Economy: Market Momentum Continues
The Roanoke Region continued to build momentum, highlighted by several significant investments and economic development announcements. Rural King announced plans to invest $40 million (M) in a new distribution center in Henry County, creating 150 new jobs, while construction is well underway on the region's first Publix in Roanoke County, a 50,000-square-foot store expected to bring 130 new jobs to the market. The healthcare sector also saw major expansion activity, as Carilion Clinic unveiled plans for a new $112M inpatient rehabilitation hospital in Southeast Roanoke through a joint venture with Select Medical. Adding to the region's positive outlook, CNN recently named Roanoke one of America's Best Towns to Visit in 2026, further elevating its national profile. Meanwhile, the Conference Center at Hotel Roanoke has been acquired for $14M by a subsidiary of the Virginia Tech Foundation, reinforcing the long-term investment and stewardship of one of the region's premier hospitality assets. Together, these developments underscore the Roanoke Region's continued growth, investment appeal, and strengthening economic foundation.
Supply And Demand: Remains Stable
Vacancy decreased 10 basis points (bps) quarter-over-quarter (QOQ) and increased 130 bps year-over-year (YOY). Quarterly net absorption was positive at 21,299 sf, and leasing activity remained strong with 27,845 sf leased during the quarter, and 127,634 sf year-to-date (YTD). Since the start of 2025, over 349,234 sf of space has been leased throughout the region. Southwest Roanoke led the market in terms of activity, accounting for over 42.4% of leasing activity. With no new deliveries and no buildings currently under construction, the market is well positioned to maintain its balance for both tenants and landlords.
Pricing: Steady Activity
Overall quoted asking rents saw a slight increase of 1.0% QOQ and remained essentially flat YOY. Significant lease transactions include an undisclosed tenant leasing 15,635 sf of space at 442 Rutherford Dr in Southeast Roanoke.
While sales activity remained limited for the quarter, sales volume has topped $12.8 million (M) YTD. The largest transaction was the sale of 3783-3785 Peters Creek Rd in Southwest Roanoke. This 14,600-sf property was purchased by Fit Studio for $1.2M, or $83.9 per-square-foot (psf). The building was 100.0% leased at the time of sale and reflected a cap rate of 7.6%.
