Wills Elliman, senior managing director of the Wilmington office of Newmark Knight Frank, a commercial real estate advisory firm, spoke with Delaware Business Times about office vacancies, leasing for the next phase of the STAR Campus and the desirability of North Wilmington for commercial tenants.
1. The overall vacancy rate in the Wilmington metro market increased to 14.4 percent over the same quarter last year, according to your company’s latest research report. What factors are keeping tenants from moving into the city?
Although vacancy ticked up to 14.4 percent this quarter due to some large vacancies in the suburbs, such as HSBC leaving 95,000 square feet at 90 Christiana Road, the overall vacancy rate is actually lower than what it was a year ago and is among some of the lowest rates we’ve seen in over 10 years. While parking and wage tax costs are factors that have kept tenants from coming into the city, they are being diminished as
the city becomes more vibrant with the addition of new apartments
and many new restaurants.
2. If Bank of America sells its two downtown Bracebridge buildings and they come back on the market as office space for lease as planned, will the asking rate fall?
Wilmington’s Central Business District (CBD) market currently has 900,000 (18.3 percent) square feet of Class A vacancy in roughly 5.0 million square feet of inventory. If the Bracebridge sale goes through, 430,000 square feet will be added to the inventory, driving the vacancy rate to 24.8 percent, with 1.3 million square feet available. However, the darkest hour is just before the dawn. Nationally, the trend is for people to want to live, work and play with walkability. There are five new restaurants on north Market Street since New Year’s. Wilmington’s residential boom continues with 200 apartments about to come online at Buccini/Pollin Group’s $75 million Residences at Mid-Town Park. In addition, construction is ongoing for the 256,000-square-foot Chemours headquarters at the former DuPont Building, which will include a $3.5 million 12,000-square-foot food hall.
3. STAR Campus Phase 3 is set to deliver 100,000 square feet of new space by next summer. What effect will that have on the lagging Wilmington South market?
The completion of STAR Campus Phase 3 will help the Wilmington South Market. While the submarket itself ended the quarter with around 12.7 percent vacancy, Class A properties posted a vacancy rate of 5 percent. With many of the premier office complexes in the region mostly occupied, there is a need for high-quality space. Eighty percent of the office space at STAR Campus 3 is already pre-leased.
4. How will North Wilmington change with all the additions, including new retail, apartments and offices?
The additions will only benefit the submarket. Many of the buzzwords in the planning and development community focus around multi-use and multi-modality. Having high-quality retail and apartments available will draw both people and businesses, and provide an opportunity for them to live and
play where they work.
5. What are the brightest spots in the New Castle County market?
In addition to the Wilmington CBD’s North Market Street renaissance, the North Wilmington submarket is rapidly becoming a desired destination. It currently has the lowest vacancy in the county. Although lease rates will undoubtedly increase with demand, the new amenities and improved retail/living spaces — such as those coming to Concord Plaza and the former Astra Zeneca campus — should provide an acceptable balance.