Developers are focusing on multi-family projects as office and retail activity remains flat or on the decline.
That was the message coming out of a breakfast discussion held by the Urban Land Institute at the Goodstay Center on the University of Delaware Wilmington campus.
Michael Hare, senior vice president of Buccini /Pollin Group (BPG) Wilmington; Louis Capano, III, principal of Capano Management, Wilmington; Gregory Pettinaro, CEO of Pettinaro, Newport; and Angela Tsionas-Matulas, principal of Tsionas Management, Newark, told the overflow crowd that their companies are focusing on that side of the residential market.
All have apartment projects underway or on the drawing board in Wilmington and suburban areas.
The biggest residential player in Wilmington is BPG, which has many developments in the works. However, Capano is joining the trend with an Avenue of the Arts apartment development near the Delaware Theatre Co. and Tsionas has proposed a $40 million mixed-use project on Pennsylvania Avenue near the city’s Little Italy neighborhood.
The Tsionas project is a first for the developer, which has mainly focused on mixed-use commercial and student housing developments in Newark, with a few other projects around the state.
The reason for the shift, according to Capano, centers on flat conditions in the retail and office markets, as Internet retailing and other factors take hold. He noted that retail rents have been unchanged for many years.
Pettinaro, meanwhile became a bigger player in retail, snapping up Stoltz retail and office holdings in Greenville that were adjacent to its apartment holdings in the upscale suburb of Wilmington.
“It was a no-brainer for us,” Pettinaro said of the purchase, citing what he described as a rare opportunity to gain high-quality space that is an attraction for apartment tenants.
Panelists did touch on the perception of Wilmington as a crime –ridden area. While all agreed that the perception does not match the reality, they did agree that the city has to continue to tell its story.
In s separate presentation, Wilmington Economic Development Director Jeff Flynn said that the city is “closer to the high mark” after job losses in recent years.
Gains in financial services jobs have at least partially offset losses in other areas, Flynn said.
The key to continued gains is a well-trained workforce, Flynn said and praised efforts such as Zip Code and TechHire, that aim to train technology workers.
Other highlights of the session.
- Capano plans to hold meetings with residents and community on plans for the Brandywine Country Club site it acquired.
- BPG is proceeding with redevelopment of the Bancroft Mills area in Wilmington. The project plans to preserve some of the historic buildings at the site while offering multi-family and even some single family homes.
- Developers see some risk in over-building in the multi-family sector. Pettinaro said the company prefers to build when demand is strong and ride out any downturn.
- Capano plans to reinvest in multi-family residential with the proceeds from the sale of the former Wanamaker store site to pharmaceutical company Incyte Inc. Incyte plans to expand office space at the site.
- Hare of BPG said the decision to reconfigure the Concord Plaza site in north Wilmington came after AstraZeneca vacated a large block of space.It also became clear that tenants are now looking for higher-end office space. The project will include a mixture of offices and multi-family apartments, with the office space still accounting for a large chunk of total square footage.
- A changing economy keeps developers up at night. Capano said “it’s a wash” at present with losses at DuPont offsetting job gains at JPMorgan Chase.
- Hare of BPG says Wilmington faces a “crisis of confidence” over job losses at big employers and publicity over its high crime rate. He added that recent investments tell a different story and unlike the perceptions over crime and other issues, investments can be quantified.
- Wilmington needs a “critical mass” of residents and amenities to move into the fast lane. “We are not there yet,” Hare said.