Greater Wilmington real estate in recovery
The Greater Wilmington real estate market is still in recovery from the Great Recession, according to Integra Realty Resources’ 2016 Commercial Real Estate Trends Report. There are bright spots in the real estate market though.
The hospitality market, buoyed by its position along I-95 midway between New York City and Washington, D.C., has an inventory of nearly 5,600 guest rooms, half less than 25 years old. Recent additions include Buccini/Pollin Group’s Westin Wilmington Hotel with 180 rooms at the Riverfront, Hampton Inn’s 136-room inn along Old Churchman’s Road, a 72-room Fairfield Inn & Suites on Dupont Highway, and a 120-room Four Points by Sheraton on Old Baltimore Pike. A 95-room Candlewood Suites is being built along Route 896 at the I-95 interchange.
Integra predicts value for hospitality buildings will increase over the next 12 months – from 2-to-3.9 percent for full service hotels and from 0.1 percent to 1.9 percent for limited service units.
The multi-family market in Wilmington and its suburbs is strong, with vacancy rate below 5 percent, and new construction is slated in the city and suburbs.
- Buccini-Pollin, Woodlawn Trustees, Todmorden Foundation, Capano and Reybold Homes are among the builders active in the multi-family market.
- Integra’s 36-month forecast suggests Urban Class A unit rents might rise 1 to 2.9 percent, Urban Class B rents might rise 0-to-0.9 percent, Suburban Class A rents might rise 1 to 2.9 percent and Suburban Class B rents might increase 0-to-0.9 percent.
Integra reported the industrial market is still recovering from the impact of the recession and the loss of GM and Chrysler. The vacancy rate is hovering in the high single digits, after spiking to mid-double digits in 2009. The only major new construction was the 1.2 million-square-foot Amazon fulfillment center in Middletown, the 200,000-square-foot Fed Ex facility in New Castle and the 400,000-square-foot SF Johnson Controls production facility in Middletown.
The industrial market is looking up:
- Market rent has gradually trended upward since 2009, and is expected to continue upward at a pace that mirrors inflation, according to Integra.
- Absorption has been positive, and few large blocks of vacant space are available in newer, modern industrial buildings. A limited number of buildings currently offer more than 75,000 square feet of contiguous space and only a handful offering more than 100,000 contiguous square feet.
- Market rents might rise 1 to 2.9 percent for flex-industrial space and 3 to 4.9 percent for industrial space in the next three years, according to Integra’s 36-month forecast.
In the office market, inventory has remained relatively level, with no major additions or removals from supply over the past two-three years, according to the independent commercial real estate valuation firm.
The Integra report mentioned these factors in the office market:
- Although employment growth in the office segment is positive, many major financial-service employers have re-sized their space and reduced the square footage per employee.
- There are still vacancies compared to pre-recession levels, and there is little room for rent growth in the central business district and the suburban market.
- The underlying economics don’t support new construction in the central business district or construction other than build-to-suit in the suburban market.
- Integra predicted no change in Class A or Class B office-space rents in the central business district in the next three years, and a 1-to-2 percent hike in Class A and Class B rents in the suburbs.