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Mid Atlantic Real Estate Journal — January 13 - 26, 2012 — 9
2012 F ORECAST
By Pete Davisson, Jackson Cross Partners Jackson Cross reports on the Greater Wilmington Office Market
ahead, we in- dicated that we thought it would be at least the end of the second quar t e r o f 2012 before we s aw a substantive W
ILMINGTON, DE —“Last year at this time, as we looked
the year by slightly less than 59,000 s/f, but that was im- pacted by the addition of the one new 164,000 s/f office building. So, overall, while we did not get healthier, we didn’t really lose much ground”. “Rental rates were steady during the year, with full service class A rates in the CBD averaging $26.68 psf and class A rates in the suburbs at $23.46. These numbers are very close to the 10 year aver- age, and unchanged during the last 12 months. “We have seen a number of positives during 2011. Bloom Energy purchased 50 acres at
the University of Delaware’s Science and Technology Park. Johnson Controls purchased 34 acres in Middletown and recently Amazon.com purchased 76 acres in Middletown for a 1.25 million s/f distribution center,” said Davisson. The industrial side of the Delaware market has also seen modest activity. The vacancy rate in industrial buildings currently stands at approximately 10.5% and the average quoted rental rate is $4.04 per s/f, triple net. Na- tionally the average quoted rental rate is just more than
$5.00 per s/f. As we compare markets the industrial market is faring slightly better than the office component. Among the most notewor- thy industrial transactions in Delaware in 2011 were: a 56,000 s/f lease at 405 East Marsh Lane in Newport to the Tile Market of Delaware; a 60,000 s/f lease by Goodwill of Delaware at Centerpoint Corporate Center; a 60,000 s/f lease by DYK Automotive in Pencader Corporate Center; a 62,000 s/f lease by the State of Delaware at 220 Lisa Drive in New Castle; and, the sale of an 83,600 s/f building at Pencader
Corporate Center in Newark to Tek3. “In the retail market vacan- cies are at a 20 year high, standing near 11%. The lack of new construction is keeping the number from going higher. On the retail side we have seen big box retail stores, and shopping centers, being con- verted to office space, medical services and museums. “In the residential market in Delaware prices have declined in all three counties. In New Castle County the decline has been 13% since 2010. The National Associates of continued on page 10
Pete Davisson
increase in leasing activity,” said Pete Davisson of Jackson Cross Partners at their annual Real Estate Forecast Meet- ing at the Hotel DuPont in Wilmington, Delaware. “Un- fortunately, like so many other things relating to the economy the date of the strengthening in office leasing has continued to slip. “Leasing activity during 2011 has been modest. While the demand from small busi- ness has held up well the Wilmington-NewCastle Coun- ty office market, the demand for new office space by medium sized firms has been weak, and the demand by larger firms was moderate. “To put some specific num- bers on the activity, fully 71% of the leases signed were for under 4,000 s/f. In the market for leases greater than 20,000 s/f, there were only five leases signed during the year. Only 19% of all leases were in the middle segment of the market, leases for between 5,000 and 20,000 s/f. And to make the situation even worse there were no leases above 12,000 s/f in that range,” noted Da- visson. “Total leasing activity in the Wilmington-New Castle County office market totaled 569,000 s/f. The larger por- tion of that total was outside the Central Business District. At the current leasing rate we have a five year supply of available office space. “Thank goodness there was only one new office building delivered this year or the situ- ation would have been worse. The national vacancy rate for all classes of office space is 12.5%. Our overall vacancy rate is 21.2%, virtually the same as it was 12 months ago. “Absorption, the net in- crease or decrease in occupied space, is the true indicator of the health of amarket. On that score we aren’t doing badly. Absorption was negative for
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
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