The Virginian-Pilot
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Hampton Roads real estate industry executives on Wednesday predicted no quick rebound in 2009 for the region's residential and commercial markets as credit remains tight, home sales continue to slide, and retailers face increased pressure to cut costs amid the recession.
The executives, speaking to a group of more than 500 at Old Dominion University's annual real estate forecast, said predictions a year ago that the real estate downturn would be limited to housing proved wrong.
"The recession is affecting all forms of real estate," said Jordan E. Slone, chairman and chief executive officer of Harbor Group International, a commercial real estate investment company based in Norfolk.
In the retail sector, vacancy rates will rise as more owners probably will consolidate stores as consumer spending falls, said H. Blount Hunter, a retail and real estate consultant. Taxable sales last year fell 2.6 percent in South Hampton Roads and 3.8 percent on the Peninsula, Hunter said.
"Retailers are under pressure to maximize the profitability of every store," he said.
Already, office vacancy rates in Hampton Roads have climbed, to 12.1 percent this year from 9.6 percent in the past year, according to a recent report by real estate firm CB Richard Ellis.
And with construction of apartments continuing, vacancy rates in multifamily rental complexes could increase to 9 percent in the coming months, said Dan W. Johnson, a senior vice president with CB Richard Ellis.
In the recession, buyers and tenants have become scarce. That means the existing inventory could take more than a year to be absorbed, executives said.
Investment activity in office buildings also will remain depressed this year, partly because a key source of financing - commercial mortgage-backed securities - has dried up, Slone said.
The availability of this financing fueled much of the activity in commercial real estate earlier in the decade, he told the gathering.
If there's any good news from the economic downturn, it's that investors with resources could see opportunities this year to pick up real estate at bargain prices, Slone said.
Staff writer Tom Shean contributed to this report.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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td - the fact that the
td - the fact that the salespeople are happy doesn't mean that the young people can afford the debt. Where is the moderator today? Does the real estate cartel have you waiting till the end of the day to approve all my posts? You quote the ODU economists guys that are about as good as a rear view mirror, but won't give me the ability to post live.
Negativity, negativity
I was involved in organizing this event and was in attendance, spoke to the speakers ahead of time about their remarks. There were positive aspects reported by some of the speakers about segments of our real estate markets, but of course the Pilot only wants to highlight the negative. For example, the apartment and industrial speakers were generally positive about those markets, and Mr. Slone's comments were focused on the national picture, not locally.
Maybe the mood at the Pilot is so negative they cannot see any good news anywhere. An accurate report of this story would have reported a mix of positives and negatives, not just the bad news.
Home prices need to revert
Home prices need to revert to where incomes can properly afford them. If you recall old pilot articles, incomes have slid since 2001 (adj for inflation). Debt is no substitute for income, but it seems like the countries goals are to keep it's people insanely indebted. Retail space will be interesting, given the internet versus B&M businesses. Friends and myself are currently hunting for office/commercial space, and what we're finding is that people don't want to rent it. They are asking prices much higher than when I had my place in 2006. Let go of the greed, make money. And remember, Hampton Roads is nothing. This area has little other than jobs fueled by gov't debt. There is nothing special about it. Real estate values *will* fall and there is nothing you can do to save it, and no reason to save it. Sorry if you're going to loose "Wealth" but you should have googled "housing bubble" before you invested.