Armada Hoffler's Retail Lease Success: A Win for Town Center of Virginia Beach

Armada Hoffler (NYSE: AHH), a vertically integrated real estate investment trust (REIT), has successfully executed two major retail leases at Columbus Village in the Town Center of Virginia Beach district. The company signed a 14,000-square-foot lease with a prominent grocer and a 19,000-square-foot lease with a national sporting goods retailer, effectively backfilling the former Bed Bath & Beyond space. This strategic move highlights Armada Hoffler's ability to attract desirable retail tenants and maximize property value in a highly trafficked area.

The Town Center of Virginia Beach district, Armada Hoffler's flagship mixed-use asset, boasts 6.9 million annual visits and features 640,000 square feet of retail space (98% leased), 800,000 square feet of office space (98% occupied, up from 95% in Q3 2024), and 760 apartments. Columbus Village, the retail component of the district, comprises 157,000 square feet of retail space across 12 acres, with notable existing tenants including Barnes & Noble, Cava, Five Below, Ulta Beauty, and Shake Shack.

The successful execution of these two major retail leases at Columbus Village represents a significant strategic win for Armada Hoffler, particularly in the context of post-pandemic retail real estate dynamics. The ability to quickly backfill former Bed Bath & Beyond space demonstrates the strength of the Town Center of Virginia Beach location and Armada Hoffler's asset management capabilities. The property's performance metrics are exceptionally strong, with 98% retail occupancy and an improved office occupancy from 95% to 98% in Q4 2024, significantly outperforming industry averages. The 6.9 million annual visits and growing foot traffic validate the location's draw as a dominant mixed-use development.

The addition of a grocer and national sporting goods retailer is strategically significant for three reasons:

1. Stable, long-term income streams: These credit tenants provide stable, long-term income streams for Armada Hoffler, ensuring consistent cash flow and supporting the property's overall financial performance.
2. Consistent foot traffic: Grocery anchors, in particular, tend to drive consistent foot traffic, benefiting other retailers in the district and enhancing the overall shopping experience.
3. Tenant mix enhancement: The addition of these tenants expands the merchandising mix within Columbus Village, potentially supporting higher rents for smaller inline spaces and fostering a more diverse and vibrant retail ecosystem.

The Town Center of Virginia Beach district's scale is impressive, with 640,000 sq ft of retail, 800,000 sq ft of office space, and 760 apartments. This diverse mix creates a self-reinforcing ecosystem where each component supports the others, potentially leading to stronger rental growth and asset appreciation over time. The successful lease-up demonstrates Armada Hoffler's ability to execute value-add strategies through active asset management, which could positively impact both near-term NOI and long-term asset value. The additional redevelopment opportunities within the district provide further upside potential for future value creation.

In conclusion, Armada Hoffler's successful execution of two major retail leases at Columbus Village highlights the company's ability to attract desirable retail tenants and maximize property value in a highly trafficked area. The strategic advantages of having a grocery anchor and a national sporting goods retailer in the Columbus Village retail space contribute to the district's value proposition and support Armada Hoffler's long-term growth prospects. The strong performance metrics and diverse mix of retail, office, and residential components within the Town Center of Virginia Beach district position Armada Hoffler well for continued success in the post-pandemic retail real estate landscape.