Norfolk Retail Q4 2020 Marketview
Market Overview
>The Norfolk retail market experienced 124,699 square feet of positive net absorption throughout Q4 2020, which resulted in a vacancy rate of 6.7%. Both the Southside and the Peninsula contributed to this, with the Southside experiencing 61,422 square feet of positive net absorption and ending the quarter at a vacancy rate of 6.6%, while the Peninsula experienced 63,277 square feet of positive net absorption and ended the quarter with a vacancy rate of 7.0%. There were multiple large occupations during the quarter that contributed to this positive net absorption, such as Wayne’s Home occupying over 25,000 square feet of space at 1543 Sam’s Circle within the Greenbrier/Battlefield submarket and Three Notch’d Brewery occupying almost 8,000 square feet of space at 249 Central Park Avenue within the Pembroke submarket.
>Average asking rents (NNN) ended Q4 2020 at $13.39 across all retail product types, which is $0.08 higher quarter-over-quarter and $0.06 more year-over-year. The Southside ended Q4 2020 with an average asking rent of $13.76, while the Peninsula followed with an average asking rent of $12.83.
Key Events
>Atlantic Park, a mixed-use surf park and entertainment center at the Virginia Beach Oceanfront is getting closer to construction. In October, details of the plans to pay for the $325 million project were released. The financing plan involves creating an authority that would issue bonds for the development, as well as reinvest taxes generated by the project in the future. Now more formal design plans will get under way, with a groundbreaking likely two years away. If this development comes to fruition, it will bring 230,000 square feet of retail space to the market.
>Strong sales activity continued during Q4 2020 in the Norfolk market. Jenel Management purchased Mercury Plaza from Branch Properties for $21.5 million, or $226.90 per square foot. This transaction, located within the Mercury Central submarket, included five buildings totaling 94,757 square feet, as well as a 1.09-acre outparcel. Slate Grocery Real Estate Investment Trust purchased the 69,930 square-foot building located at 1401 North Main Street from Cedar Realty Trust for $6.95 million, or $99.39 per square foot. Lastly, Amazon purchased the 94,649 square-foot building located at 210 West Mercury Boulevard from Gator Hampton Partners for $5.95 million, or $62.86 per square foot. This purchase is notable because the building was a former Kmart that had been vacant for years. The transaction highlights that Amazon is willing to purchase former big box retail in order to refit them into last mile delivery stations, which could be an important trend for brick-and-mortar retail going forward.
>The Norfolk retail market experienced 124,699 square feet of positive net absorption throughout Q4 2020, which resulted in a vacancy rate of 6.7%. Both the Southside and the Peninsula contributed to this, with the Southside experiencing 61,422 square feet of positive net absorption and ending the quarter at a vacancy rate of 6.6%, while the Peninsula experienced 63,277 square feet of positive net absorption and ended the quarter with a vacancy rate of 7.0%. There were multiple large occupations during the quarter that contributed to this positive net absorption, such as Wayne’s Home occupying over 25,000 square feet of space at 1543 Sam’s Circle within the Greenbrier/Battlefield submarket and Three Notch’d Brewery occupying almost 8,000 square feet of space at 249 Central Park Avenue within the Pembroke submarket.
>Average asking rents (NNN) ended Q4 2020 at $13.39 across all retail product types, which is $0.08 higher quarter-over-quarter and $0.06 more year-over-year. The Southside ended Q4 2020 with an average asking rent of $13.76, while the Peninsula followed with an average asking rent of $12.83.
Key Events
>Atlantic Park, a mixed-use surf park and entertainment center at the Virginia Beach Oceanfront is getting closer to construction. In October, details of the plans to pay for the $325 million project were released. The financing plan involves creating an authority that would issue bonds for the development, as well as reinvest taxes generated by the project in the future. Now more formal design plans will get under way, with a groundbreaking likely two years away. If this development comes to fruition, it will bring 230,000 square feet of retail space to the market.
>Strong sales activity continued during Q4 2020 in the Norfolk market. Jenel Management purchased Mercury Plaza from Branch Properties for $21.5 million, or $226.90 per square foot. This transaction, located within the Mercury Central submarket, included five buildings totaling 94,757 square feet, as well as a 1.09-acre outparcel. Slate Grocery Real Estate Investment Trust purchased the 69,930 square-foot building located at 1401 North Main Street from Cedar Realty Trust for $6.95 million, or $99.39 per square foot. Lastly, Amazon purchased the 94,649 square-foot building located at 210 West Mercury Boulevard from Gator Hampton Partners for $5.95 million, or $62.86 per square foot. This purchase is notable because the building was a former Kmart that had been vacant for years. The transaction highlights that Amazon is willing to purchase former big box retail in order to refit them into last mile delivery stations, which could be an important trend for brick-and-mortar retail going forward.
