The Hampton Roads office market experienced a steady quarter, with vacancy at 9.6%, down from 9.7% last quarter, and average asking rents increased from last quarter, averaging $17.77 per square foot per year. Net absorption in the first quarter for the Hampton Roads office market was positive 85,089 square feet.

In Downtown Norfolk, net absorption was negative 6,632 square feet in the first quarter 2018. That compares to positive 120,814 square feet in the fourth quarter 2017. There are a handful of large blocks, including 12 full floors, available downtown. Tenants are consolidating and there are very few new tenants entering the market. Digital marketing company Trader Interactive has moved its corporate headquarters into Norfolk’s tallest building, the 26-floor Dominion Tower at 999 Waterside Drive. The company now occupies 39,081 square feet on the 19th, 20th and 21st floors. 

Net absorption for the suburban markets was positive 71,600 square feet in the first quarter 2018. That compares to negative 52,618 square feet in fourth quarter 2017 The suburban office market remains tight and it is almost impossible to find large blocks of space. Class B office buildings in the suburban submarkets are experiencing a decrease in vacancy and increase in asking rents. Retailer Dollar Tree is moving forward with their $110 million expansion to their current headquarters in Greenbrier, adding a new 12-floor tower, which will become the tallest building in Chesapeake. The expansion will include around 60,000 SF of street level retail space with a possible hotel.

Although the Norfolk market hasn't been affected yet by the increase in the defense budget, the region can can expect to see an uptick in military spending in the upcoming year.