The outlook for downtown ‘concerning’
The office vacancy rate in northern New Castle County rose slightly in the second quarter to 14.4 percent from 14.1 percent, according to NKF as a financial services company vacated space.
NKF, a large commercial real estate services firm, has an office in downtown Wilmington.
The vacancy rate in Wilmington decreased for the first time in almost a year, falling from 17.6 percent to 16.8 percent. The lower rate came as Capital One occupied of 91,104 square feet at 800 Delaware Avenue, which in turn contributed to 57,732 square feet of positive absorption in downtown.
In a temporary reversal of prevailing trends, the vacancy rate increased in the suburbs, the firm reported
The largest increase was recorded in the Wilmington South submarket, where the vacancy rate increased to 12.7 percent from 10.9 percent, as HSBC vacated 95,581 square feet at 90 Christiana Road, New Castle. Overall, the suburbs experienced 106,204 square feet of occupancy loss, driven mainly by the HSBC vacancy.
“Despite the current quarter, the long-term outlook for the Wilmington CBD is concerning. Higher operating costs are pushing office tenants to choose the suburbs rather than relocate to or within the CBD. There are over 800,000 square feet of office space requirements in the Wilmington metro market; 75 percent of that amount is targeted for the suburbs,” NKF reported. “The Capital One move, while large, is also negligible compared with the 1.2 million square feet of vacant office space, 892,712 square feet of which is Class A. The situation is expected to worsen when Bank of America sells its 430,000-square-foot Bracebridge buildings, which will return to market inventory as vacant space.”
Despite much speculation, no deal has surfaced for the Bracebridge space.
The Wilmington metro market’s average direct asking rental rate decreased by 28 cents a square foot to $24.81, still six cents above where it was a year ago.
Rents for Class A and Class B buildings in the Wilmington central business district experienced minor increases, while rents in Wilmington North grew by 15 cents per square foot to $25.14.
The rise in rents was balanced out by decreases in Wilmington South and Wilmington West. In Wilmington South, rents fell 97 cents a square foot to $21.29, the lowest rate for the submarket since the second quarter of 2010. The drop came from an additional 135,000 square feet of former HSBC space at 90 Christiana Road being offered at below the average rate.
