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The high-rise at 824 N. Market St. in downtown Wilmington was recently acquired by a New Jersey investment firm. | PHOTO COURTESY OF CBRE[/caption]
WILMINGTON – A downtown Market Street high-rise that is home to the U.S. Bankruptcy Court for the District of Delaware recently sold for more than $16 million to a New Jersey-based commercial real estate investment firm.
The sale closed April 8, according to county deed records, but was announced Tuesday by CBRE, the seller’s brokerage. While a sale price wasn’t disclosed, a calculation of the state’s transfer tax estimates the sale at $16.5 million, or about $80 a square foot.
The seller was a limited liability corporation affiliated with Connecticut-based Ellington Management Group, which acquired the property in a November 2016 foreclosure auction after buying its non-performing note at a discount a year before. The owner before Ellington was California-based Triple Net Properties LLC, which owed nearly $26.9 million on the property when it entered foreclosure, according to county land records.
The Class A office building located at 824 N. Market St. was sold to Chopp Holdings LLC of Lakewood, N.J. It is the first acquisition outside of New Jersey for the investment firm headed by Mark Chopp, who said they've been eyeing the Wilmington market for several years.
The deal came with a "compelling price," Chopp said, noting his firm's investments are very price-driven. It has a portfolio of roughly 1.5 million square feet across 19 buildings, split roughly even between investments and new constructions. It has three office buildings under construction in Lakewood right now.
Despite the pandemic shelving many commercial real estate deals right now due to uncertainty for future employment levels, Chopp said his firm wasn't concerned about their property.
"It wasn't our game plan when we started looking at this building, but, in an unfortunate way, it probably can actually benefit from the whole downturn," he said, referring to the likely increasing caseload of bankruptcies for Delaware's millions of corporations.
Built in 1982, the 10-story, roughly 200,000-square-foot office building is in the heart of the Wilmington’s central business district, directly across from Delaware’s U.S. District Courthouse.
At the time of the sale, the office building was 67% occupied, primarily by General Services Administration (GSA) tenants. It’s anchored by the U.S. Bankruptcy Court, which occupies 65,941 square feet, but also houses retail tenants such as Santander Bank, Brew HaHa! and Jimmy John’s, among others. The federal government signed a 10-year lease worth $20.4 million in 2016, ensuring that a major tenant will be around for at least another six years.
Chopp said that he planned to begin fit-outs of speculative office space for the vacant portion of the building, adding conference rooms and a gym, to help entice potential tenants. He said that he has had conversations with GSA about additional potential leasing, but was also pursuing other tenants who might want to be close to Delaware's court system.
Last week, the brokerage Jones Lang LaSalle (JLL) announced that it had been retained by Chopp Holdings as the exclusive leasing agency for the property.
Chopp's acquisition is just the latest example of out-of-state firms investing in downtown Wilmington real estate, with others from Baltimore, New Jersey, Texas, Colorado and Washington, D.C., buying downtown buildings in the past two years. Chopp said that he was impressed by what he was seeing in downtown Wilmington, especially concerning the increasing amount of residential units.
"We feel there are some really good sparks taking place in Wilmington," he said. "And when the price is right, we want to get in early on that."
By Jacob Owens
jowens@delawarebusinesstimes.com
