The commercial real estate firm of Newmark Grubb Knight Frank reported that the northern Delaware office market saw growth of more than 500,000 square feet of leased space in 2012. That led to the lowest vacancy rate since the start of the recession in 2008. Newmark has an office in Wilmington.
Driving demand were financial services and law firms such as Capital One and the law firm of Young Conaway Stargatt and Taylor. Pharmaceutical and chemical companies did not add space, but unlike previous years did not see big cutbacks.
Capital One, which acquired INGDirect, vacated space near the Wilmington Train Station but leased 130,000 square feet at 1110 N. Market Street in downtown Wilmington. That is the former headquarters for Wilmington Trust, which was acquired by M&T Bank.
A repeat leasing performance is not expected in 2013, the company noted, citing the decision by J.P Morgan Chase to vacate a site near Newark for a recently acquired building a short distance away in the Iron Hill Corporate Center during the first quarter of this year.
Rents were up for more desirable Class A office space, while rates declined for Class B space. Class A occupancy rates have been rising in recent years, while vacancies for Class B or C buildings either increased or held steady.
Deals, such as free rent for a short period for new tenants, were available, but could become rarer in 2013, the report indicated. Money was available to build out space for tenants with good credit.
Landlords were aided by a lack of new construction, with no new leasable office space delivered to the market since 2010 and none expected this year, the report noted.
Vacancy rates ranged from 19.5% in downtown Wilmington to 2 percent in western suburbs of Wilmington. The overall suburban vacancy rate was 14.7% The combined city and suburban vacancy rate was 16.8%.