Norfolk Retail Q3 Marketview
The Norfolk retail market experienced 14,069 square feet of positive net absorption throughout Q3 2020, which resulted in a vacancy rate of 6.5%. The Peninsula propped up the market, experiencing 46,906 square feet of positive net absorption and ending the quarter at a vacancy rate of 7.2%. The Southside experienced 32,837 square feet of negative net absorption and ended the quarter at a 6.2% vacancy rate.
Over the last 15 years, the average market vacancy rate is 5.8%, with the Southside averaging 5.5% and the Peninsula averaging 6.3%. Although the market is currently seeing a higher vacancy rate than the market average, there is optimism, as the effects of COVID-19 are beginning to subside, and the upcoming holiday shopping season should help prop up many retail businesses in the short term.
Average asking rents (NNN) ended Q3 2020 at $13.69 across all retail product types, which remains unchanged quarter-over-quarter but is $0.17 less year-over-year. The Southside ended Q3 2020 with an average asking rent of $13.43, while the Peninsula followed with an average asking rent of $14.21.
Atlantic Park, a mixed-use surf park and entertainment center at the Virginia Beach Oceanfront is getting closer to construction, with the proposed project progressing through the development process farther than any other previous proposal for the site. In September, the developer of the proposal, Venture Realty Group, met a deadline to prove they can secure the necessary financing for the project. This allows for more formal design plans to get under way, with a groundbreaking still at least a year away. If this development comes to fruition, it will bring 230,000 square feet of retail space to the market.
The Commonwealth of Virginia remains in Phase 3 of its reopening plan. Although many businesses are still struggling due to the pandemic, positive signals are being evidenced, such as the easing of the United States unemployment rate from a high of 14.7% in April to 7.4% in August.
Strong sales activity continued during Q3 2020 in the Norfolk market. J&J Investments purchased the 86,201 square-foot Newport Market Place from Frontier Development LLC for $5.8 million, or $67.28 per square foot. Dominion Marketplace LLC purchased the 75,506 square-foot Dominion Marketplace from Focused Chesapeake LLC for $4.9 million, or $64.90 per square foot. Lastly, Chesapeake Virtual Offices purchased the 43,375 square-foot Campostella Corners Shopping Center from Yagen Rental Properties LLC for $3.5 million, or
$80.69 per square foot.