An update from The Buccini/Pollin Group, Inc. reported that the downtown Wilmington central business district (CBD) office market ended 2015 with a 15.2 percent vacancy rate.
Buccini/Pollin is the largest development firm in downtown and has a portfolio of office and apartment holdings that extend from the riverfront through downtown.
The 15.2 percent figure, based on research from commercial broker JLL, is the lowest for downtown since 2009.
“In 2015, we began to see new businesses enter the market as well as growth from within our existing client base,” said Blaise Fletcher, executive vice President at JLL. “Coming out of the recession, we had mainly seen musical chairs within the Wilmington CBD now with several recent adaptive re-use projects, the effect is a strengthening downtown market.”
The release from Buccini/Pollin reported that downtown saw about 123,000 square feet of positive absorption of space during the year in downtown.
Buccini/Pollin noted that while a sizable amount of the downtown market activity came in office lease expansions by Citibank, TD Bank, and new leases signed by Deloitte Consulting, ZipCode, and Epic Research, there were several unconventional deals that improved overall investment in the area:
Those deals included:
– 1300 Market Street was converted from an antiquated office building to a 96-room Marriott Residence Inn with delivery scheduled in the fourth quarter of 2016.
– 600 King Street, the longtime home of ALICO/MetLife, was rebranded as Courthouse Square; the ownership invested over $7 million in capital improvements to render the property as a class A multi-tenant facility.
- – Freire Charter School opened at 201 W. 14th Street, which repurposed class B office space.
- – 1001 Jefferson Street which was a long-vacant class B building was demolished to make way for future development.
– The Market Street Village development at 6 E. 3rd Street, 838 Market Street, and 839 Market Street, converted abandoned office space to 76 multi-family apartments.
– The addition of 74 multi-family apartments at 608 MKT, the first ground-up apartment community in over 50 years on Market Street and 627 MKT an adaptive reuse within the MKT community.
– Alpha Technologies purchased 704 King Street, and will renovate and occupy most of the 80,000 sq. ft. building.
Rick Kingery, a vice president at Colliers International who represented Alpha Technologies for its building acquisition, said, “When Alpha Technologies was looking for a home for its first Center of Excellence, where they will provide on-shore-off-site information technology managed services, Wilmington kept checking all the boxes of their requirement; fast internet speeds, strong transportation infrastructure (Amtrak, Septa, & DART), active financial community, business friendly government, and a workforce with tech as well as financial experience.”
On the downtown office market, Kingery added, “The delivery of new housing stock and restaurants on Market Street is creating a more vibrant downtown, which is attracting employers and energizing workers. A real live-work-play atmosphere is developing as the city sees a diversification of employers and the dynamics of a once ‘company town’ are changing. A FinTech cluster and entrepreneurial community have emerged while the banking and legal anchors are still thriving.”
Co-working space in the CBD is another sector that experienced substantial growth. The Mill, occupying the 4th floor of The Nemours Building at 1007 North Orange Street, opened its doors in March.
This is in addition to 1313 Innovation, located on the ground floor of The Hercules Building and Coinloft which occupied 605 Market Street in 2012.
Hatch House, a live-work accelerator for start-ups, opened in late 2015. Later this year, NextFab will open in Wilmington’s Creative District, providing direct access to advanced manufacturing technologies, and start-up incubation services required to turn ideas into products and products into businesses.
Mike Turick, Vice President of Leasing at The Buccini/Pollin Group, said, “The rise of co-working spaces in Wilmington represents a paradigm shift in how both large and small companies utilize office space. We’ve seen a surge in demand from our tenant base requesting open floor plans, flexible meeting and conferencing spaces, and on-site amenities for employees.”
While activity has increased in downtown, Buccini/Pollin has been fighting negative perceptions about downtown that have come out of publicity about the city’s high homicide rate and the uncertain status of DuPont spin-off Chemours and the Hotel duPont.
Chemours is now headquartered in the massive building that houses the hotel and until recently DuPont, which moved to a site just outside the city.
The status of downtown is also an election year issue as a host of candidates battle incumbent Mayor Dennis Williams, who is seeking a second term.