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HAMPTONROADS2004MULTI-FAMILY MARKET SURVEYAcknowledgementsAuthor:Charles DaltonData Analysis/Layout:Real DataFinancial Support: Old Dominion University Center for Real Estate and EconomicDevelopment (CREED) functions and reports are funded by donations from individuals,organizations and the CREED Advisory Board.DEFINITIONSAverages All averages withinthis report are calculated usinga weighted average based onthe number of units.Concessions Any monetarydiscount or enticement beingoffered during the currentreporting period.Absorption Net change inoccupied units within comparable communities within a specific time frame. New units thathave entered the market in thelast six months (completions)and are currently reported asbeing occupied are consideredpositive absorption. Note:With regard to existing communities, absorption can only becalculated for communities thatparticipated in the current andprevious survey.Comparable Rent ChangeNet change in quoted rent ofexisting comparable units within a specific time frame.Rental Rate The quotedmonthly rental rate excludingany additional concessions orspecials.Comparable Units are definedas communities that participated in the current and previoussurvey. New units that haveentered the market since theprevious reporting period arenot included in the comparable rent change although theyare included in the overallaverage rent calculation.Total Units For the market as awhole, all rentable units thatwere surveyed in the currenttime period. For the individualcommunities, the total numberof units that are complete.Vacant Unit Physically unoccupied; pre-leases that are notphysically occupied are considered vacant.M U LT I - FA M I LYThe following terminology andsources are used in the CREEDApartment Report:67

METHODOLOGYInformation contained in the Real Data Norfolk-Virginia Beach-Newport News Apartment Report is obtainedfrom reliable sources, but Real Data makes no guarantee of accuracy or completeness. Readers should understand that the data contained within this report has been gathered from conventional apartment communities,generally with at least 50 units, within Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, VirginiaBeach, York and Williamsburg. Conditions might have changed since the survey date of October 15, 2003.APARTMENT OVERVIEWThe Norfolk-Virginia Beach-Newport News Apartment Report, researched and published by Real Data, is adetailed analysis of the rental market within conventional apartment communities in the Peninsula andSouthside portions of the Hampton Roads region. The area has been divided into eight submarkets:Chesapeake/Suffolk, Hampton, Newport News, Norfolk, Portsmouth, Virginia Beach, Williamsburg and York.Combined, these areas contain a survey base of nearly 80,000 apartment units.The James River divides the Norfolk-Virginia Beach-Newport News market into two portions. The Peninsulaarea is north of the James River and contains Hampton, Newport News, Williamsburg and York. The Southsidearea is south of the James River and contains Chesapeake/Suffolk, Norfolk, Portsmouth, and Virginia Beach.The submarket with the highest concentration of units is Virginia Beach, which accounts for nearly one-thirdof the region’s apartment units.The Hampton Roads region continues to have one of the highest occupancy rates in the Southeast. Occupancyrates improved slightly in 2003. As of October 2003, the average occupancy rate was 97.2%. There were 1,168units absorbed in 2003. Development activity has increased in recent years with over 1,700 units completed inthe last 24 months. As of October 2003, there were 1,443 units under-construction.The average quoted rental rate is 693, with one-bedroom rents averaging 613 per month, two-bedroom unitshaving an average rental rate of 701, and three-bedroom units reporting an average quoted rental rate of 828.Rental rates from existing inventory increased by 25.19, or 3.8%, during the last twelve months.As of October 2003, development activity remained high with 1,443 units currently under construction, andan additional 1,852 units proposed for rfolk16%

HISTORICAL APARTMENT DEVELOPMENTNorfolk-Virginia Beach-Newport NewsTABLE IA total of 79,088 units were surveyed for this report. Development of apartment units in this market peakedduring two time periods, the early 1970s and the late 1980s. Development during the 1990s and so far in the2000s is minor compared to past development. Approximately 10% of the apartments units in this region werebuilt after 1990.Historical Apartment Development25,000NUMBER OF 84‘85-‘89‘90-‘94M U LT I - FA M I LY69

MULTI-FAMILY PERMIT ACTIVITYHistorical Multi-Family Building PermitsNorfolk-Virginia Beach-Newport NewsTABLE IIMulti-family permit activity was strongest in 2002, although much of the permit activity has not been rentalapartments, but instead for-sale condominiums, townhouses, and senior facilities.Annual Multi-Family Permit Activity2,3552,4002,200PERMITS 0012002TABLE IIIMulti-Family Permits Past 12 MonthsNUMBER t.2003

APARTMENT DEVELOPMENT ACTIVITYTABLE IVThere are currently over 1,400 apartment units under construction within eight communities in the NorfolkVirginia Beach-Newport News market. As of October, over 1,800 additional apartment units were planned forthe region.Apartment Development Activity (October 2003)Under ConstructionProposedNUMBER OFUNITS6005004003002001000ChesapeakeHamptonNewport NewsNorfolkPortsmouthVirginia BeachWilliamsburgYorkM U LT I - FA M I LY71

York CountyMULTI-FAMILY SUBMARKETSJames akeIsle of Wight Co.isle of WightCountyFranklin/So. HamptonVirginia BeachPeninsulaNewport NewsHamptonJames City CountyYork Countysuffolk72

olkPortsmouth26426446464Virginia BeachM U LT I - FA M I LYChesapeake73N o r t hC a r o l i n a

ABSORPTIONDemand for housing can be measured by calculating the number of housing units absorbed within a given timeframe. Absorption is defined as the net change in occupied units. Therefore, positive absorption occurs whenpreviously vacant or newly built dwellings become occupied. Based on the current state of the economy andhistorical performance, the Norfolk-Virginia Beach-Newport News area is expected to absorb between 700 to900 units annually. The 1,168 units absorbed over the past year is well beyond expectations. The area hasmaintained a relatively low unemployment rate and is one the few areas to have a net gain in jobs inrecent years.TABLE VAbsorption13001200AMOUNT OF t.2001Apr.2002Oct.2002Apr.2003Oct.2003The Virginia Beach submarket had the highest level of absorption between April and October 2003.ABSORPTION (SIXMONTHS)TABLE VISubmarket Absorption – October 2003600500400300200100074ChesapeakeHamptonNewport NewsNorfolkPortsmouthVirginia BeachWilliamsburgYork/Williamsburg

VACANCYThe overall vacancy rate for the Norfolk-Virginia Beach-Newport News market as of October 2003 was 2.8%.This figure represents a decrease from the 4.0% vacancy level six months prior. Vacancy rates are expected torise moderately in 2004.TABLE VIIOverall Vacancy5.04.5VA C A N C Y R AT .2003Oct.2003All areas in the Hampton Roads region showed an improvement in vacancy rates over the last six months.TABLE VIIISubmarket Vacancy RatesApril 2003October burgYorkOverallM U LT I - FA M I LYVA C A N C Y R AT E S4.575

RENTAL RATESAs of October, the average quoted rental rate in Norfolk-Virginia Beach-Newport News was 693. This figuredoes not take into account any rent concessions or specials that individual communities may be offering.Hence, the actual rent being received for a unit may be lower than the quoted rent as a result of these specialsor concessions. As expected with occupancy rates above 97%, only 7% of apartment communities were offering concessions. Concessions offered most often were reduced rent for military personnel, reduced deposits,or reduced rent for the first month of the lease term.TABLE IXAverage Rental RatesAV E R A G E R E N T A L R AT E 700 600 500 400 300 200 100 ct.2001Apr.2002Oct.2002Apr.2003Oct.2003Average RentsAverage overall rents ranged from a low of 604 in Portsmouth to a high of 789 in York County. Portsmouth,Newport News, Norfolk, and Hampton all reported rents lower than the average rent of 693, while Chesapeake,Williamsburg, York and Virginia Beach all reported rents higher than the average overall quoted rent.TABLE XAverage Rent by Submarket – October 2003 900 800AV E R A G E R E N T 700 600 500 400 300 200 100 peakeWilliamsburgVirginia BeachYork

MANAGEMENTThere were over 400 conventional apartment communities with more than 50 units surveyed in the Southside andPeninsula regions in October. Out of the 79,088 apartment units, the top fifteen management firms manage overhalf of the units in the Norfolk-Virginia Beach-Newport News apartment market. In addition to these fifteenfirms, there are more than 100 additional management firms and private individuals that manage the remaining45% of the market. The top five management firms manage 38% of the market, or nearly 30,000 units.TABLE VIITop 15 Management CompaniesNameS.L. NusbaumGreat AtlanticDrucker & FalkLawson CompaniesAIMCOPerrel ManagementBreeden ManagementUnited Dominion RealtyWMCIAbbitt ManagementPRG Real EstateClark-Whitehill Ent.Ripley-HeatwolePalms IONAL TRENDSRichmondFindings for the August 2003 Richmond Apartment Index were based on 46,151 units. The overall vacancy ratewas 8.8% while the average rent reported was 683 per month. Development in this region remains steady withnearly 1,600 units under construction and over 1,800 units currently proposed.RoanokeM U LT I - FA M I LYOver 9,000 apartment units were surveyed for the April 2003 Roanoke Apartment Index Report. Findings indicated a vacancy rate of 10.3% an increase from 7.0% reported in the previous year. Overall rental rates were 577per month. There was no development activity in Roanoke as of April 2003.77

NEWPORT NEWS, VIRGINIAHI-TECH HOMETOWN City Center at Oyster Point Port Warwick Symantec Ferguson Corporate Center II Downtown Engineering Center Virginia Advanced Shipbuilding andCarrier Integration Center Applied Research Center 20,425,000 million in commercial real estate financing100 E. Main Street – Norfolk, VirginiaCarriage House Apartments – Richmond, VirginiaCommonwealth Shopping Center – Newport News, VirginiaCountry Inn & Suites – Williamsburg, VirginiaLakeridge Square Apartments – Richmond, VirginiaSafe Place Mini-Storage – Virginia Beach, VirginiaArranged throughNewport News Economic Development AuthorityCreativity, Innovation, Commitment, IntegrityCAPITAL ADVISORSReal Estate Financial ServicesBat Barber, Scott Mauzy, Roger MontagueFlorence G. Kingston,Secretary/Treasurer2400 Washington AvenueNewport News, VA 236074300 Glenwood Avenue, 3rd FloorRaleigh, North Carolina(919) aleigh1-800-274-8348/757 926-3428www.newportnewsva.com«« V Ê, ÛiÀ! ./2&/, 3/54(%2. 2!),2/7Ê /"1,/Ê "1-3-52&)4 34/.%0!0%2 -),,,"" 7"" " "1,.%7 %.4!)20/242)#(-/. ).4%2.!4)/.!,!)20/24 -/4/2/,! 3)%-%.37)4( ).&).%/.4%#(./,/')%3!. (%7,%44 0!# !2 , - , " Ê"1,-"Ê "Ê "7 -7%)2 #2%% ). 5342)!,0!2 "!#7%34 0/).4!)20/24,"9 7Ê / " Ê "1,- #389 À Ê, Ûi 2!),À2/! " " Ê7 - 1, . 7),,)!-3"52').4%2.!4)/.!, !)20/242/54% #/--%2#% #/22) /2 2%! 9 4/ '/ 3)4%33)4% ! 7 ,Ê , Ê3)4% "ÊÓ xÊ VÀiÃÊV Ê" , Ê* , ÊnÓÊ VÀiÃÊ VV ÌiÊLÕ }ÃÊvÀ ÊV Ê VÊV Ê Ê ÌiÊLÕ Ê }ÃÊvÀ Ê ää]äääÊÌ Ê ]nää]äääÊõ ÊvÌ ÊÎää]äääÊÌ Ê ]äää]äääÊõ ÊvÌ ÊÕ ÊÌ ÊÃÕ Ì3)4% #Ê Ê VÀiÃÊV Ê VV ÌiÊLÕ }ÃÊvÀ ÊÇx]äääÊÌ Êxää]äääÊõ ÊvÌ ÊÕ ÊÌ ÊÃÕ Ì ÀÊ ÊLÀ V ÕÀiÊ Êà ÌiÊ«À w« wÊ iÃ]ÊV Ê ÞÊ }Þ]ÊÞ }Þ V VÊ iÊÛi Ê ««Ê i ÌÊ ÊÀiVÊÌ À]Ênä{ ÈÈ ÈÎ Ê \ }ÞJ9ià iÜ i Ì L âÊÊÊÊÊ iÜÊ i ÌÊÜiLà Ìi\ÜÜÜ 9ià iÜ i Ì L â

Greenbrier Circle One Oyster PointLeasing Office/Retail/WarehouseAcquisitions and DevelopmentProperty ManagementBuild to suitsContact Paul D. HansenVice PresidentDirector of Real Estate, VA(757) 873-8400paulhansen@starmount.comwww.starmount.com

The purpose of the Advisory Board is to provide professional expertise invarious aspects of real estate and economic development to makerecommendations to the University concerning policy and operations of theCREED as well as the University's real estate curriculum.2004 EXECUTIVE COMMITTEE OF THE CREED ADVISORY BOARDThe 2004 officers and members of the Board are as follows:Market Review Committee:Executive CommitteeChair.Billy KingExecutive Director .John LombardSecretary .Tom DillonPrograms Chair .Joyce HartmanResearch Chair.Brian DundonMembership Chair.Thor GormleyCapital Funding .Joan GiffordCirriculum Co-Chairs .Jon CrunkletonBetsy MasonSponsorship Chair .Don PerryBy-Laws Chair .Andrew KeeneyEconomic Development Chair .Warren HarrisMembership.Craig HopeSponsorship .Ron BrayPast Chair.Jonathan GuionAt-Large .Dick ThurmondAt-Large .Van RoseAt-Large .Melody BobkoIndustrial .Jonathan GuionOffice.Don CriggerRetail .Chris ReadMulti-Family .Real DataResidential .Van RoseResearch/Editorial Committee:Brian Dundon, ChairSandi PrestridgeJoy LearnLane SheaBeth HancockMaureen RooksTo obtain additional copies of this report send a check for 50 for eachcopy payable to the Center for Real Estate and Economic Developmentto the address below.Send to:John R. Lombard, Ph.DDirectorYour NameAddressCenter for Real Estate andEconomic DevelopmentOld Dominion University2089 Constant HallNorfolk, VA 23529TelephoneQTY 2004 CREED Report ( 50)Total Amount of Check Enclosed Telephone:(757) 683-4809E-Mail:jlombard@odu.edu

CREED ADVISORY BOARD MEMBERSJerry BanaganOffice of Real Estate AssessorThor GormleyGMAC Commercial MortgageVictor PickettLaureate Capital Mortgage BankersBruce A. BerlinEllis-Gibson Development GroupDennis W. GruelleAppraisal Consultation GroupJohn ProfiletS.L. Nusbaum Realty CompanyMelody M. BobkoLandAmerica/Lawyers TitleJonathan S. Guion, SIORSperry Van NessSandi PrestridgeCity of Norfolk, Economic DevelopmentRonald S. BrayBurgess & Niple, Inc.Bill HamnerHamner Development CompanyChris ReadCB Richard EllisChris BrownWachovia Bank, N.A.Ellizabeth HancockOffice of the Real Estate AssessorF. Craig ReadRead CommericalStewart H. Buckle, IIIThe Morgan Real Estate GroupRussell G. Hanson, Jr.Atlantic Mortgage & Investment Co.Rennie RichardsonRichardson Real Estate CompanyRick E. BurnellAtlantic Commercial Real Estate Services, Inc.Carl HardeeLawson Realty CorporationTrenda S. RobertsonDrucker & Falk, LLCDee ButlerCoastal Capital ManagementWarren D. HarrisChesapeake Economic DevelopmentThomas E. RobinsonRobinson Development GroupVincent Campana, Jr.Drucker & FalkJohn C. HarryJohn C. Harry, Inc.Maureen RooksDivaris Real EstateM. Albert CarmichalNAI Harvey LindsayJoy

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