The northern Delaware office market may be springing back from soft conditions in the second quarter.
“Summer can be slow, but that hasn’t been the case this year,” says Neal F. Dangello, managing director at Newmark Grubb Knight Frank, Wilmington.
Dangello, said tenants are now actively seeking space, something the market has not seen since 2008 or 2009.
“We’re seeing a willingness to move,” said Dangello, who noted that in recent years, moves were undertaken only if the new space came at a better price.
Companies shopping the market are looking for space ranging from 2,000 to 200,000 square feet, he said.
Dangello said the activity shows northern Delaware may be joining the turnaround seen elsewhere in the Delaware Valley.
The activity was good news after “demand growth still proved relatively soft during the second quarter,” the report noted.
Although it came as no surprise, more office space went on to the market when DuPont Co. moved from Barley Mill Plaza site west of Wilmington space to a new building.
The site was in the news when a court decision voided a rezoning vote by the New Castle County Council The Newmark Grubb report noted that while Stoltz Real Estate Partners will redevelop the site at some point, the existing office space is being marketed is now part of the inventory of space.
Meanwhile, the vacancy rate for leased office space rose to 17.7 percent in the second quarter.
The report also noted that higher interest rates could dampen planned growth by banks in the region. Chase, Bank of America and other large banks have pledged to add jobs in Delaware. On the plus side, the Federal Reserve Bank’s latest employment study showed that growth in business, health and education services proved robust during May. That could increase office demand over the next two quarters, the report noted.
One trend in the market is the uptick in office sales to users over the past year. A building at the Iron Hill Corporate Campus near Newark was bought by Chase. Chase earlier bought two downtown office towers that were part of the Christina Gateway development.
Also, Bank of America donated the 270,000-square-foot building at the Bracebridge complex to the Longwood Foundation to house a newly created non- profit for education.
Dangello said it remains unclear on whether the move by Chase represents a trend in the marketplace, or whether the purchases are simply part of a strategy to buy, rather than lease space. Other notable events during the second quarter included:
Wilmington
– Bifferato LLC vacated 13,000 square feet of space at 800 North King Street.
– DuPont signed a lease for 14,000 square feet of space at 123 South Justison Street with plans to occupy the space this year.
– PNC vacated 18,858 square feet of space at 901 North Market Street. DelOne Federal Credit Union back-filled 8,897 square feet of that space.
Wilmington South
– A group of lawyers and doctors bought 4051 Ogletown Road in the second quarter. They occupied the remaining 23,267 square feet that had been vacant.
– Diamond State Financial Group occupied 10,000 square feet of space at 121 Continental Drive.
– F. Schumacher & Co. occupied 12,572 square feet of space at 131 Continental Drive.
Wilmington West
– DuPont vacated the 60,000-square-foot building at 4401 Lancaster Pike.
