14C — January 27 - February 9, 2017 — 2017 Forecast — M id A tlantic
Real Estate Journal
www.marejournal.com
W ilmington , DE M arket
Jackson Cross Partners hosts its 37th Annual Forecast breakfast What’s ahead for the Wilmington real estate market
hos t ed i t s 37th Annu- al Forecast b r e a k f a s t on Tuesday, D e c emb e r 13th, at the Ho t e l du - Pont. Pete Davisson, W
suburbs, major property sales completed during 2016, properties currently avail- able for sale, and projects on the drawing board. “There was significant sales activity in the Wilm- ington area office market,” said Davisson. There are also a number of office build- ings currently available for sale. In addition, developers have plans in various stages of readiness for new con- struction. All of that activity should be interpreted as a positive for the Wilmington and Delaware economic out- look.
“The past year has been a challenging one for office real estate in Delaware. With the uncertainties brought on by the pending merger of Du- Pont and Dow, the spinoff of Chemours, and the continu- ing retrenchment of Astra- Zeneca and their resulting job cuts in Delaware, office leasing was slow. The presi- dential election also added a level of uncertainty. It should be noted that office leasing as we define it is measured by companies moving to new space. It does not include firms who renew in their current location. I believe
the overall uncertainty was a factor in 2016 with many firms deciding to sit on the sidelines or “shelter in place” and not upgrade or move to new office locations. The good news is that for the most part rental rates have remained steady and occupancy rates have not decreased signifi- cantly. In addition, there was only limited speculative office development. So, we did not addmuch space to the available inventory. “Leasing activity in the central business district (CBD) totaled just less than 100,000 s/f. This is well be-
low the 10 year average of 232,000 s/f. Space available in the CBD has not changed materially in the past 10 years. There are currently 13 buildings in the CBD that can accommodate a 50,000 s/f user. The overall vacancy rate in the CBD held its own during 2016 --- up slightly in class A buildings and down two points in class B build- ings. Average rental rates are at the 10 year average in class A buildings and slightly below the 10 year average in class B buildings as build- ing owners compete for the limited number of deals for their buildings. “InWilmington’s suburban office market leasing activity during 2016 was just less than 200,000 s/f. This level is below both the 10 and 20 year averages. Space avail- able in the suburbs grew substantially during the year with the largest portion of the increase in class A space. Available office space in class B buildings actually declined by 17%. In the combined 135 buildings in the suburban market only five buildings can accommodate a 50,000 s/f user and there are no blocks of space that could accom- modate a 200,000 s/f user. Vacancy rates are higher than at the end of 2015 in both class A and B space, but are 3.5% below the 10 year average. Rental rates for class A space is up about $1 and now average $24.63 psf. Class B rates are also up approximately $.35 and are now at $21.63 psf. “Overall absorption, the net increase or decrease in occupied space, was negative during 2016. That is never good news, but the declines were minor, just 11,928 s/f in the CBD and 49,315 s/f in the suburbs. “As we look ahead to 2017 there are a number of chal- lenges. We still have a sig- nificant amount of available space and much of that space is in blocks of space of 50,000 s/f or greater. Negative ab- sorption is always a concern since it is the single best measure of the strength of the office market. The CBD still has an image problem, with some people concerned about safety issues, particu- larly after normal business hours. “However, there are also a continued on next page
I LM I NGTON , DE — Jackson Cross Partners
Pete Davisson
SIOR, CCIM and partner of Jackson Cross opened his remarks by reviewing the status of development projects in Wilmington’s central business district and
HealthCare/Medical Properties Issue Date: February 10, 2017 This issue will publish as a special pull-out section... Featuring:
spotlight
New Development Financing Opportunities Design Trends and Challenges
Case Studies on Successful Projects Re-Development & Renovations Retrofitting Existing Properties vs. New Development
Direct Link to Your Advertisement FREE Online Visibility
*Deadline: February 3, 2017*
Contact Linda Christman for more information:
781-871-3456 | lchristman@marejournal.com | www.marejournal.com
Made with FlippingBook - Online catalogs