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Commercial Real Estate Features

Wilmington’s building boom set to continue in 2019

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By Christine Facciolo
Special to Delaware Business Times

Business leaders, economists and development drivers are bullish about the future of Delaware’s largest city – though many anticipate speed bumps along the way.

“I would say that after 20 years of investing and over $1 billion in the city, we’ve never felt like we’ve had the wind at our backs until 2018,” said Christopher F. Buccini, co-president of The Buccini/Pollin Group. “I’d say it was even late spring 2018.”

There are many reasons for Buccini’s optimism. Historically, the Wilmington economy has supported about 50,000 jobs. There was a slight dip during the two years following the Great Recession of 2008, but
the number now hovers around its historic benchmark.

A recent study by the real estate firm CBRE found that 33,000 city residents are employed, even though most have jobs that take them outside the city. That number marks an improvement over 2009, when about four thousand fewer Wilmingtonians had jobs.

Approximately 10,000 to 15,000 Wilmington residents work in the city. The sectors accounting for the most jobs include construction, financial services/insurance, professional services, healthcare and government.

Wilmington’s third quarter unemployment rate stood at 6.1 percent, according to the Bureau of Labor Statistics. That is the lowest rate since 2007.

Wilmington measures economic strength by the amount of private investment in residential, commercial and infrastructure projects. Typically, the combined value of the investment in those sectors hovers around $500 million. Currently that figure stands at $600 million, due to the Christina River Bridge project, the Delaware Third Rail project and renovations to the Chemours Building.

“Wilmington’s Downtown and Riverfront apartment market offers an urban living option to professionals which did not exist 15 years ago,” said Jeffrey Flynn, director of the Office of Economic Development in the City of Wilmington. “More and more employers are making location decisions based on access to a quality workforce. Developing Wilmington’s downtown apartment market not only helps attract new residents, it also supports future business investment by employers seeking access to a quality workforce.”

Last year more than three hundred new units went up. The Residences at Midtown Park contributed the lion’s share with 200 units just off Market Street.

Big projects

Some upcoming projects include 300 luxury units on the Brandywine River at the former Bancroft Mill site, 80 units on the Avenue of the Arts and 75 units between the Nemours building and the Hotel Du Pont. An additional 140 units will come from the conversion of office space at 901 and 913 Market Street. Construction is set to begin this year on a 40-unit building at 5th and 6th streets on Shipley Street.

Buccini said Wilmington can look forward to more development on Shipley and Orange streets now that the Market Street Corridor is strong. He says more restaurants and bars will be coming as well, including BPG’s DE.CO food hall, which will open in the DuPont Building in February.

Co-working spaces like 1313 Innovation, coIN Loft and The Mill will continue to draw talented entrepreneurs to Wilmington. The Mill, which opened in 2016 on the fourth floor of the Nemours Building, is set to expand to 60,000 square feet. “I don’t think there’s anything like it, even in Philadelphia,” said Buccini, whose company owns the building.

The Riverfront will also see its fair share of development. The Buccini/Polln Group is constructing a Homewood Suites hotel, which is scheduled to open in September. The Homewood is being built next to an incoming Hyatt Place hotel in the shadows of the Chase Center and the Westin Hotel.

Cathy Rossi, vice president of public & government affairs at AAA Mid-Atlantic, said the new hotels will be a boon to both convention planners and Triple A. “For Triple A meetings of a larger size we were always challenged with having space for the meeting at the Chase Center but not having the hotel space at the Riverfront,” she said. “It will be wonderful when (the hotels) are here because they will serve business needs that currently exist to try to keep everyone in close proximity to one another for overnight meetings.”

Buccini/Pollin is also building the 76ers Fieldhouse on the East Side of the Riverfront. The 2,500-seat facility will be home to the NBA Gatorade League’s Delaware Blue Coats (formerly the 87ers) and is set to open in February.

The city has received $2.9 million in funding to build the South Wilmington Wetland Project. The project is located just south of the Christina River, near the ShopRite of Christina Crossing and the under-construction 76ers Fieldhouse. Construction on the 14-acre project will begin in the spring and feature a stormwater management facility to reduce flooding in Southbridge and create open space for the community, including trails.

New Castle-based Light Action Productions has plans to construct a soundstage and production facility on the 7th Street Peninsula, about two miles east of the wetlands project.

The facility seeks to attract regional and national acts that would use the sound stages to test equipment before going on tour. It will break ground in the spring.

The Riverfront also stands to benefit from the Christina River Bridge project. The project proposes to add another entry point to the Riverfront and improve access to U.S. 13, I-495 and I-95. The bridge is set to open in 2020.

“The new bridge will make it easier for people to get here,” said Joseph Valenti, director of marketing for the Riverfront Development Corporation. “And once they’re here they may find something else that interests them and they’ll come back.”

The Wilmington Economic Development Corporation (WEDCO) continues its mission of providing funding to projects that cannot obtain support from traditional lenders. The organization assisted Bernie’s Original Italian Water Ice with setting up a brick-and-mortar location just off the N. Union Street corridor on the city’s west side. It has assisted with façade improvements and provided funding to the owners of Wilson’s Lighting & Shade Center to correct code violations.

Renata Kowalczyk, managing director of the Wilmington Renaissance Corporation, is excited about projects that beautify a community and benefit its residents. Kowalczyk is especially interested in the now-vacant properties at 7th & Washington streets that housed a liquor store and a laundromat. “There are a lot of interesting things popping up around food, urban farming and job creation in that space and I’m very interested in seeing how these things will proceed and what role the WRC can play to form partnerships that will make it a reality.”

Regional footprint

Like any other urban area, Wilmington operates within regional and national economies. Economists note that while we won’t experience anything as drastic as the Great Recession of 2008, they do see a slight slowdown in growth for 2019 as the effects of last year’s tax cuts wear off. The good news: the Fed will probably lighten up on interest rate hikes.

“I think most of the interest rate hikes are behind us and that’s good news for interest-sensitive sectors like housing and automobiles,” said Luke Tilley, chief economist at Wilmington Trust.

City officials recognize the value of Gulftainer’s plans for the Port of Wilmington, but Flynn said his office is focused more on stimulating the growth of blue-collar jobs in the southeast sector of the city that lies outside the port area.

“We spend our time looking at ways to make sure that when an opportunity comes along that sites are prepped and ready to go and that’s not easy to do,” he said. “We talk to landowners and try to get them to commit to building a business park. That makes more sense than renting the land to park empty trailers at six bucks a square foot.”

Another challenge is moving commuters from Philadelphia in and out of the city. “I understand the (rush-hour) SEPTA train is packed to the gills,” said Flynn. “There’s a group of people in the governor’s office and other stakeholders who want to know why that is and how to change that.”

A third challenge facing the city is how to fill the two million square feet of office space. Flynn is optimistic. “We’re excited about this in our office because we see it as an opportunity,” he said. “But many people-the press and the capital markets-see it as a negative.” The problem is that while it’s cheaper to lease premier space in downtown Wilmington than it is in the county, the cost of parking drives up the cost.

Flynn points out that buildings like the ones just sold by Bank of American have their own parking so they will be attractive to a large employer. “As for the rest of the space, we’re going to convene a group of stakeholders to see if we can convert it to another use or get it filled,” Flynn said.

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