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Amazon Purchases Former Kmart Building to Create a Delivery Station

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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.

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Amazon Purchases Former Kmart Building to Create a Delivery Station

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Related Experts

Scott Adams

Executive Managing Director, Virginia & Raleigh

Norfolk - Main

J. Scott Adams, CCIM, has over 27 years’ experience in the commercial real estate industry as an investment sales broker, corporate leader, project manager, and consultant.  Since 1993, Mr. Adams has led the negotiation and sale closings of $1.7 Billion of investment sales of office, office/flex, and industrial properties, primarily in the Virginia markets of Hampton Roads, Richmond, and Charlottesville. He has consistently been recognized as a top regional dealmaker and trusted adviser for institutional and local owners. Mr. Adams remains an active investment sales broker in addition to his corporate leadership responsibilities.

As President of Colliers I Virginia, Mr. Adams is primarily responsible for leading the Colliers International brokerage and asset services teams to be the top performer throughout Southeast and Central Virginia. Mr. Adams has leadership responsibilities for all regional corporate support functions in that region as well. Beginning fall 2020, Mr. Adams will also have leadership oversight for the Raleigh, NC market. 

Prior to Colliers International, Mr. Adams was President for CBRE’s Mid-South Region Affiliate Offices (including offices in Virginia and throughout North Carolina) as well as a Senior Consultant with Kenneth Leventhal & Company (now part of EY) in their Washington, D.C. office. 

Mr. Adams is also actively involved in serving the military veteran community as well as for real estate initiatives at the University of Virginia. 

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Persifor Frazer

Executive Vice President

Norfolk - Main

Executive Vice President and Principal, Perry Frazer has over 22 years of commercial real estate experience. Perry was named the Managing Director of the Hampton Roads office in 2014. As Managing Director, Perry manages all aspects of local business to generate and maintain maximum profitability. The emphasis is on integration of a variety of service lines for new business development and growing market share. Perry guides real estate managers, sales professionals, and the office manager in client relations, service orientation and consulting role as well as the effective and efficient operation of its office and accounts.

He has been a top ten regional producer every year since 2002 and over the past 15 years Perry has leased approximately 20 million square feet in the Hampton Roads market. Perry represents institutional Landlords in the Hampton Roads markets and has established himself as one of the leading office and flex brokers in the region. He has completed numerous large tenant representation assignments over the past five years.
 
Perry has earned the distinction as one of the leading brokers in Hampton Roads and one of the leading brokers in the entire Hampton Roads organization.

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Chad Braden

Research Analyst

Norfolk - Main

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