Amazon fuels unprecedented spike in Hampton Roads’ industrial development, experts say

More industrial space was built in Hampton Roads last year than in the preceding 10 years combined, a commercial real estate expert said.

Lang Williams, executive vice president with Colliers Virginia, said the 10-year span leading up to 2020 saw about 4.4 million square feet of industrial space developed in the region.

“Last year, 5.1 million square feet were completed,” he told 100 attendees of Hampton Roads Association for Commercial Real Estate’s final luncheon of the year on Oct. 19.

Much of the recent spike can be attributed to Amazon’s new 3.8 million-square-foot robotics-powered fulfillment center in Suffolk and its 640,000-square-foot facility in Chesapeake.

He said after the event that with demand increasing from e-commerce and modernization of two terminals at the Port of Virginia, his firm projects more than 10 million square feet to be added by 2024.

Craig Cope, executive vice president for general brokerage services at Harvey Lindsay Commercial Real Estate, agreed that Hampton Roads has experienced unprecedented growth in the development and use of industrial space over the past 24 months despite the coronavirus pandemic crashing economies and global supply chains. He moderated the four-person “State of the Industrial Market” panel.

Much like in recent years, Amanda Nelson, vice president of growth for Virginia International Terminals, said it is important for the region’s port to be in a position to capitalize when markets fluctuate. The port experienced record-setting container volumes in 2021 as it marketed itself as a better alternative to congested ports.

She said the port operator maintains a forward-thinking mindset to help it continue serving customers today and in the future. That mindset — along with the $312 million project at the Virginia International Gateway terminal in Portsmouth and the expansion and modernization of Norfolk International Terminals’ south terminal — led to strategically preparing for the onslaught of containers.

Kevin Hughes, Suffolk deputy city manager, said the largest city in the commonwealth, stretching 430 square miles, can handle a lot of industrial growth — and it has. Hughes said he thinks density will continue to provide opportunities for diverse users in industrial space.

“We just want to open up as many good, well-located sites that make sense to move product,” he said. “And as we continue to see activity, we want to support folks that want to invest in our community.”

Bill Hudgins, senior development manager of the mid-Atlantic market for Panattoni Development, said that back in 2018 and 2019, an 80,000-square-foot space could not be given away in Suffolk. He said it will be fascinating to see which communities grab the new paradigm and want to plan like Suffolk did 15 to 20 years ago.

“Communities need to get organized; they need to talk about the future,” Hudgins said. “The opportunity is just unreal, but we have got to realize that it’s a bigger picture than Norfolk or the Peninsula or Richmond.”

While he agreed the region experienced an unprecedented past two years of growth, he said he is not sure how long that will continue.

“It’s going to be fun,” he said. “Hold on, and let’s have a good ride with it, I hope.”

Sandra J. Pennecke, 757-652-5836, sandra.pennecke@insidebiz.com