14C — January 11 - 24, 2013 — 2013 Forecast — Mid Atlantic Real Estate Journal
www.marejournal.com
2013 F orecast By Pete Davisson, SIOR, CCIM, Jackson Cross Partners, LLC. Jackson Cross reports on the Delaware office market
W
e have all been look- ing, and waiting, for the positive signs as-
annual Real Estate Forecast Breakfast at the Hotel DuPont. “Earlier in the year people were saying they were waiting to pull the trigger on new deals until after the election. That was the prevailing attitude, wait until after November. Following the election people began saying they would wait to see how the political leaders in Washington address the looming fiscal cliff. Throughout the year there was a lot of activity, but much of it was of the looking, not sign- ing, variety. I believe we are all happy to see any kind of activity, but in reality we have
been comparing this year to last, which was one of the worst years on record. After all was said and done, in 2012 the combined leas- ing activity was 511,000 s/f. “The Central Business District (CBD) experienced a 24% in- crease in leasing activity. But, the suburban office market experienced a 23% decline in activity. The net effect was a decline in total activity year to year. Leasing activity in the CBD totaled 187,977 s/f, while leasing outside the CBD (OCBD) was 322,740 s/f. Dur- ing 2012 tenants in the market
were either reducing in size or making lateral moves. There were very few new tenants in the market during the year. Overall leasing activity was well below both the 10 and 20 year averages. “The combined vacancy rate in the greater Wilmington mar- ketplace increased to 21.9%, up from 21.2% at this time last year. In the CBD, class “A” office space saw a decrease in vacancy while Class “B” office space increased by more than 10% to 33.6%. Amajor factor in the movement between classes of office space can be attributed
to the fact that the owners and developers of the newer build- ings are more aggressive and have larger tenant improve- ment allowances with which to attract tenants from Class “B” buildings. In market conditions such as this there is usually a ‘Flight to Quality’ and 2012 was no different. “There were only five record- ed transactions during 2012 greater than 20,000 s/f. Three were in the CBD and two were in the suburbs. Three of the 5 transactions were in the Class A category of buildings. This is the second year in a row where there were only 5 lease trans- actions of 20,000 s/f or greater. The two largest deals were both in the suburbs --- Capital One signed a 57,000 s/f deal at Churchman’s Corporate Center and Interdigital signed a 36,000 s/f deal at 200 Bellevue Park- way. At 222 Delaware Avenue a 25,000 s/f lease was signed by Eckert Siemens, a law firm, and CitiBank expanded by 22,000 s/f in the Brandywine Build- ing. An additional 100,000 s/f plus was done in buildings not tracked in our data base. The largest lease signed during the year was a substantial block of space where Capital One signed a long term lease in M&T Bank’s Plaza office building. To keep it all in perspective, how- ever, in 70 of the 180 buildings we track there was not one new lease signed. “The average quoted rental rate for class “A” space was $26.36 per s/f, full service in the CBD and $23.50 in the suburbs. class “B” rates were $19.70 in the CBD and $21.90 in the suburbs. Rental rates remained flat during the year. “Absorption, the number that is most reflective of the health of the marketplace, was posi- tive during 2012, with 125,765 s/f more of occupied space at the end of the year. In 2011, absorption was a negative 58,885 s/f. “Only one office building was sold during 2012, when Invista purchased Three Little Falls. There are currently at least 4 office buildings for sale in the CBD and 12 in the suburbs. “The Delaware industrial market, which includes ap- proximately 45 million s/f of warehouse and flex space, has seen positive results associ- ated with increased levels of retail sales and distribution. The vacancy rate is currently continued on page 16C
sociated with a comeback of both the economy and the world of commercial real estate. In Wilming- ton Delaware “The pent up
Pete Davisson
demand in the office market- place is creating a positive buzz,” said Pete Davisson of Jackson Cross Partners at their
Commercial Real Estate Services
Lou Battagliese, SIOR 610.265.7700 Ext.112 ljb@jacksoncross.com
Pete Davisson, CCIM, SIOR 302.792.1301 Ext. 223 pd@jacksoncross.com
John Morrissey, SIOR 610.265.7700 Ext. 124 jpm@jacksoncross.com
Cate Sennett, Esq. 610.265.7700 Ext. 123 csennett@jacksoncross.com
Advisory • Brokerage • CRE Strategies • Investments • Property Management
1010 West 9th Avenue • King of Prussia, PA 19460 300 N. Market St., Building 1, Suite 100 • Wilmington, DE 19801 603 Heron Drive, Suite 2 • Swedesboro, NJ 08085
Made with FlippingBook - Online Brochure Maker