Office market has strong quarter, but 500,000 sq. ft. of former Bank of America space remains challenge

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The northern Delaware office market had a decent quarter but still has a half million square feet of office space hanging over the downtown Wilmington market.

The report came from Newmark Knight Frank (NKF), which this week released its first-quarter 2019 office report for the greater Philadelphia region.

Northern Delaware’s office market performed strongly in the first quarter of 2019 with numerous new occupancies driving net absorption, the report indicated.

Theoverall market vacancy rate declined to 15.6 percent after reaching a five-year high of 17 percent at the end of 2018.

Both downtown Wilmington and suburban markets realized healthy demand, and several large leasing announcements in the suburban area, specifically Avenue North, the former AstraZeneca campus in Fairfax, the report noted.

Christiana Care leased 386,460 square feet in a consolidation and relocation program, and chemical company Solenis signed for 87,640 square feet and will relocate from 3 Beaver Valley Road in north Wilmington.

Neal Dangello, NKF senior managing director, said the downtown market faces a challenge and an opportunity.

“Wilmington’s CBD will be hit with Bank of America’s 500,000-square-foot-plus retraction from the Bracebridge buildings next quarter. While this is a challenge, Class A properties such as 301 W. 11th Street, are available opportunities for tenants seeking quality, well-located large blocks – which are nearly non-existent in the suburban market.”

Philadelphia NKF research manager Lisa DeNight noted that 2019 office occupancy will be buoyed by sustained job growth recorded in the region.

Delaware’s jobless rate has dropped below three and a half percent in recent months.

“Companies are becoming more efficient in their use of space, but total employee headcounts are increasing. We’ve seen a lot of downsizing but are starting to see more companies in expansion mode as well,” she said.

Newmark Knight Frank (“NKF”), operated by Newmark Group, Inc. is a large real estate advisory firm. For further information, visit www.ngkf.com.

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