Dec. 24--A change in FCC regulations is turning out to be a boon for two commercial real estate developers in Hampton Roads.
The Runnymede Corp. and Olympia Development Corp. are building offices that will allow communications companies to consolidate their operations under one roof. A Federal Communications Commission rules change signed into law in February allows one company to own as many as seven radio stations (four FM and three AM) in Hampton Roads, up from a previous limit of two AMs and FMs each.
"The consolidation has created a need for a couple of larger spaces, which have allowed some people to get some projects off of the ground that would have waited a while," said Jonathan Guion, an industrial specialist at S.L. Nusbaum.
The Runnymede Corp. is building a 40,000-square-foot office warehouse called TRC Center, Phase II, in which Virginia Beach-based Max Media Inc. will consolidate its local radio stations, said sources close to the deal.
York, Penn.-based Susquehanna Radio will move its three radio stations, operating out of two different locations, into one spot -- a two-story building being constructed in Virginia Beach by Olympia Development Corp., said Bill Whitlow, vice president and general manager for Susquehanna.
By moving its stations -- WLTY-FM, WGH-AM (The Score) and WGH-FM (Eagle 97) -- into one building, Susquehanna can cut administrative costs, facilitate meetings and provide "one-stop shopping for the advertiser," Whitlow said. Construction began Monday.
Susquehanna will move into the 30,000-square-foot, class A office between Greenwich Road and Southern Boulevard by August 1997, Whitlow said. It will occupy the top floor, or 15,000 square feet, of the two-story building, which is located near the new Department of Environmental Quality headquarters. About 80 people will be involved in the move, Whitlow said.
Susquehanna will pay $14 per square foot for its space, he said. The building costs about $3 million, sources said.
Max Media Inc., involved in a similar move, owns four FM radio stations: WWDE (2WD) and WNVZ (Z-104) in Virginia Beach; WFOG and WJQI (The Point) in Norfolk. It will consolidate all its local stations in Virginia Beach at the new TRC Center on Cleveland Street across from Cox Communications' headquarters. Max Media will occupy about 15,000 square feet, or one-third of the space. About 75 to 80 people will work in the TRC Center, and Max Media has signed a 10-year lease, sources say.
"It's a flex-type building, it's oriented to service people who have a variety of needs, office, storage or technical benchspace," said Michael Barrett, Runnymede's CEO. "It appeals to firms that have all those needs but need to have them all in one place."
Max Media's new building is scheduled for completion by the second quarter of 1997.
Although Gee's Group, a Virginia Beach real estate group, broke ground on a speculative office building called Southport Centre in October, other firms are wary of following in its footsteps.
"We believe there is considerable strength in the market for this light industrial, flex space," Barrett said. "The occupancy rate nationwide is probably approaching 95 percent. In our view, it's a market in balance. The need for new product and new firms is quite clear."
This type of consolidation fits into the Beach's economic development strategy. "Our No. 1 target area is communications," said Don Maxwell, director of the Department of Economic Development.
Maxwell said the communications industry has several benefits: it is associated with higher-level income, it requires support services from other companies in the community and it gives the Beach exposure on the airwaves and among national media. Plus, the environmental impact of the firm on density is low, and the return on investment is good, he said.
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(c) 1996, Norfolk Virginian-Pilot. Distributed by Knight-Ridder/Tribune Business News.
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