Newmark Knight Frank (NKF) reported weaker fourth quarter conditions in the northern Delaware office market.
The Greater Wilmington office market posted a second consecutive quarter of negative absorption (46,300 square feet) and recorded only 2,361 square feet in occupancy gains for the year.
Wills Elliman, NKF senior managing director stated: “The Delaware market faces the unenviable position of having both weak demand for and an oversupply of quality properties.” Year-over-year, overall vacancy increased 10 basis points to 16.3 percent mostly due to rising availability in the Class A market. Class A vacancy rose 80 basis points over the past twelve months to 16.3 percent.
There was good news for the Wilmington metro market in the fourth quarter when Sallie Mae leased 57,756 square feet at 84-90 Christiana Road and the United States Attorney’s Office signed a lease for 35,573 square feet at 1313 N. Market Street.
Despite weakening market fundamentals, the Wilmington CBD was home to two of 2017’s largest deals in the region: Capital One’s renewal and expansion of 330,000 square feet at 800 and 802 Delaware Avenue, and the Chemours sale and leaseback of 256,000 square feet at the DuPont Building.
Northern Delaware and other areas in the region also saw companies reworking their office space.
Over the past twelve months, PNC, Verizon, and Deloitte gave back space in the Philadelphia Central Business District. In addition, the Children’s Hospital of Philadelphia vacated 226,000 square feet at 3535 Market Street, but only to relocate to an owned property across the river.
Southern New Jersey is seeing two big tenants, Subaru and American Water move their headquarters to Camden from the suburbs, leading to worries of a spike in vacant office space.
“Although the new Camden office park developments, along with NJ Grow state incentives, are luring office users a few miles down the road, not all of the potential half a million square feet of new vacancy may be dumped on the market. The lead time we have to backfill space, in addition to the expansion of other existing office users and the repurposing of certain buildings, may help to limit the increase in vacancy over the next few years,” stated Anne Klein, NKF executive managing director.
Newmark Knight Frank operates from more than 400 offices on six continents.
For further information, visit www.ngkf.com.
See story below on vacancy figures from an earlier market report. (Vacancy rates differ).
