[PDF] - 1 Our Proud Sponsors Our Proud Sponsors Special thank you to LI PDF Document

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1

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

Executive Committee Executive Committee

Chair: Chair: Joyce Hartman Joyce Hartman Executive Director: Executive Director: John Lombard John Lombard Vice Chair: Vice Chair: Tom Dillon Tom Dillon Programs Chair: Programs Chair: Stephanie Sanker Stephanie Sanker Publications Chair: Publications Chair: Brian Dundon Brian Dundon Membership Chair: Membership Chair: Craig Cope Craig Cope Curriculum Co Curriculum Co-

Chairs:

Chairs: John Crunkleton and Brad Sanford John Crunkleton and Brad Sanford Sponsorship Chair: Sponsorship Chair: Cliff Moore Cliff Moore By By-

Laws Chair:

Laws Chair: Andrew Keeney Andrew Keeney Past Chair: Past Chair: William E. King William E. King At Large: At Large: Jonathan Guion and Aubrey Layne Jonathan Guion and Aubrey Layne

Sponsorship Committee Sponsorship Committee

Cliff Moore, W.M. Jordan Cliff Moore, W.M. Jordan Brad Sanford, Dominion Realty Advisors Brad Sanford, Dominion Realty Advisors Larry Colorito, Axial Advisory Group Larry Colorito, Axial Advisory Group

Program Committee Program Committee

Stephanie Sanker, GVA Advantis Stephanie Sanker, GVA Advantis Joyce Hartman, Sperry Van Ness Joyce Hartman, Sperry Van Ness Peggy Koch, GVA Advantis Peggy Koch, GVA Advantis Eva Wiggins, NAI Harvey Lindsay Eva Wiggins, NAI Harvey Lindsay

Publication Editing Committee Publication Editing Committee

Brian Dundon, Brian J. Dundon & Assoc. Brian Dundon, Brian J. Dundon & Assoc. Sandi Sandi Prestridge Prestridge, City of Norfolk , City of Norfolk Maureen Rooks, Divaris Maureen Rooks, Divaris Joy Learn, SunTrust Joy Learn, SunTrust Lane Lane Shea Shea, Harbor Group , Harbor Group Joyce Hartman, Sperry Van Ness Joyce Hartman, Sperry Van Ness Bradley Sanford, Dominion Realty Advisors Bradley Sanford, Dominion Realty Advisors Beth Hancock, City of Chesapeake Beth Hancock, City of Chesapeake John Lombard, ODU John Lombard, ODU

Our Proud Sponsors Our Proud Sponsors

ATLANTI C MORTGAGE AND I NVESTMENT COMPANY ATLANTI C MORTGAGE AND I NVESTMENT COMPANY AXI AL ADVI SORY GROUP, LLC AXI AL ADVI SORY GROUP, LLC BANK OF AMERI CA REAL ESTATE BANKI NG GROUP BANK OF AMERI CA REAL ESTATE BANKI NG GROUP BB&T BB&T BBL DEVELOPMENT. BBL DEVELOPMENT. CAVALI ER LAND, I NC. CAVALI ER LAND, I NC. CR RI CHARD ELLI S CR RI CHARD ELLI S CHESAPEAKE DEPARTMENT OF ECONOMI C DEVELOPMENT CHESAPEAKE DEPARTMENT OF ECONOMI C DEVELOPMENT CLANCY & THEYS CONSTRUCTI ON COMPANY CLANCY & THEYS CONSTRUCTI ON COMPANY CLARK NEXSEN CLARK NEXSEN CMSS ARCHI TECTS CMSS ARCHI TECTS COLLI NS ENTERPRI SES COLLI NS ENTERPRI SES CONTI NENTAL REALTY SERVI CES, I NC. CONTI NENTAL REALTY SERVI CES, I NC. COSTAR GROUP COSTAR GROUP CREW CREW DAVENTPORT GROUP / LEFCOE DEVELOPMENT DAVENTPORT GROUP / LEFCOE DEVELOPMENT DOMI NI ON REALTY ADVI SORS, I NC. DOMI NI ON REALTY ADVI SORS, I NC. DRUKER & FALK, LLC. DRUKER & FALK, LLC. GREAT ATLANTI C MANAGEMENT COMPANY GREAT ATLANTI C MANAGEMENT COMPANY GVA / ADVANTI S GVA / ADVANTI S HAMPTON DEPARTMENT OF ECONOMI C DEVELOPMENT HAMPTON DEPARTMENT OF ECONOMI C DEVELOPMENT HARBOR GROUP I NTERNATI ONAL HARBOR GROUP I NTERNATI ONAL HAYES, SEAY, MATTERN & MATTERN, I NC. HAYES, SEAY, MATTERN & MATTERN, I NC. KAUFMAN & CANOLES, A PROFESSI ONAL CORPORATI ON KAUFMAN & CANOLES, A PROFESSI ONAL CORPORATI ON LANDMARK DESI GN GROUP LANDMARK DESI GN GROUP LAUREATE CAPI TAL MORTGAGE BANKERS LAUREATE CAPI TAL MORTGAGE BANKERS

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2 Our Proud Sponsors Our Proud Sponsors

LI BERTY PROPERTY TRUST LI BERTY PROPERTY TRUST MI DEASTERN BUI LDERS MI DEASTERN BUI LDERS THE MORGAN REAL ESTATE GROUP, I NC. THE MORGAN REAL ESTATE GROUP, I NC. NAI HARVEY LI NDSAY NAI HARVEY LI NDSAY NANCY CHANDLER ASSOCI ATES, REALTORS NANCY CHANDLER ASSOCI ATES, REALTORS NEWPORT NEWS PLANNI NG AND ECONOMI C DEVELOPMENT NEWPORT NEWS PLANNI NG AND ECONOMI C DEVELOPMENT NORFOLK DEPARTMENT OF ECONOMI C DEVELOPMENT NORFOLK DEPARTMENT OF ECONOMI C DEVELOPMENT PERRI NE & WHEELER REAL ESTATE I NVESTMENTS PERRI NE & WHEELER REAL ESTATE I NVESTMENTS PORTSMOUTH DEPARTMENT OF ECONOMI C DEVELOPMENT PORTSMOUTH DEPARTMENT OF ECONOMI C DEVELOPMENT RESOURCE BANK RESOURCE BANK ROSE & WOMBLE REALTY COMPANY ROSE & WOMBLE REALTY COMPANY THE RUNNYMEDE CORPORATI ON THE RUNNYMEDE CORPORATI ON SAM SEGAR AND ASSOCI ATES, I NC. SAM SEGAR AND ASSOCI ATES, I NC. SI GNATURE MANAGEMENT CORP./ WAI TZER PROPERTI ES SI GNATURE MANAGEMENT CORP./ WAI TZER PROPERTI ES S.L. NUSBAUM REALTY COMPANY S.L. NUSBAUM REALTY COMPANY SOUTHERN TRUST MORTGAGE SOUTHERN TRUST MORTGAGE SPERRY VAN NESS COMMERCI AL REAL ESTATE ADVI SORS SPERRY VAN NESS COMMERCI AL REAL ESTATE ADVI SORS SUFFOLK DEPARTMENT OF EC0NOMI C DEVELOPMENT SUFFOLK DEPARTMENT OF EC0NOMI C DEVELOPMENT SUNTRUST REAL ESTATE FI NANCE GROUP SUNTRUST REAL ESTATE FI NANCE GROUP THALHI MER/ CUSHMAN WAKEFI ELD THALHI MER/ CUSHMAN WAKEFI ELD TOWNE BANK TOWNE BANK TRI CI TY DEVELOPERS, LLC. TRI CI TY DEVELOPERS, LLC. VANASSE HANGEN BRUSTLI N, I NC. VANASSE HANGEN BRUSTLI N, I NC. VI RGI NI A BEACH DEPARTMENT OF ECONOMI C DEVELOPMENT VI RGI NI A BEACH DEPARTMENT OF ECONOMI C DEVELOPMENT WALL, EI NHORN & CHERNI TZER, P.C. WALL, EI NHORN & CHERNI TZER, P.C. WI LLI AMS MULEN WI LLI AMS MULEN W.M. JORDAN W.M. JORDAN WEXFORD SCI ENCE & TECHNOLOGY, LLC. WEXFORD SCI ENCE & TECHNOLOGY, LLC.

Special thank you to

Inside Business

for their sponsorship

ver the past four

years.

Residential Review Residential Review – – J.V. Rose, Jr. J.V. Rose, Jr.

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

Residential Market Review Residential Market Review

J. Van Rose, Jr. MIRM

President Rose & Womble Enterprises Principal Owner of Rose & Womble Realty 2004 Rose & Womble Sold 7,000 Homes Equaling $ 1 Billion in Volume Lifetime Teacher & Motivator Travels the country sharing his knowledge and unique perspective.

14 Year History of Resale and New Construction Closings

5 0 0 0 1 0 0 0 0 1 5 0 0 0 2 0 0 0 0 2 5 0 0 0 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5

R e s a le N C

Hampton Roads Housing Stats Hampton Roads Housing Stats – – 2005 2005

Permits Closings

2 0 0 4 2 0 0 5 2 0 0 4 2 0 0 5 5 4 4 8 5 0 9 2

7 2 6 5 7 7 7 8

7,778 Building Permits
5,092 Closed New Home Sales

SLIDE 3

3

Average Price of SF New Home

Average Price of SF New Home

$405,943

$405,943

An I ncrease of $91,138 and

An I ncrease of $91,138 and 28.9% in one year 28.9% in one year

Average Price of SF Existing Home

Average Price of SF Existing Home

$252,844

$252,844

An I ncrease of $45,317 and

An I ncrease of $45,317 and 21.8% in one year 21.8% in one year

Hampton Roads Housing Stats Hampton Roads Housing Stats – – 2005 2005 Growth of Home Sizes and Growth of Home Sizes and Price Per Square Foot Price Per Square Foot

2 0 02

$17 0 K $7 9 SF

2 1 5 0 SF

2 0 03

$ 2 58 K $1 04 SF

2 4 8 0 SF

2 0 04

$ 31 3K $ 1 18 SF

2 6 4 7 SF

2 0 05

$4 0 6K $ 145 SF

2 8 0 0 SF

Market Share 1994 vs. 2005 Market Share 1994 vs. 2005

2005

Resale Resale

64% 36% 18% 82% NC – 3 6 % RESALE - 6 4 % NC – 1 7 % RESALE – 8 3 %

1 99 4 2 00 5

$332,161 $473,205 $141,044 $280,078 $444,168 $164,090 $259,341 $390,187 $130,846 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 VB Ches Suff Resale NC Diff

Southside Single - Family Detached Homes Resale vs. New Construction Average Closing Prices for 2005

$159,485 $300,660 $141,175 $203,738 $344,739 $141,001 $292,667 $416,734 $124,067 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 Ports Norf I/W Resale NC Diff

Southside Single - Family Detached Homes Resale vs. New Construction Average Closing Prices for 2005

$171,584 $298,914 $127,330 $194,880 $340,897 $146,017 $324,992 $390,523 $65,531 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Hamp NN YC Resale NC Diff

Peninsula Single - Family Detached Homes Resale vs. New Construction Average Closing Prices for 2005

SLIDE 4

4

$368,816 $390,212 $21,396 $384,978 $261,559 ($123,419) ($150,000) ($50,000) $50,000 $150,000 $250,000 $350,000 $450,000

JCC WMSB Resale NC Diff

Peninsula Single – Family Detached Homes Resale vs. New Construction Average Closing Prices for 2005

Average Consumer Lot Costs Average Consumer Lot Costs Chesapeake Chesapeake

$ 7 22 ,59 5 $ 5 39 ,73 3 $ 7 89 ,00 0 $ 6 78 ,46 1

Edinburgh - $275,000
Ruth’s Glen - $250,000
Emerald Forest - $285,347
English Oaks - $178,778

Land Cost = 3 8% Land Cost = 4 7% Land Cost = 3 6% Land Cost = 2 6%

Average Consumer Lot Costs Average Consumer Lot Costs Suffolk Suffolk

$ 6 12 ,37 2 $ 4 44 ,07 8 $ 6 76 ,55 7

Governors Pointe - $182,000
Nansemond River Estates -

$ 141,825

The Riverfront - $368,505

Land Cost = 3 0% Land Cost = 3 1% Land Cost = 5 4%

Average Consumer Lot Costs Average Consumer Lot Costs Virginia Beach Virginia Beach

$ 7 13 ,83 7 $ 8 20 ,08 3 $ 7 20 ,00 0* $ 6 94 ,60 4

Lago Mar – $211,690 Thoroughgood– $345,000 Victoria Park – $345,000 Indian River Plantation - $281,618

*Estimated Selling Price

Land Cost = 4 3% Land Cost = 4 2% Land Cost = 4 8% Land Cost = 4 1%

Average Consumer Lot Costs Average Consumer Lot Costs James City County James City County

$ 4 59 ,70 8 $ 5 63 ,99 9 $ 5 78 ,80 2 $ 5 24 ,90 2

Lake Powell Pointe – $166,201 Governors Land– $152,812 Fords Colony – $170,073 Landfall - $153,500

Land Cost = 3 6% Land Cost = 2 9% Land Cost = 2 9% Land Cost = 2 9%

Average Consumer Lot Costs Average Consumer Lot Costs Hampton, Newport News, York Hampton, Newport News, York County, Williamsburg County, Williamsburg

$ 4 62 ,20 0 $ 4 07 ,94 0 $ 4 49 ,30 0 $ 9 58 ,40 0

H Howe Farms – $94,667 N Port Warwick – $159,724 Y Quartermarsh Est – $110,000 W Holly Hills - $385,106

Land Cost = 2 4% Land Cost = 4 0% Land Cost = 2 0 .4 % Land Cost = 2 9%

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5

1. Cautiously Optimistic

Residential Housing Residential Housing Forecast Forecast

RESI DENTI AL HOUSI NG RESI DENTI AL HOUSI NG FORECAST FORECAST REASONS:

1. Hampton Roads Economics

Hampton Roads Economic Stats Hampton Roads Economic Stats 2005 2005

The area

The area’ ’s economy has outperformed the s economy has outperformed the country country’ ’s for the past s for the past 5

5 years

years

The port

The port’ ’s growth and tourism provide a buffer s growth and tourism provide a buffer to military cutbacks to military cutbacks

Median Family I ncome

Median Family I ncome National Average National Average $ 57,511 $ 57,511 Virginia Beach Virginia Beach $ 61,230 $ 61,230 Chesapeake Chesapeake $ 58,701 $ 58,701 Hampton Hampton $ 46,110 $ 46,110 James City County James City County $ 66,171 $ 66,171

Average MSA Military Pay $ 52,600

Average MSA Military Pay $ 52,600

More than 53,000 Retired Military in HR

More than 53,000 Retired Military in HR

RESI DENTI AL HOUSI NG RESI DENTI AL HOUSI NG FORECAST FORECAST REASONS:

2. Hampton Roads Housing Demand

Percent of Households That Purchased A Home in 2005 Compared To The Total Number of Households In The MSA

C h a r l o t t e N C M S A H a m p t o n R o a d s M S A

Total Closings = 38,803 12.8 % of HH Total Households = 300,800 Total Closings = 29,390 4.9 % of HH Total Households = 587,975 R a l e i g h /D u r h a m M S A Total Closings = 43,416 8.1 % of HH Total Households = 535,200

RESI DENTI AL HOUSI NG RESI DENTI AL HOUSI NG FORECAST FORECAST REASONS:

3. Hampton Roads Housing Supply

SLIDE 6

6

Number of Homes Listed in December 1998-2005 and January 2006

8 5 8 2 6 9 0 2 6 4 4 9 5 2 0 0 4 0 8 2 2 9 2 5 2 7 6 4 2 8 0 9 5 7 3 2

2 0 0 0 4 0 0 0 6 0 0 0 8 0 0 0 1 0 0 0 0

1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6

RESI DENTI AL HOUSI NG RESI DENTI AL HOUSI NG FORECAST FORECAST REASONS:

4. Effects of Interest Rates

(Mortgage Instruments)

I nterest Rate Affect On Housing Affordability I nterest Rate Affect On Housing Affordability

1999 2000 2001 2002 2003 2004 2005 MI $39,704 $42,448 $51,000 $53,900 $56,302 $56,624 $59,100 IR 8.2% 7.3% 7.3% 5.5% 5.25% 6.0% 6.125%

= = = = = = = TM $154,000 $173,000 $210,000 $260,000 $300,000 $275,000

$300,000

With Down Payment

$400,000

Interest Only

$425,000

Interest Only With Down Payment

$525,000

RESI DENTI AL HOUSI NG RESI DENTI AL HOUSI NG FORECAST FORECAST REASONS:

5. Military Influence

Defense Spending I n Billions Defense Spending I n Billions 1990 1990 -

2006

2006

4 1 9 .3 4 1 7 3 7 9 .9 3 5 5 .1 3 2 9 2 9 1 2 2 1 2 1 9 2 0 3 2 1 8 2 2 3 2 3 0 2 3 8 2 5 8 2 7 0 2 9 5 2 9 8

50 100 150 200 250 300 350 400

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

New Construction Closings By Price Points 2003, 2004, 2005

500 1000 1500 2000 <200 K 200-290K 300-390K 400-490K 500-590K 600-690K 700K +

2003 2004 2005

SLIDE 7

7

Multifamily Review Multifamily Review – – Aubrey Layne Aubrey Layne

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

Multifamily Market Review Multifamily Market Review

Aubrey Lane Aubrey Lane President & Principal Broker President & Principal Broker Great Atlantic Properties Great Atlantic Properties Responsible for the operations and Responsible for the operations and administration of Great Atlantic administration of Great Atlantic’ ’s s Property management functions, Property management functions, new business acquisition, capital new business acquisition, capital improvement, banking and investor improvement, banking and investor relations. relations. MBA MBA – – Old Dominion University Old Dominion University

2006 2006 Multifamily Market: Multifamily Market: Review and Assessment Review and Assessment

Aubrey L. Layne, Jr. Aubrey L. Layne, Jr. President President Great Atlantic Management Great Atlantic Management

GREAT ATLANTIC

2006 2006 Multifamily Market: Multifamily Market: Review and Assessment Review and Assessment

2005 Year in Review

2005 Year in Review

– –Economic Background Economic Background – –Fundamentals Fundamentals

Operational Trends

Operational Trends

Multifamily Transactions

Multifamily Transactions

Opportunities / Cautions

Opportunities / Cautions

Conclusion

Conclusion

2005 Year in Review 2005 Year in Review

Economic Background

Economic Background

– – HR (Hampton Roads) favorable unemployment HR (Hampton Roads) favorable unemployment rate of 3.6% (vs. 4.7% for US) rate of 3.6% (vs. 4.7% for US) – – Demand exceeds supply Demand exceeds supply

2,595 units under construction and 1,764 proposed 2,595 units under construction and 1,764 proposed

– – Long term interest rates historically low and Long term interest rates historically low and steady steady – – Home prices have increased significantly Home prices have increased significantly

Fundamentals

Fundamentals

– – Vacancy 3.8% Vacancy 3.8% – – Average rent $785 Average rent $785

Rent growth in excess of inflation

Rent growth in excess of inflation

– – Strong fundamentals compared to Strong fundamentals compared to nearby regions nearby regions

Source: Real Data

2005 Year in Review (Continued)

SLIDE 8

8

Avg. Rents by City - 2005

500 550 600 650 700 750 800 850 900 950 N N P

r

t s m

u

t h N

r

f

l

k H a m p t

n

W i l l i a m s b u r g H R a v g . C h e s / S u f f

l

k Y

r

k V a B e a c h $ per month

$785 $881 $700

Net Monthly Cost of Owning vs. Renting

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2000 2001 2002 2003 2004 2005 0% 10% 20% 30% 40% 50% 60% 70% 80% avg rent home P&I

wner %

premium 73% $1,341 $785 Sources: ODU Economic Forecasting Project and Real Data

Hampton Roads Avg. Rent and Median P&I for a Newly Purchased Home

Comparison to Nearby Regions Comparison to Nearby Regions

7.8%

7.8% 6.5% 6.5% 13.8% 13.8%

2 yr. % 2 yr. % Change Change rent rent

$700 $700 $726 $726 $785 $785

Avg. Avg. Rent Rent

9.8% 9.8% 6.3% 6.3% 3.8% 3.8%

Vacancy Vacancy Raleigh Raleigh-

Durham

Durham Richmond Richmond HR HR

Source: Real Data

Operational Trends Operational Trends

Condo conversions

Condo conversions

“

“Renters by choice Renters by choice” ”

Urbanism

Urbanism

Life style amenities

Life style amenities

– – Concierge Service Concierge Service – – Automated rent payments and web based Automated rent payments and web based maintenance requests maintenance requests – – Business center Business center – – Cyber Cyber-

caf

café é – – Hot tubs / tanning booths Hot tubs / tanning booths

Multifamily Transactions Multifamily Transactions

Per unit prices for multifamily properties have increased

Per unit prices for multifamily properties have increased significantly since 2001 significantly since 2001

2001, $36,700

2001, $36,700

2004, $72,700

2004, $72,700

2005, $68,600

2005, $68,600

Number of units traded increased

Number of units traded increased

2001, 2,200 units

2001, 2,200 units

2004, 4,000 units

2004, 4,000 units

2005, 2,700 units

2005, 2,700 units

U n i t s S

l

d

Hampton Roads Apartment Units Sold and Average Price per Unit

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 1999 2000 2001 2002 2003 2004 2005

apt. units sold

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000

avg. price per unit

# of units sold

Avg. price per unit

$62,400 $36,700

Data: CBRE, reported broker transactions

$59,600 $72,700 $68,600

SLIDE 9

9

Multifamily Transactions Multifamily Transactions (Continued) (Continued)

Tenants in common (TIC)

Tenants in common (TIC)

Cap Rate Compression

Cap Rate Compression

– – Interest rates are low Interest rates are low – – Limited financial return alternatives for investments Limited financial return alternatives for investments

Financial returns significantly based

Financial returns significantly based

n property appreciation
n property appreciation

HR Multifamily Cap Rates*

3 4 5 6 7 8 9 10 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 percent cap rates and Interest Rates (10 years) interest rates * CBRE, broker supplied data 6.9% 4.2%

HR Multifamily Cap Rates*

3 4 5 6 7 8 9 10 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 percent cap rates and international cap rates** * CBRE, broker supplied data NY, 6.9% London, 6.8% Paris, 6.0% Tokyo, 5.4% ** GE Commercial Finance

6.9%

Opportunities / Cautions Opportunities / Cautions

National perspective

National perspective

BRAC

BRAC

Interest rates

Interest rates

Vacancy

Vacancy

Conclusion Conclusion

Multifamily economics remain strong

Multifamily economics remain strong

Valuations questionable

Valuations questionable

Watch fundamentals

Watch fundamentals

GREAT ATLANTIC

Office Review Office Review – – Don Don Crigger Crigger

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

SLIDE 10

10 Office Market Review Office Market Review

Donald Crigger, CCI M Donald Crigger, CCI M Senior Director, Office Properties Senior Director, Office Properties Advantis Real Estate Services Company Advantis Real Estate Services Company Directs the leasing operations for nearly 2.5 Directs the leasing operations for nearly 2.5 million square foot portfolio million square foot portfolio Specializes in landlord and tenant Specializes in landlord and tenant representation, leasing and sales representation, leasing and sales Since 1987, transaction volume exceeds Since 1987, transaction volume exceeds $225 Million $225 Million B.A. College of William and Mary B.A. College of William and Mary

2006 Office Market Review 2006 Office Market Review

Presented by: Presented by: Donald R. Crigger, CCIM Donald R. Crigger, CCIM Senior Director, Office Properties Senior Director, Office Properties GVA Advantis GVA Advantis

7.80% 9.70% 11.80% 14.30% 13.10% 10.10% 8% 0.00% 5.00% 10.00% 15.00% 20.00% 1999 2000 2001 2002 2003 2004 2005 Vacancy Rate

HAMPTON ROADS HI STORI CAL HAMPTON ROADS HI STORI CAL VACANCY RATE TRENDS VACANCY RATE TRENDS

804,000 608,000 657,000 551,000 343,000 823,000 384,000 200,000 400,000 600,000 800,000 1,000,000 Square Feet Net Absorption 823,000 343,000 657,000 384,000 551,000 804,000 608,000 1999 2000 2001 2002 2003 2004 2005

HAMPTON ROADS HI STORI CAL HAMPTON ROADS HI STORI CAL ABSORPTI ON TRENDS ABSORPTI ON TRENDS

The Real Estate Cycle The Real Estate Cycle

Absorption of Excess Supply Declining Prices, Rents, Construction High Vacancies Oversupply Accelerated New Construction I ncreasing Prices and Rents Low Vacancies

First Half First Half

f the 90s
f the 90s

Today Today

Landlord or Tenant Market? Landlord or Tenant Market?

Scarcity of Choice Sites

Scarcity of Choice Sites

Rapidly I ncreasing Land Prices

Rapidly I ncreasing Land Prices

Construction Costs Up 25% to 30%

Construction Costs Up 25% to 30% (Since 2003) (Since 2003)

New Construction Rental Rates Up 15% to 20%

New Construction Rental Rates Up 15% to 20%

Modest to Moderate Office Demand

Modest to Moderate Office Demand

SLIDE 11

11

Development Response to Development Response to “ “Tight Tight” ” Market Market

Continued Measured Approach to Adding

Continued Measured Approach to Adding New Supply New Supply

Limited Speculative Development Will Be

Limited Speculative Development Will Be Rewarded Rewarded

Larger Tenants Must Plan Further Ahead

Larger Tenants Must Plan Further Ahead (18 to 24 months) (18 to 24 months)

Visuals

Visuals – – Architectural Plans and Renderings Architectural Plans and Renderings

AMERIGROUP Building AMERIGROUP Building

Fall 2006 Completion Fall 2006 Completion

The Gallery The Gallery

April 2006 Delivery April 2006 Delivery

Liberty Three Liberty Three

December 2006 Delivery December 2006 Delivery

Innovation Research Park Innovation Research Park

Delivery Spring 2007 Delivery Spring 2007

Trader Center Trader Center

January 2007 Completion January 2007 Completion

SLIDE 12

12 Commander Corporate Center Commander Corporate Center

Spring 2007 Delivery Spring 2007 Delivery

Bridgeway Technology Center III Bridgeway Technology Center III

Summer 2006 Delivery Summer 2006 Delivery

300 Exploration Way 300 Exploration Way

Fall 2006 Delivery Fall 2006 Delivery

300 Exploration Way National I nstitute

f

Aerospace Delivered 2005

One City Center One City Center

Delivery 2006

Office Market Forecast Office Market Forecast

Vacancy Continues Gradual Decline

Vacancy Continues Gradual Decline

Rental Rates Will Surge Upward

Rental Rates Will Surge Upward

Relatively Strong Net Absorption

Relatively Strong Net Absorption

LARGER Volume of New Construction

LARGER Volume of New Construction Later in 2006 Later in 2006

Retail Review

Retail Review -

Christopher E.

Christopher E. Rouzie Rouzie

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

SLIDE 13

13

Retail Market Review Retail Market Review

Christopher E. Rouzie Christopher E. Rouzie Senior Vice President Senior Vice President Thalhimer Thalhimer Managing Broker for Thalhimer Managing Broker for Thalhimer Newport News Newport News Specializes in Retail Site Selection Specializes in Retail Site Selection for National Retailers for National Retailers Recipient of the 2001, 2003, 2004 Recipient of the 2001, 2003, 2004 CREC Gold Award and Top CREC Gold Award and Top Hampton Roads Producer for Hampton Roads Producer for Thalhimer in 2001 and 2003 Thalhimer in 2001 and 2003

RETAIL MARKET REVIEW

13.11% 12.83% 11.64% 11.19% 9.41% 7.55% 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 2001 2002 2003 2004 2005 2006

Hampton Roads – Retail Vacancy

New Projects

Williamsburg Marketcenter

SLIDE 14

14

Williamsburg Marketcenter Williamsburg Marketcenter

Windsormeade Marketplace

Windsormeade Marketplace Windsormeade Marketplace

Jefferson Commons

SLIDE 15

15

Jefferson Commons Jefferson Commons

Patrick Henry Mall

Courthouse Marketplace

SLIDE 16

16

Courthouse Marketplace

Berkley Commons

Berkley Commons Berkley Commons

Edinburgh Commons

Proposed

SLIDE 17

17

Edinburgh Commons

Cahoon Commons

Cahoon Commons Cahoon Commons

Redevelopment

Mid-City Shopping Center - Portsmouth

Before After

SLIDE 18

18

Tidewater Shopping Center - Norfolk

Before

Crossways Center - Chesapeake

After

Crossroads Center at Chesapeake Square - Chesapeake Janaf Shopping Center - Norfolk Power Plant - Hampton Shops at Yorktown - Yorktown

Before After

SLIDE 19

19

Governor’s Green - Williamsburg

Before After

Town Centers

New Town - Williamsburg City Center – Newport News Coliseum Mall - Hampton Peninsula Town Center - Hampton Coliseum Mall - Hampton

SLIDE 20

20

Virginia Beach Town Center – Virginia Beach Dean Plaza – Virginia Beach

Before

City Walk at Virginia Beach – Virginia Beach Towne Place at Greenbrier - Chesapeake Harbour View Station Town Center - Suffolk

Pipeline

SLIDE 21

21

Landstown Commons Red Mill Walk

Mt. Pleasant Marketplace

Bennett’s Creek Hanbury Village Indian River & Ferrell Pkwy. Benn’s Grant The Marquis The Market @ Harbor Heights

Industrial Review Industrial Review – – Clay Clay Culbreth Culbreth

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

Industrial Market Review Industrial Market Review

Richard C. Culbreth, Jr., CCI M, SI OR Richard C. Culbreth, Jr., CCI M, SI OR Senior Director, I ndustrial Properties Senior Director, I ndustrial Properties Advantis Real Estate Services Company Advantis Real Estate Services Company Since 1989 has concentrated exclusively on Since 1989 has concentrated exclusively on marketing, selling and leasing industrial marketing, selling and leasing industrial properties. properties. 1991 Co 1991 Co-

founded Virginia Commercial Real

founded Virginia Commercial Real Estate Services in Virginia Beach. Estate Services in Virginia Beach. 1995 formed Old Dominion Commercial Real 1995 formed Old Dominion Commercial Real Estate Services. Estate Services. Since 1992 to present has been a Tidewater Since 1992 to present has been a Tidewater Associates of Realtors Associates of Realtors’ ’ Million Dollar Million Dollar Producer. Producer.

Bobby Beasley Ken Benassi Charles Dickinson Worth Remick Pat Mumey Chip Worley Ron Biesecker Abe Ellis Bill Throne Billy King Charles Dickinson Stephanie Sanker Trip Ferguson

Gross Square Feet 1997 Gross Square Feet 1997 -

2005

2005

20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 1997 1998 1999 2000 2001 2002 2003 2004 2005

Hampton Roads Industrial Market Hampton Roads Industrial Market Vacancy Rate Vacancy Rate

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 13.5 10.9 10.2 12.3 10.8 9.2 8.7 8.6 7.3 7.6 6.4 7.4 7.5 6.25 5.24

SLIDE 22

22

5.24 5.24 6.25 6.25 Total Total

5.05% 5.05% 6.88% 6.88% Williamsburg Extended Area Williamsburg Extended Area 4.72% 4.72% 7.39% 7.39% Oakland/ Upper Peninsula Oakland/ Upper Peninsula 4.08% 4.08% 5.13% 5.13% Oyster Point/ Middle Point Oyster Point/ Middle Point 8.80% 8.80% 17.43% 17.43% Copeland/ Lower Peninsula Copeland/ Lower Peninsula 0.00% 0.00% 0.68% 0.68% I sle of Wight I sle of Wight 4.72% 4.72% 6.13% 6.13% Suffolk Suffolk 23.04% 23.04% 9.13% 9.13% Portsmouth Portsmouth 7.23% 7.23% 3.39% 3.39% Airport I ndustrial Park Airport I ndustrial Park 1.85% 1.85% 2.45% 2.45% Greenwich/ Cleveland Street Greenwich/ Cleveland Street Area Area 3.85% 3.85% 3.31% 3.31% Lynnhaven Lynnhaven Area Area 6.33% 6.33% 6.43% 6.43% West Side/ Midtown Norfolk West Side/ Midtown Norfolk Area Area 2.87% 2.87% 4.07% 4.07% Norfolk I ndustrial Park Norfolk I ndustrial Park 2.82% 2.82% 2.91% 2.91% Norfolk Commerce Park Norfolk Commerce Park 9.25% 9.25% 8.14% 8.14% Cavalier I ndustrial Park Cavalier I ndustrial Park 0.00% 0.00% 5.60% 5.60% Bainbridge/ S. Elizabeth River Bainbridge/ S. Elizabeth River 1.13% 1.13% 2.12% 2.12% Greenbrier Greenbrier

2005 Vacancy Rate 2005 Vacancy Rate 2004 Vacancy Rate 2004 Vacancy Rate Submarket Submarket

TOTAL ABSORPTION FROM 2000 TOTAL ABSORPTION FROM 2000-

2005

2005

500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 2000 2001 2002 2003 2004 2005

1,000,000 2,800,000 3,000,000 2,100,000 2,270,000 1,826,000

Bay Warehouse Bay Warehouse

($13.2 million/ $44.00 ($13.2 million/ $44.00 per square foot) per square foot)

Gateway Building Gateway Building

($14.1 Million/ $33.44 per square foot) ($14.1 Million/ $33.44 per square foot)

1920 1920 Campostella Campostella Road Road

Ashley Capital Acquisition Ashley Capital Acquisition -

2005

2005 GE Facility GE Facility

Some Leases Worth Noting Some Leases Worth Noting

Bridgeway Bridgeway Commerce Center Commerce Center Ward Court Ward Court Gateway Distribution Facility Gateway Distribution Facility

If You Build It, They Will Come!

SLIDE 23

23

C. Jones Hooks,
C. Jones Hooks, CEcD

CEcD President & CEO President & CEO Hampton Roads Economic Hampton Roads Economic Development Authority Development Authority

Russell Young Russell Young Director, Economic Development Director, Economic Development Virginia Port Authority Virginia Port Authority

Greedy Broker Greedy Broker

The increase in port activity The increase in port activity will generate a need for will generate a need for “… “… between 20 and 60 million between 20 and 60 million square feet of additional square feet of additional distribution center space in distribution center space in the region the region…” …”

Moffatt Moffatt & Nichol Report dated June 2005 & Nichol Report dated June 2005

Modern Terminals Modern Terminals

Portsmouth Marine Terminal Portsmouth Marine Terminal NI T North NI T North Craney Craney I sland Build I sland Build-

Out 2032

Out 2032 Newport News Marine Terminal Newport News Marine Terminal

Maersk Maersk Terminal Site Terminal Site

SLIDE 24

24 Craney Craney Island Island

Industrial Developers Circling the Market Devon Devon’ ’s s Enterchange Enterchange at Suffolk at Suffolk

Devon Devon’ ’s s Enterchange Enterchange at Hampton at Hampton

Liberty Property Trust Liberty Property Trust’ ’s s Bridgeway Bridgeway Commerce Center Commerce Center

American Port Services American Port Services’ ’ Northgate Commerce Park Northgate Commerce Park

SLIDE 25

25

Regional Companies Regional Companies’ ’ Virginia Regional Commerce Park Virginia Regional Commerce Park Ashley Capital Ashley Capital’ ’s s 2601 Indian River Road 2601 Indian River Road

Investment Review Investment Review – – Jonathan Jonathan Guion Guion

Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast 2006 2006

Presented by: E.V. Williams Center for Real Estate and Economic Development

Investment Market Review Investment Market Review

Jonathan S. Guion, SI OR Jonathan S. Guion, SI OR Senior Advisor Senior Advisor Sperry Van Ness Sperry Van Ness 18 Experience in Commercial Real Estate 18 Experience in Commercial Real Estate specializing in Industrial Properties and specializing in Industrial Properties and Commercial Investment Sales Commercial Investment Sales Sperry Van Ness is the third largest Sperry Van Ness is the third largest commercial real estate investment commercial real estate investment brokerage company in the nation brokerage company in the nation 2005 Commercial Sales exceeded 2005 Commercial Sales exceeded $6 Billion Dollars $6 Billion Dollars

I nve stme nt Marke t I nve stme nt Marke t

Jo nathan Guio n, SI OR Jo nathan Guio n, SI OR

National Market Influences National Market Influences I nflo w o f F

re ig n Capital

I nte rstate F lo w o f Capital Co ndo Co nve rsio n Rush

SLIDE 26

26

Inflow of Foreign Capital

Others 30% Mid East 10% Germany 20% Australia 40%

Interstate Flow of Capital Interstate Flow of Capital

$

$ $ $ $ $ $ $ $ $ $ $ $

Condo Conversion Rush Condo Conversion Rush

FOR SALE

For For Rent Rent

Hampton Roads Market Hampton Roads Market

Increase in portfolio sales Increase in out-of-state buyers

For Sale

150 West Main St Norfolk $50,500,000

SOLD

Hampton Roads Transactions Hampton Roads Transactions

Ce dar Sho pping Ce nte rs

$93.8 millio n

F irst Po to mac Re alty T rust

$68 millio n

Bransc an Re al E state Oppo rtunity F und

$25.5 millio n

SLIDE 27

27

I nve stme nt Marke t I nve stme nt Marke t

Jo nathan Jo nathan Guio n Guio n, SI OR , SI OR

Special thank you to

Inside Business

for their sponsorship

ver the past four

years.

Old Dominion University Old Dominion University Old Dominion University Old Dominion University Hampton Roads Real Estate Hampton Roads Real Estate Hampton Roads Real Estate Hampton Roads Real Estate Market Review and Forecast Market Review and Forecast Market Review and Forecast Market Review and Forecast

Please Join Us for the Reception Please Join Us for the Reception

Presented by: E.V. Williams Center for Real Estate and Economic Development