Poe & Cronk Real Estate Group released the results of its 27th annual office market survey today reporting all three major Roanoke office sub-markets experienced an increase in new supply in 2013 after both rental rates and occupancy edged upward in 2012.
Over 150,000 SF of new qualifying office supply entered the market in 2013. This new supply, combined with some increased vacancy in all sub-markets, moved the overall occupancy rate down to 86% for 2013. This is compared to a 90% occupancy rate experienced at the end of 2012.
According to Matt Huff, CCIM of Poe & Cronk, “It is important to note there is approximately 85,000 SF of office space occupied by the displaced Veteran’s Administration Offices in various locations around the Central Business District. These spaces are currently leased, but considered â€˜available’ as of our reporting date. The U.S. General Services Administration indicates they intend to consolidate the VA offices back into the Poff Federal Building upon completion of the renovations in 2014.”
Despite several large blocks of office spaces entering the market in 2013 and 2014, the 86% occupancy rate for the Roanoke office market is ahead of the national average of around 83%, as reported by the national real estate research firm REIS, Inc. The National Association of REALTORS® also expects average office rental rates to increase by 2.8% in 2014, up from an expected 2.5% increase in 2013.
“I think the market is seeing stable long term metrics for job growth and office use in Roanoke and has accordingly begun adjusting and repositioning inventory in preparation for future demand”, added Matt.
Poe & Cronk developed Roanoke’s Original Office Market Survey in 1987 and has conducted it annually using consistent criteria and methods of reporting. This year’s survey incorporates data covering more than 100 non-governmental office buildings measuring 10,000 square feet or more.