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EDITORIAL: Will a recession dent Wilmington’s renaissance?

Jacob Owens November 3, 2022

I recently got a chance to sit down with Chris Buccini, one of the co-founders of the Buccini/Pollin Group, a multi-billion-dollar real estate development and management firm that has quite seriously been credited with revitalizing large swaths of Delaware’s crown city. We were there to talk about BPG’s upcoming multi-million-dollar renovations to its Wilmington office

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Wilmington has enjoyed an economic renaissance in recent years, but a looming recession may impact the future of the city. | DBT PHOTO BY JACOB OWENS[/caption] I recently got a chance to sit down with Chris Buccini, one of the co-founders of the Buccini/Pollin Group, a multi-billion-dollar real estate development and management firm that has quite seriously been credited with revitalizing large swaths of Delaware’s crown city. [caption id="attachment_222223" align="alignright" width="300"]

Jacob Owens
Editor
Delaware Business Times[/caption] We were there to talk about BPG’s upcoming multi-million-dollar renovations to its Wilmington office buildings, but I was also curious to pick his brain about the bigger state of affairs for the city’s economic development. Who would be better to ask? Today, BPG’s investments in Wilmington have exceeded $1 billion, ranging from offices like the Brandywine, Nemours, DuPont and I.M. Pei buildings to entertainment venues like The Queen theater, 76ers Fieldhouse and Penn Cinema Riverfront, restaurants like Bardea, La Fia and Makers Alley to 20 different apartment complexes. BPG has been perhaps the most bullish bull in Wilmington for 20 years, even through its lows following the splitting of the legacy DuPont company, the sales of MBNA and Wilmington Trust, its difficult reckoning with violent crime, and surviving the COVID-19 pandemic shutdown. Through it all, BPG has continued to commit to projects in its home city and the latest investments of millions more is only further evidence of their confidence. While office vacancy rates have crept higher in the city in 2022 following the post-pandemic turn to hybrid work schedules – and its own key-swipe data shows about 60% of tenant employees are back in offices – BPG thinks more tenants are coming back soon or landing here for the first time. “We believe very, very passionately that office buildings are not going away. Like everything, the pendulum goes from one side and comes back to the other. But I also passionately believe that the future of offices will be different than what historically has occurred,” Buccini told me. In that respect, BPG has been a trailblazer of sorts. It was likely the first company in Wilmington to bring its entire staff back into the office following the nearly two-month closure in the early days of the pandemic. All 140 staff at its headquarters returned to the city under COVID protocols in June 2020, never leaving in the turbulent months that followed. Buccini said the firm doesn’t regret that decision at all. “[That decision] was a representation of the DNA of our company. I think we really all bonded together, and when we look back, it might be the most productive time in the 29-year history of our company,” he said. As the city’s largest landlord, Buccini recognizes that lease payments will arrive regardless of whether workers are back at desks or working from home, but he’s working to convince those employers and employees to come back anyway. “I think what their absence hurts is the vibrancy of a community. I think it hurts a lot of the ancillary businesses that really help this community,” he said. That’s a belief I share and have been arguing for the better part of two years now. A year into the pandemic, Market Street restaurant owners told me that they took up second jobs, applied for loans and were forced to amend hours and operations to adjust to fewer office workers in the city during the week. The central business district is busier today than a year ago, but it’s clearly not at pre-pandemic levels yet, which concerns me as a recession of some magnitude already seems to be underway. Almost two-thirds of corporate economists believe the United States is already in a recession or will be within the next 12 months, according to an October survey from the National Association for Business Economics. At the end of 2021, two-thirds of survey respondents reported rising sales for their companies, but that number fell to only one-third in the October survey. With the Federal Reserve dramatically raising the nation’s core interest rate this year, lending will become more expensive. Stubborn inflation over 8% will also continue to temper spending patterns for consumers, further cutting into corporate profits and straining their ability to repay debts, which subsequently opens the possibility of cost-cutting. To be sure, however, the looming recession seems to be disproportionately affecting certain industries and companies more than others. Wilmington’s abundant number of major national and regional banks are reporting better-than-expected quarterly earnings in recent weeks and already planning a return to stock buybacks, assuaging fears of any potential job cuts for now. The city’s legal scene, long dependent on the ever-busy Chancery Court and federal bankruptcy court venues, is also booming right now. A yearlong recession is unlikely to dramatically slow court hearings that have only started to pick back up in earnest after a COVID-related backlog. The city has also seen a fairly significant change in the past few years that Buccini and I have both noticed. Whereas critics once claimed that Wilmington’s sidewalks rolled up after 5 p.m. when workers went home, it seems that the city is now livelier after hours. “I think restaurateurs are doing better than they've ever done. The city of Wilmington is booming most nights,” Buccini said, noting that the growing notoriety of the city’s restaurateurs and its plentiful bars and nightlife have helped that draw. “People just want stuff to do. And now they have it.” Hopefully BPG is right in the long run, and Wilmington can keep its momentum in its long-desired renaissance.

EDITORIAL: Will a recession dent Wilmington’s renaissance?

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