Clearwater, FL (MSA)

Oakland-Hayward-Berkeley, CA (MD)

2017 Rank

2016 Rank

Change

1

2

+1

2

6

+4

3

5

+2

4

4

Steady

5

8

+3

6

26

+20

7

9

+2

8

7

+1

9

3

-6

10

11

+1

11

1

-10

12

36

+24

13

12

-1

14

21

+7

15

33

+18

16

18

+2

Seattle-Bellevue-Everett, WA (MD)

17

10

-7

Naples-Immokalee-Marco Island, FL (MSA)

18

17

-1

19

24

+5

20

44

+24

21

28

+7

Charleston-North Charleston, SC (MSA)

22

16

-6

Denver-Aurora-Lakewood, CO (MSA)

23

13

-10

Portland-Vancouver-Hillsboro, OR-WA (MSA)

24

14

-10

25

30

+5

San Antonio-New Braunfels, TX (MSA) Riverside-San Bernardino-Ontario, CA (MSA) Fort Lauderdale-Pompano Beach-DeerďŹ eld Beach, FL (MD)

Fayetteville-Springdale-Rogers, AR-MO (MSA)

ou ce

il en nstitute

OFFICE: ■ The uilding in Norfolk 2 ,662 S sold for 5 ,000,000, or 1 . 6 per square foot.

RETAIL: ■ reenbrier Square in hesapeake 26 ,102 S sold for , 00,000, or 1 . per square foot.

■ N Shopping enter and its outparcels totaling 0,250 S sold for 5.65 million to Wheeler EIT. MULTIFAMILY: ■ Latitudes partments in Virginia each sold for 55, 0,000, or 12 , 0 per unit.

INDUSTRIAL: ■ avalier istribution enter in hesapeake 125, 06 S sold for ,550,000, or 5 . per square foot.

■ are- -Lot purchased a manufacturing building, a distribution building, and ten developable acres on London ridge oad in Virginia each.

The sale price was ,500,000.

HOSPITALITY: ■ Waterside arrio in Norfolk sold to Lingerfelt ommonwealth for an estimated 5 million, or 6, 20 per key.

ampton oads saw sustained economic growth in 201 and current trends in the market support another good year as real estate fundamentals continue to improve across the board. There is a possibility of be er than expected results if increases in defense spending and infrastructure spending materialize in 201 .

NORFOLK’S MOMENTUM CONTINUES IN 2018 TRANSPORTATION

OFFICE

INDUSTRIAL

RETAIL

MULTIFAMILY

INVESTMENT

MANUFACTURING

RESIDENTIAL

All this and more.

Contact: 999 Waterside Drive, Suite 2430 Norfolk, VA 23510 • 757-664-4338 NorfolkDevelopment.com

NorDev IB Market Review 1/2pg ad.indd 1

1/24/18 12:41 PM

MMonths O N T H S SSupply U P P LY OofF IInventory N V E N TO RY

Chief Operations OfďŹ cer, Rose & Womble Realty

5.5 5.5

11,000 10,000

5

9,000 ,000 8,000 8,000

4.5 .5

7,000 7,000 6,000 ,000

4

5,000 5,000

W

an Feb eb Mar ar AAprr May a Jun un Jul ul Aug e Octct Nov ec Jan Aug Jan Noc Dec Inventory

nventor

It as another good year for residential for sale real estate in mar ing the third straight year of gains. In ampton Roads overall closings ere up . follo ing substantial increases in and . Consumer con dence continued to gro than s to lo unemployment rising ages lo interest rates and signi cant e uity gains since the housing trough in . This con dence helped feed the move up mar et in ne construction hile resale continued to ll the gap for many rst time buyers. ricing po er remained good but at a slightly declining rate of gro th ith o gains in the median pricing of . . With little anticipation of signi cant shi s in the macro environment and fueled by demographic changes e foresee robust gro th but at a diminishing rate into . ast year e suggested that in response to rising prices especially ith ne construction detached pricing hi ng some high mar s in Chesapea e and Virginia Beach buyers ould continue to migrate south to the greater Moyoc mar et in search of a ordability. That seems to have occurred and the shi as exacerbated by Ryan omes entry into that submar et.

While closings for ortheast orth Carolina ere only up . o that number ill signi cantly gro hen Ryan starts to close their sales. Average closed sales prices rose a phenomenal . o but remained ell over belo average closed sales prices in Chesapea e and Virginia Beach.

Jan

Feb

Mar

Avg. 30 Year Fixed Rate Mortgage

4.20%

4.19%

Local Unemployment Rate

4.7% 5.1%

(Hpt Rds MSA)

National Unemployment Rate

8

Mos. Supply Mos. Supply

# Homes on Market # Homes onthe the Market

12,000

X

Mos. Supply

os. u l

Source REIN MLS ou ce RE

W

W

W

While the picture is bright for housing there are al ays potential limiters on the hori on. In continued declines in inventory put some real constraints on demand. Single family housing inventory at the start of as the lo est it had been in ten years. Months to absorb inventory hit a lo of . months at the end of ecember. e construction ill bear much of the burden of solving this imbalance. o ever land is scarce and expensive eeping up ard pressure on pricing and limiting builder s abilities to serve the rst time buyer mar et. Rising median prices have already caused some shi s in buying habits as attached ne construction closings ere up . o hile detached closings fell by . .

Interest rates sa some gains but stayed ell belo the . range that most economists had predicted e ould see by the end of . There seems to be the general consensus for rates to stabili e in in the . range. These rates should not have a signi cant impact on a ordability and hen combined ith an ongoing easing of under riting standards ill continue to help many rst time buyers ump onto the housing ladder.

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

4.10%

4.10%

4.02%

3.94%

3.96%

3.93%

3.78%

3.85%

3.94%

3.94%

4.5%

4.2%

4.0%

4.2%

4.4%

4.3%

4.3%

4.1%

4.0%

4.1%

n/a

4.9%

4.6%

4.1%

4.1%

4.5%

4.6%

4.5%

4.1%

3.9%

3.9%

3.9%

home sales under grabbed a . share on the Southside contrasted by ne construction hich only carried a . share in that same price band. On the eninsula the numbers ere . and . respectively. Rising prices seemed to be the catalyst for a slight shi to both resale hich grabbed . of the mar et for sales in and to attached product hich sa a . gain in mar et share o trends that may ell continue if inventory remains at such lo levels and prices continue to trend up in ne construction.

ains continued into in the resale mar et in ampton Roads ith closings revenue and median closed sales prices all rising o . Residential resale closings increased by . over to closings. Revenues gre by . to ith overall median prices up by . . etached homes carried . of all closings ith resale homes nding much traction ith rst time buyers. Resale detached

R ESA L E Sales SA L ES BY EA R A Nand D S ECSector TO R Resale byY Year 114000 000 12000 12000

12680

10000 10000

8000 8000

12003

up 4.5% with 996 more closings totaling 22,924 up 2.4%, a $2,075 increase to $197,075 up 5.5%, a $284.9 million increase to $5.42 billion

11046

000 6000

6149

000 4000

3527 3337 3203

2000 2000 00

SS Det et

4394

SS A Att 2015 2015

5463

Pen en Detet

1191 1113 880 Pen en ATT A

2012016 2017 2017 ou ce RE

W Builders en oyed up ard movement across almost all metrics in albeit at a slightly moderated pace from . There ere gains in the number of closings average sales price and revenue.

As before the Southside mar et accounted for ust over

of all closings in ampton Roads. e construction s share of all residential closings lost some ground in ending ith a . share. Overall median closed home pricing too a slight dip of . o but this as driven primarily by the shi from detached to attached sales as attached sales ere up . o.

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

New Construction

3,318

2,775

2,421

2,354

2,714

2,911

2,360

3,072

3,214

3,247

Avg Sales Price

$483,874

$432,232

$368,752

$329,035

$268,269

$320,767

$333,402

Total Revenue (millions)

$1,605

$1,199

$893

$775

$728

$934

$787

$333,262 $342,983 $343,105 $1,023

W were up 1.0% with 33 more closings totaling 3,247 was down 1.9% to $310,831, marking a shift to attached product was up 1.06%, an increase of $11.7M to $1.114B

$1,102

$1,114

A M P TO N R OA S - B C I T City/County

Closings thru Q4

Median Sales Price thru Q4

2016 2017 % Change

2016

2017

Avg Sales Price thru Q4

% Change 2016

2017 % Change

Revenue thru Q4 2016

2017

% Change

CHES

994

978

-1.6%

355,000

368,051

3.7%

344,730 358,363

4.0%

342,661,440

350,479,023

2.3%

I of W

114

104

-8.8%

362,468

357,566

-1.4%

364,128 350,418 -3.8%

41,510,638

36,443,471

-12.2%

NORF

279

303

8.6

256,100

268,900

5.0%

303,672 296,953 -2.2%

84,724,478

89,976,816

6.2%

PORT

107

151

41.1%

217,900

225,000

3.3%

216,401 224,172

3.6%

23,154,921

33,849,963

46.2%

SUFF

286

399

39.5%

294,583

300,024

1.8%

312,988 306,315 -2.1%

89,514,503

122,219,717

36.5%

VBCH

644

504

-21.7%

344,847

356,000

3.2%

389,506 413,267

6.1%

250,841,991

208,286,369

-17.0%

Total Southside

2424 2439

0.6%

310,000

312,900

0.9%

343,403 344,918

0.4%

832,407,971

841,255,359

1.1%

GLOU

97

104

7.2%

299,830

276,957

-7.6%

294,806 282,544 -4.2%

28,596,185

29,384,595

2.8%

HAMP

144

148

2.8%

269,200

275,000

2.2%

276,751 293,451

6.0%

39,852,136

43,430,793

9.0%

JCC

323

331

2.5%

360,503

329,555

-8.6%

380,093 373,382 -1.8%

122,770,120

132,589,278

0.7%

NNEWS

107

64

-40.2%

332,381

326,155

-1.9%

335,740 329,499 -1.9%

35,924,145

21,087,964

-41.3%

WMSBG

37

31

-16.2%

286,167

281,990

-1.5%

296,182 300,990

1.6%

10,958,716

9,330,680

-14.9%

YORK/POQ

82

130

58.5%

358,776

319,650

-10.9% 388,281 353,705 -8.9%

31,839,061

45,981,685

44.4%

Total Peninsula

790

808

2.3%

326,682

308,388

-5.6%

341,697 337,630 -1.2%

269,940,363

272,804,995

1.1%

Hampton Roads

3214 3247

1.0%

317,001

310,831

-1.9%

342,983 343,105

1,102,348.334

1,114,060,354

1.1%

Again in the position by closings as held by Spence Crossing in Virginia Beach a ragas Cos. community ith closings a gain of almost o . Spence Crossing is comprised of four active neighborhoods o ering both attached and detached product. ragas has a solid

0.0

foothold in the rst time buyer mar et ith closed prices in the Fernhill neighborhood averaging in .

Rounding out the Top subdivisions ere Culpepper anding Chesapea e ne comer White all ames City County Benn s rant IOW Cty. and ings ointe Chesapea e .

Ran ing by revenues trac ed pretty closely ith closings but ominion Meado s Chesapea e grabbed the spot than s to their average closed sales price of .

TO P S B I I S I O N S -- A M P TO N ROA S Subdivision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Closings Recorded

SPENCE CROSSING, V CULPEPPER LANDING, C WHITE HALL, J BENN’S GRANT, IOW KINGS POINTE AT WESTERN BRANCH, C REUNION, C THE VILLAGE AT CANDLESTATION, J DOMINION MEADOWS, C NEW PORT, P OCEAN VIEW, N EAGLE POINTE, C OLAH’S LANDING, C NEW TOWN, J THE RESERVE AT WILLIAMSBURG, J NORFOLK HIGHLANDS, C

0

160 74 68 66 63 53 52 51 50 49 49 42 41 38 36

Average Price # Bldrs

Subdivision

Total Revenue # Bldrs

$275,948 $374,296 $314,836 $331,939 $194,213 $228,463 $312,024 $402,525 $232,505 $304,946 $345,103 $470,319 $344,738 $281,452 $270,705

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

$44,151,670 $27,697,897 $21,907,968 $21,408,860 $20,528,788 $19,753,383 $17,228,868 $16,910,056 $16,225,239 $15,561,342 $14,942,335 $14,541,539 $14,134,266 $13,811,045 $12,800,384

1 3 1 1 1 1 1 1 1 11 1 2 2 1 9

SPENCE CROSSING, V CULPEPPER LANDING, C BENN’S GRANT, IOW WHITE HALL, J DOMINION MEADOWS, C OLAH’S LANDING, C NORTH END, V EAGLE POINTE, C THE VILLAGE AT CANDLESTATION, J LIBERTY RIDGE, J OCEAN VIEW, N FIELDSTONE, C NEW TOWN, J HANBURY WOODS, C RIVERVIEW AT THE PRESERVE, C

1 3 1 1 1 2 10 1 1 1 11 4 2 4 1

Furniture For Everywhere You Work Ryan omes continued their dominance of the ampton Roads mar et boo ing closings ith in revenues more than Chesapea e omes by unit count and more by revenue. Ryan omes is a por olio builder ho counted closings from thirty seven active communities. Moreover these numbers do not include their entree into the E orth Carolina mar et hose closings ere not trac ed in .

Chesapea e omes umped into the spot. i e Ryan omes they have some nice regional balance ith . of their closings coming from the eninsula. Moreover they sho ed some great strength at their ortsmouth community e ort ith y closings there. ragas Companies as the builder by closings and revenue.

Moreover hat is even more impressive is that the ragas Cos. operates only on the Southside. These closings came from their closeout of adley ar as ell as from ings oint and Spence Crossing.

Rounding out the Top Five builders ere unt omes and Eagle Construction. The Top builders accounted for . of all closings in ampton Roads. It is signi cant to note that the in ll spot lot builders continue to have a considerable mar et share in aggregate. A er you leave the top t enty builders builders contributed another closings for an average of . closings builder and a among this group are E C omes Wetherington omes and SF evelopment.

757.962.9810 | ibiva.com

.

share of the mar et. otable

The mar et continues to gro albeit at a some hat slo er pace. o ever the outloo is positive for at least t o more years of solid ne construction performance TO P B I L E RS -- A M P TO N R OA S Builder 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

RYAN HOMES CHESAPEAKE HOMES DRAGAS COS HH HUNT HOMES EAGLE CONSTRUCTION EDC HOMES HEARNDON CONST NAPOLITANO HOMES TERRY PETERSON RES WETHERINGTON HOMES CORINTH RES BISHARD HOMES DSF DEVELOPMENT PLATINUM HOMES HAV INC

Closings Recorded 610 256 227 142 84 78 77 76 75 73 47 46 35 34 34

Average Price # Sites

Builder

Total Revenue # Sites

$358,086 $295,787 $252,428 $323,802 $386,365 $310,452 $372,898 $419,199 $289,696 $269,529 $256,495 $480,573 $303,297 $526,483 $419,338

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

$218,432,164 $75,721,538 $57,301,169 $45,979,916 $32,454,681 $31,859,144 $28,713,167 $24,215,222 $22,106,369 $21,727,237 $19,675,625 $17,900,418 $16,636,576 $14,257,497 $13,039,687

37 10 3 8 4 34 3 6 4 25 2 15 9 6 3

RYAN HOMES CHESAPEAKE HOMES DRAGAS COS HH HUNT HOMES EAGLE CONSTRUCTION NAPOLITANO HOMES HEARNDON CONST EDC HOMES BISHARD HOMES TERRY PETERSON RES WETHERINGTON HOMES PLATINUM HOMES STEPHEN ALEXANDER HOMES HAV INC ASHDON BUILDERS

37 10 3 8 4 6 3 34 15 4 25 6 9 3 6

1

S NT M NT Assistant Director, Director, E.V. Williams Center for Real Estate, Strome College of Business

W

The E.V. Williams Center for Real Estate created the am ton Roa s Real Estate a ets entiment u e in fall . This survey conducted annually via email intends to gather a greater understanding of the ampton Roads real estate community s a tude to ards the current and the future real estate mar et sectors. The Sentiment Survey collected in anuary had respondents.

Survey uestions and re uested information on respondents and their ampton Roads real estate mar et activities.

Please identify your primary Hampton Roads real estate activity (select one).

Real Estate Estate Activity Real Activity

A

A

N

A

A

A

A

V

2018

Primary Hampton Roads Real Estate Activity: Spring 2018 n 117 n = 117 Professional - property management Professional - property management Professional - law Professional - law Professional - consultant Professional - consultant - civil engineer Professional - Professional civil engineer Professional - broker/sales Professional - broker/sales Professional - architect Professional - architect Professional - appraiser Professional - appraiser Professional - accountant Professional - accountant Lending Lending Investing Investing Governing Governing Entrepreneurial Entrepreneurial (Developing)(Developing) Consumer - homeowner Consumer - homeowner or renteror renter Consumer - commercial Consumer - commercial propertyproperty None Noneof ofthe theabove. above. Please Please explain explainbelow. below.

0%

5% 5%

10% 10%

15% 15%

20% 20%

25%

30% 30%

Percentage of Participants Percentage or Participants

(select one).

Hampton Roads Real Estate Markets

Please identify your primary real estate market affiliation

Hampton Roads Real Estate Markets

A

OfďŹ ce Industrial Retail

A

A

A

N 2018

n Market 117Affiliation: Spring 2018 Primary n= 117

Office Industrial Retail

Multi-family residential Multi-family residential Single-family residential Single-family residential

Land

Land 0% 0%

5% 5%

10% 10%

15% 15%

20% 20%

Percentage of Participants Percentage of Participants

2

25% 25%

30% 30%

uestions and sho high levels of sentiment all sectors above neutral and three of seven sectors above mild positive for all ampton Roads real estate mar et segments. Respondents sho the most positivity for the industrial real estate mar et segment follo ed by the residential sectors. Six month pro ections sho a decrease in multi family residential sentiment and sentiment increases to industrial office and retail. Respondents may be indicating a rotation from high levels of sentiment in multi family residential to these other sectors. Retail had the lo est sentiment level but is expected to increase over the next six months.

Hampton Roads Real Estate Markets

Please rate current and anticipated month sentiment levels or the ollowin Hampton Roads real estate mar et se ments.

Hampton Roads Real Estate Markets

AV

A

NAverage N Sentiment - Present N ANand

N

N 2018

Month Pro ection: Spring 2018 n = 117

Office

Office

Industrial

Industrial

Retail

■ 6 Month Sentiment

Retail

Current Sentiment ■Month CurrentSentiment

Multi-family residential Multi-family residential

Sentiment

Single-familyresidential residential Single-family Land

Land

11 Negative

22 3 Mild-Negative Neutral Sentiment Level Sentiment Level

4 Mild-Positive

55 Positive

Respondents suggested that the industrial real estate sector has the best investment potential loo ing for ard. Interestingly results sho a signi cant decrease in the perceived investment potential of the ampton Roads multi family residential sector even though responses in and sho ed that this sector had the best investment potential. Single family residential also had a signi cant decrease from recent prior years.

select one

Real Estate Market Segments

Over the ne t months which Hampton Roads real estate property sector has the est investment potential

Hampton Roads Market Segments

B Office Industrial Retail

A

N

A

N Investment N APotential N - Next est NV Hampton Roads 2018201 Spring 2017 Spring 201 2018,Spring 2017,

N Months:

Office Industrial Retail

■ 2018 ■ 2017

Multi-family residential Multi-family residential

■ 2016

Single-familyresidential residential Single-family

Land No Opinion

Land No Opinion

0% 0%

5% 5%

10% 10%

15% 15%

20% 20%

25% 25%

30% 30%

Percentage of Participants Percentage of Participants

35% 35%

40% 0%

45% 5%

ositive ne s is re ected in responses to uestion as more people intend to expand their real estate space usages rather than contract or reduce their space usage. o ever retail is the one exception to this general nding.

e would li e to understand your anticipated real estate usa e over the ne t months.

Please indicate i you plan to e pand or contract your use or ownership o space

Hampton Roads Real Estate Markets Hampton Roads Real Estate Markets

AN Office Industrial Retail

A

A

Anticipated A AReal Estate AN sage Changes N n= 117

Months: 2018 N Spring 2018

Office

Industrial

■ No Change

Retail

■ Contract ■ Expand

Multi-family residential Multi-family residential Single-family Single-familyresidential residential

Land

Land

please answer each row .

0%0%

5% 5%

10% 10%

15% 15%

20% 20%

25% 25%

30% 30%

35% 35%

0% 40%

5% 45%

50% 50%

Percentage Participants Percentage ofofParticipants

select one .

Expected Change

Over the ne t months what is your e pectation or the chan e in eneral mort a e interest rates

Expected Change

AN

N

A

N

A

N

Expected Changes in Mortgage Interest Rates - Next 2018, 2017, 201 Spring 2018 Spring 2017 Spring 201 n = 117

Month:

N

Increasing Increasing

■ 2018

No Change

No Change

■ 2017 ■ 2016

Decreasing

Decreasing 0%

0%

10%

10%

20%

20%

30%

30%

0%

50%

0%

70%

40% 50% 60% 70% Percentage of Participants Percentage of Participants

80%

80%

0%

90%

100%

100%

Although ampton Roads communities have begun planning for the impending e ects of sea level rise most survey respondents indicate that sea level rise currently has generally moderate to no impact on their ampton Roads real estate interests.

A

V

N

NA

A

A

N

Impact of Sea-level Rise on Personal Real Estate Interest: 2018,Spring 2017, 201 2018 Spring 2017 Spring 201

Severe Impact

Level of Impact

Severe Impact

Level of Impact

Please choose the statement elow that est re lects the impact o sea-level rise on your Hampton Roads real estate interests select one .

A

ModerateImpact Impact Moderate

■ 2018 ■ 2017

Minimal Impact Minimal Impact

■ 2016

No Impact No Impact 0%

0%

5%

5%

10%

10%

15% 20% 25% 30% 15% 20% 25% 30% Percentage of Participants Percentage of Participants

an you albrid e Pro erty Ad isors or s onsorin t e 201 eal state Mar ets Sentiment Sur ey

If you ould li e to participate in this survey please contact E.V. Williams Center for Real Estate irector Andy ans at hans odu.edu.

35%

35%

0% 40%

5% 45%

am ton oads

MORE THAN A MAIN STREET Creative Districts 1 Economy 8 Business

CULTURALLY COOL International Companies

20

2000+ int’l scientists conduct research at Jefferson Lab National Accelerator Facility NEW BLUE COLLAR In the past 6 years,4800 advanced manufacturing jobs announced DIVERSE NIGHTLIFE & RECREATION

ENTREPRENEURSHIP HUB Tech Center Research Park $ kick-starts your start-up

OVER 180K STRONG

YOUR CITY | OUR CITY | ONE CITY

We want to start a personal partnership with your business FIND OUT MORE: (757) 926 -8428 | N E W P O R T N E W SVA . C O M

50

81

66 340

250 220

64

29

How can you be in two states at the same time?

301

95

Think Currituck!

64

Newport News Hampton

AN CE ATL ANTIC O

Currituck County, North Carolina is actually part of Hampton Roads, Virginia’s Metropolitan Statistical Area. So when you expand your business here, 85 221 220 you’ll get all the benefits of the economically95robust, infrastructure - rich Southeastern Virginia corridor, 58 plus extra advantages—including the lowest tax rate (.48 per $100 valuation) of all the Hampton 220 Roads localities, and workforce incentives—offered 52 only in North Carolina. It’s the best of both worlds; 85 95 like being in two states at once. And that is one 40 great state for your business to be in.

Norfolk Virginia Beach 58 Suffolk Chesapeake 64

17

168

Currituck County

13

17 64

264

85

220

74

17 Download your free 2018 Hampton Roads 40 Business Resource Guide: www.thinkcurrituck.com/hrbizguide

Larry J. Lombardi, Director 252-232- 6015 | M: 301-237-8951 Larry.Lombardi@CurrituckCountyNC.gov 153 Courthouse Road, Currituck, North Carolina 27929

ThinkCurrituck.com

M SS ON of the

.V. Williams enter for eal state

The E.V. Williams Center for Real Estate strives to connect those engaged or interested in real estate and economic development to the research curriculum and students at Old ominion niversity O . Through programming research initiatives and publications the Center partners ith its members O alumni and business leaders to educate the community and provide O students ith enrichment experiences that facilitate their professional development.

For membership or programming in uiries please contact Andy ans

hans

odu.edu or atalie

Boehm nmcgaugh odu.edu .

E. V. WILLIAMS CENTER FOR REAL ESTATE odu.edu/creed