Newmark Knight Frank (NKF) reported flat conditions in the northern Delaware market during the third quarter, with sharply higher vacancy rates in coming months as a large chunk of downtown office space comes online.
NKF has an office in Wilmington.
The overall vacancy rate in the northern Delaware market remained flat at 14.3 percent, with the Wilmington central business district remaining at 15.8 percent.
However, the long-anticipated sale of Bracebridge I and Bracebridge III took place, and the buildings are poised to add 450,624 square feet of space once Bank of America leaves its space.
With Capital One’s upcoming departure from their 145,080-square-foot space of its 291,645 square feet at M&T’s Wilmington Plaza, the two vacancies will cause the Class A vacancy in the CBD to spike to more than 27 percent.
NKF Senior Managing Director Wills Elliman said the office space will be difficult for the market to absorb, but noted that “with the relatively low purchase price of $13.5 million ($29.96 per square foot), the new Bracebridge owner will be well positioned to be aggressive with rental rates to attract new tenants to the CBD.”
The office complex was constructed by MBNA as a single-occupant building. Over more than a decade and a half, its successor, Bank of America has reduced employment in the city.
With downtown struggling, most of the market activity was concentrated in the suburbs.
In the Stanton-Christiana area, the Okonite Company and Delivery Circle occupied sublease space totaling 3,622 square feet and 3,082 square feet, respectively, at 111 Continental Drive.
West of Wilmington, Cover & Rossiter occupied 10,348 square feet at 2711 Centerville Road.
The Delaware market’s average direct asking rental rate increased by six cents per square foot quarter-over-quarter, to $24.95 per square foot, sustaining a run of higher market rates.
Rents over the past year have been the highest in over10 years.
In the region, The Philadelphia central business district led the way with the largest absorption for the second straight quarter, experiencing a noteworthy reduction in vacancy.
The Southeastern Pennsylvania submarkets the vacancy rate continued to decrease over the past six quarters. The vacancy rate in the Southern New Jersey market also declined.
