Improvements in the Virginia commercial market driven by the pursuit of quality

realtors in virginiaAccording to Q3 2021 Commercial Market Report released by Virginia REALTORS®, while the Delta variant slowed economic growth in Virginia, the state’s commercial real estate market showed signs of strength in the third quarter.

The third quarter report found that office markets in the state’s major metropolitan areas (N. Virginia, Richmond and Hampton Roads) were more resilient than smaller markets.

A key driver has been the strength of the premium Class A market, where growth and absorption of rents has been relatively strong. Class A offices are in demand, as companies looking to bring workers back to the office after COVID look for buildings with a wide range of amenities and flexible spaces to accommodate improved technologies and hybrid work.

Additionally, the companies that are currently buying office space are probably the ones with the best track records and the most resources to engage in leased space.

Neighborhood retail has also been performing surprisingly in most markets in Virginia, as “big box” stores continue to struggle, in large part due to pre-COVID trends. “Improving neighborhood retail is a testament to the importance of the local retail experience for individuals and families across Virginia,” said Beth Dalton, President of Virginia REALTORS® 2021.

The industrial market remains the hottest segment of the commercial real estate market in Virginia. As large warehouse spaces (e.g. distribution centers) continue to be in demand, businesses looking for a small niche warehouse and flexible space face increasing challenges.

“The construction of new industrial spaces and warehouses has not kept up with the growing demand,” says Lisa Sturtevant, PhD, chief economist of Virginia REALTORS®. “In addition to rising material costs and labor shortages, there is an additional challenge at the local level, where zoning codes and use categories do not always suit the spaces in demand,” such as flexible spaces. “

Virginia REALTORS® publishes quarterly reports on the commercial real estate market. These reports summarize office, retail and industrial market trends in nine regions of the state and provide a perspective on future commercial market conditions.

Click here for the full Third Quarter 2021 Commercial Market report.

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