Rent in Wilmington trophy buildings on par with Philly’s
By Kathy Canavan
Rents for Wilmington’s trophy buildings now rival rents for trophy properties in suburban and downtown Philadelphia, according to a new report from CBRE, the commercial real estate company.
Demand for residential apartments and retail services in downtown Wilmington continues to increase, and owners of Class B and Class C office buildings are expected to convert them to residential to maximize their values. Nearly 4,000 new apartment units were added in Wilmington in the past four years, but occupancy levels have remained strong – 93 percent to 95 percent. Average monthly rents are above $1,100.
Occupancy rates for general office space in the Wilmington region are expected to rise in the next two years, too, despite a persistent buyers’ demand for Class A trophy buildings. The reason: In the first quarter of this year, total office employment in the region eclipsed the previous 2007 peak, according to a new CBRE report.
More than 102,000 office workers now occupy space in the Wilmington region. More than 7,220 jobs are forecast for the next two years, and that should drive down vacancy, according to CBRE. Trophy building vacancy has decreased significantly since 2013.
Office-space users are shifting to Class A buildings, especially trophy buildings. They can afford higher rents because they require less space due to digitization of files and smaller computers as well as workplace changes such as telecommuting, smaller offices and more collaboration spaces.
There is limited availability of top-quality office space due to strong demand and no development — less than 10 percent availability of trophy buildings in downtown Wilmington. Rents and vacancy rates for trophy properties in Wilmington’s central business district rival those in trophy buildings in downtown and suburban Philadelphia.
Wilmington’s population growth dipped slightly at the beginning of the year, but it is forecasted to grow more than 2.5 percent over the next four years, outperforming the region. Greater Philadelphia is expected to see flat growth.