April 2024

8A — April 2024 — Spring Preview — M id A tlantic Real Estate Journal


S pring P review

economically significant region stretching from Boston to Wash- ington, D.C. The proximity to By Joseph Latina, SIOR & Christopher Moore, CCIM, LMT Commercial Realty/CORFAC Int’l. Exploring industrial land and building pricing in Northern Delaware I n recent years, the price increases of industrial land in Delaware have been

the Delaware River. The state boasts an excellent transporta- tion network, including major highways, railways, the Port of Wilmington, and the Delaware Memorial Bridge. Due to these favorable loca- tional conditions, there have been several recent industrial developments in Northern Del- aware. The 3.8 million square foot Amazon distribution cen- ter constructed on the former General Motors Boxwood Road site in Newport has caused concern with local government and constituents related to un- checked “by-right” industrial

development. As a result, the county and state have become more hostile to industrial de- velopment triggering recent changes to the industrial zon- ing approval process in the form of building size regula- tions and required site and green space improvements. These new restrictions have created additional layers and added more time in obtaining entitlements, thereby creating increased carrying costs for de- velopers. This is driving devel- opers to build larger buildings to gain economies of scale and control costs, when in reality

the market is in desperate need of smaller industrial and flex buildings to accommodate small and mid-size businesses. This, coupled with increased labor and construction costs has increased the cost of new development with finished costs approaching $175 psf as opposed to a much lower cost of $100-$125 psf just a few years ago. Many investors and develop- ers from surrounding markets such as New Jersey, New York and Pennsylvania have been pushing up demand for existing industrial warehouse buildings. The market has seen prices grow from $60-$80 psf just 4-5 years ago to over $150 psf currently. Triple-net rents have also risen in the last 5 years from $5-$7 psf/annu- ally with most landlords now asking $11-$12 psf/annually for industrial base rents. The current market for un- improved zoned industrial land in New Castle County, Delaware, has a wide range of prices from as low as $150,000 per acre for more challenging properties to as high as $1+ million per acre depending on location, buildable acreage, and access to roads and utili- ties. Industrial zoned land with improvements and utilities but without substantial improve- ments have been trading as high $400,000 to $750,000 per acre in some instances and smaller infill lots or assem- blage parcels have reached as high as $1 million per acre for heavy industrial zoned laydown yards and land near the Port of Wilmington. Land prices in more development friendly markets like Middle- town, Delaware, are trading at consistently higher prices due to a more predictable and shorter approval process. The size and shape of the parcels appear to be impact- ing values as well, with larger parcels traditionally trading at a slightly discounted rate. The presence of flood zones, wetlands, dense forestry, and topography are also crucial to ultimately determining the value of Industrial land. Un- derstanding buildable versus non-buildable acreage is an important part of a buyer’s due diligence process as non- buildable acreage has very little value. Unfortunately, these in- creased costs are ultimately continued on page 9A

the subject of interest and scrutiny, re- flecting broad - er trends in the state’s economy and real estate market. One of the primary driv-

three adjoin- ing states, the Port of Wilm- ington, and Philadelphia International Airport en- hances the at- tractiveness of industrial development

Joseph Latina Christopher Moore

ers of the state’s industrial land prices is its strategic location within the Northeast Corri- dor, a densely populated and

in Northern Delaware. New Castle County serves as a focal point for industrial activity, with its strategic position along

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