The Hampton Roads retail market experienced not much change in market conditions from the second quarter 2018. The vacancy rate increased to 5.6%, up from 5.2% in the first quarter. Net absorption was negative 226,447 square feet and rental rates are down slightly this quarter, ending at $13.45 per square foot per year.
Net absorption can be expected to remain negative through the rest of 2018 due to the continuing amounts of big box vacancies. Five Toys 'R' US and three Babies 'R' Us closed in the market this quarter. About a half dozen vacant Farm Fresh Grocery stores have added to big box inventory. Two Sears stores are vacant at Pembroke Mall in Virginia Beach and the Greenbrier store in Chesapeake.
There are some users entering the market and back filling big box space. Conn's HomePlus, a furniture, appliance and electronics retailer, is backfilling former HHGregg and BigLots vacancies. Grocers are active in the market, however not backfilling any existing grocery store vacancies. German budget grocers Aldi and Lidl are actively looking for site but prefer new construction. Wegman's is under construction in Pembroke, where small shop rents are around $40 per square foot. The 130,000-square-foot store will open in 2019.
The largest sale this quarter was the $9.1 million sale of Oyster Point Square, an 83,089-square-foot shopping center anchored by Food Lion in Newport News, Virginia. The sale consisted of the center, a freestanding BB&T, and a 0.46 acre parcel. The former Green Flash Brewery building in Virginia Beach was the largest lease this quarter - Southeast-based craft brewer New Realm Brewing will open a second brewery and taproom.