The northern Delaware office leasing market finished the year on a quiet note, according to a report from Newmark.
The report from the commercial real estate firm with an office in Wilmington indicated that a combination of supply chain problems, labor matters, the holidays, and respiratory illnesses that include Covid-19 and RSV contributed to a weeaker fourth quarter performance.
A reduction in subleased space in downtown Wilmington was offset by additional subleased space elsewhere. A 15,000-plus square foot lease by a law firm accounted for the late year gains in downtown.
Northern Delaware office rental rates declined slightly in the fourth quarter. Rental rates are down substantially when the costs borne by landlords for improvements are considered, the report indicated.
The Newmark report noted that some of the leasing activity was driven by grants, an example being the expansion by chemical-maker Solenis, which has received Strategic Grants from the State of Delaware. Research and development and life sciences are becoming a bigger part of the northern Delaware economy, offsetting weak demand for office space, the reported noted.
Law and wealth management are the two areas that driving current leasing activity. Some office space is no longer on the market as owners convert offices to residential units and even hotels.
Also noted in the report was the inrease in interest rates as the Federal Reserve works to tamp down inflation and the possibility of a recession. Delaware’s employment rate remains about 1% above the national figure and would increase with any economic downturn.