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Summit Pointe Delivery Marks a Positive End to 2020

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Norfolk Office Q4 2020 Market Report

Market Overview
>Norfolk’s vacancy rate increased slightly during Q4 2020, ending the quarter at 11.6%. This vacancy rate is 17 bps (basis points) higher quarter-over-quarter and 131 bps higher year-over-year.  This increase in vacancy is not truly indicative of market conditions, however, as the market saw 111,211 square feet of positive net absorption over the quarter.  Instead, this increase in vacancy rate is due to the delivery of the new 170,000 square-foot Summit Pointe office building.  This delivery brought vacant inventory to the market, however did not affect absorption.

>Average asking rents increased slightly in Q4 2020, ending the quarter at
$20.25, an increase of $0.17 quarter-over-quarter and $0.15 year-over-year. Although rents initially took a hit due to COVID-19, they have begun creeping back up, and have now passed pre-pandemic highs.

>Sublease space has particularly become more prevalent since the pandemic began, with 730,661 square feet of sublet space available for lease to end Q4 2020.  This is a 45.1% increase since the end of Q1 2020, when the effects of the pandemic first began being felt, which ended with 503,640 square feet of available sublease space.

Key Events
>Summit Point delivered a 170,000 square foot Class A office building to the market, which is now in lease-up.  This is the largest Class A office building delivered to the market since 4525 Main Street Tower was delivered to Town Center of Virginia Beach in 2014.

>Panasonic Corporation of North America sold a former call center to Essential Contractors LLC for $4.25 million, or $85 per square foot.  The 50,000 square-foot property is located at 661 Independence Parkway within the Greenbrier submarket of Chesapeake.

>Gracestone Investments purchased Volvo Office Park from Volvo Park Partners, L.P.  The park, totaling 49,932 square feet, sold for $4.6 million, or $92.13 per square foot.

>A 31,000 square-foot medical office building located at 5716 Cleveland Street within the I-64/I-264 submarket was sold by the City of Virginia Beach to Montecito Medical Real Estate.  The building, known as Gallery II, sold for $6.5 million, or $216.67 per square foot.  It will continue to operate as medical office space for current tenants Jordan-Young Institute and Patient First.

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Summit Pointe Delivery Marks a Positive End to 2020

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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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