Hampton Roads retail has gathered some positive momentum since vacancies hit a peak in 2010. Big name retail and shopping center brands such as IKEA, Lidl, and Simon Properties’ Premium Outlets are establishing footholds in the region. As of September, vacancies were roughly 5.1%. Further contributing to the potential for urban retailers to grow their presence in submarkets such as Downtown Norfolk and the Virginia Beach CBD is the emergence of a live/work/play environment that caters to the sought-after millennial demographic. This trend has been driven by rampant apartment construction in and surrounding the downtown areas, as well as the addition of The Tide light rail service, which provides increased metro connectivity. The Cordish Companies’ and Norfolk Economic Development Authority’s Waterside District in Downtown Norfolk has attracted a slew of food and beverage tenants such as Guy Fieri’s Smokehouse, Starr Hill Brewery, and Rappahannock Oyster Company. 

Supply has been steady over the past 12 months, with more than 270,000 SF delivered in the past year, and there is still active construction at retail sites in Hampton Roads totaling more than 800,000 SF. Rent growth has been positive for the past seven consecutive years after periods of negative growth following the downturn. Sales remain strong, with more than $335 million in volume year-to-date.

Average rent levels, at $17.10, are in line with neighboring Virginia metros such as Richmond but behind North Carolina metros such as Charlotte and Raleigh. Contrary to most major markets around the country, suburban submarkets in Hampton Roads such as the Lynnhaven Submarket ($21/SF) achieve higher retail rents than core submarkets such as Downtown Norfolk ($20/SF). Out of the various center types, malls still command the highest rents, with average asking rents at roughly $24/SF.

Deliveries have been light this cycle compared to the metro's historical average. However, more than 3.7 million SF has delivered in Hampton Roads since 2014.

Most of the retail assets traded recently in the Hampton Roads metro are drugstores, well-occupied shopping centers, or part of bulk national portfolio transactions. The rise in popularity of net leased retail properties that don’t rely on soft goods retailers impacted by e-commerce has brought investors to Hampton Roads, as seen in the consistent sales volume of more than $200 million annually and pricing that is higher than other major metros.