Real Estate and Construction: Stagnant with some silver linings

Realtors slogged through another sluggish market in 2024.

Pollyanna types will point out that the commonwealth did see 4,000 more home sales in 2024 than in the previous year, according to Virginia Realtors data. On the other hand, the 102,509 homes that sold in Virginia in 2024 were down 18.8% from 2019 sales.

Mortgage rates remained historically high in 2024, averaging around 6.7%. That led to fewer homeowners putting their homes on the market, pushing up home prices.

But back to the bright side: Realtors did enjoy an uptick in activity in December 2024, when Virginia had 7,907 home sales, a 14% increase over December 2023.

“The surge we observed at the end of 2024 indicates buyers are coming to terms with mortgage rate levels which, while still elevated, are lower than a year ago,” Virginia Realtors President Lorraine Arora said in a January statement.

Last year also saw a landmark $418 million settlement by the National Association of Realtors over allegations that its members colluded to raise commissions, violating antitrust laws.

In August 2024, NAR policy changed, requiring real estate agents who use a Multiple Listing Service (MLS) to enter into written agreements with buyers before touring a home and includes “a specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.”

Many predict the new policy could give buyers more power to negotiate commissions, which could impact Realtors’ bottom lines.

Virginia’s commercial real estate industry also faced challenges in 2024, but the year did offer bright spots.

The office segment continues to limp along, failing to recover from the pandemic, when more workers started working remotely. Nationally, the market has lost 23.3% ($740 billion) of its aggregate value since 2019, according to the Brookings Institution, a nonpartisan research organization.

Virginia’s office vacancy rates were at 13% for the fourth quarter of 2024, a smidge higher than the previous year, according to data from Virginia Realtors.

About 17.8% of the available office space in Northern Virginia was vacant in that last quarter. Richmond’s vacancy rate was 8.6%, while Hampton Roads was 7%. Vacancy rates in Harrisonburg, Roanoke and Lynchburg hovered around 4%.

Demand for retail space, on the other hand, remains high in Virginia. Statewide, the retail vacancy rate was 3.7% in the final quarter of 2024, according to Virginia Realtors.

Construction employment increased 6% in Virginia from November 2023 to November 2024, according to an analysis of government data by the Associated General Contractors of America. Nationally, Northern Virginia added the second most construction jobs (9,000) over that period, trailing behind the Houston region, which saw 16,100.

Hampton Roads saw one of its biggest commercial real estate projects celebrate a milestone in 2024. In September, the Rockefeller Group, a New York real estate developer, and Matan Cos., a Maryland real estate investment firm, broke ground on the first phase of Port 460 Logistics Center, a massive industrial campus that will offer direct access to the Port of Virginia’s terminals. It has been estimated to cost around $420 million.

The same month, workers broke ground in Richmond at the site of the future home of the Richmond Flying Squirrels, a $117 million-plus baseball stadium dubbed CarMax Park. The 67-acre, $2.44 billion Diamond District project is also expected to include two hotels, 2,800 residential units, 935,000 square feet of office space and 195,000 square feet of retail and community space.

A highlight of Northern Virginia’s year in commercial real estate came in February 2024, when the CoStar Group, a global real estate data and analytics company best known for its Apartments.com and Homes.com brands, announced plans to relocate its headquarters to Arlington County from Washington, D.C. The company purchased the Central Place Tower at 1201 Wilson Blvd. for a reported $339 million, with plans to invest $20 million in the move.

“CoStar Group’s strategic move to Arlington reinforces our attractiveness as a hub for innovative global businesses,” Libby Garvey, former chair of the Arlington County Board, said in a statement.