A report from Newark showed increased leasing activity in the northern Delaware office market.
About 140,509 square feet of space was leased in the first quarter, a notable, up 13.5% from the 2020-2024 quarterly
leasing average.
The State of Delaware’s purchase of 704 N. King Street Custom House for use by the court system reduced the inventory of vacant space downtown and contributed to an increase in average rental rates.
A major contributor to the leasing activity was the law firm of Morris James, which pre-leased the first six floors of the 100,000-square-foot Avenue North Tower in north Wilmington. The 43,000-square-foot lease reduces Morris James’ existing 60,000-square-foot footprint at 500 Delaware Avenue in downtown Wilmington. That will affect the downtown vacancy and absorption rate in 2025.
Morris James said it will maintain a presence in Wilmington.
By the end of the first quarter of 2024, downtown Wilmington’s vacancy rate had dropped to 27.2%, down about 1%.
The continued removal of obsolete or aging offices from competitive inventory remains crucial for the health of the Delaware office market, with the possibility of office space being converted to apartments.
The overall vacancy rate in northern Delaware remains on the high side at 20.9%.
Strong preleasing at Avenue North and at 800 Creek View Road underscore Delaware’s demand for modern space. Offices built after 2000, have a vacancy rate that is 35% lower than the broader market, Newmark noted.
What brokers have called a “flight to quality” office space has been occurring for several years.
