Net absorption posted a flat performance while vacancy inched up as formerly owner-occupied space was added to the inventory, as reported in the Newmark Grubb Knight Frank (NGKF) Q3 2013 Wilmington office research report.
In what proves to be a recurring event over the past several years, another disposition of corporate-utilized office space eroded recent gains in recovery momentum. AstraZeneca sold the 195,000-square-foot building at 2200 Concord Pike, known as the Rollins Building, in northern New Castle County to Roch Management, Inc., an investment firm controlled by the founder of Applied Bank. The entirety of the building is currently available for lease. AstraZeneca is now marketing a two-building, 357,551-square-foot portfolio on its South Campus for sale. All told, if these properties are added to the base inventory, vacancy will increase another 390 basis points.
“This phenomenon of corporate-owned assets adding to vacancy is not a new one for the greater Wilmington area,” noted Neal Dangello, NGKF senior managing director. “Fortunately, the legal and financial services sectors are showing signs of positive momentum as of late. These sectors have tallied 400,000 square feet of positive absorption since 2012. This is a hopeful sign for our market as law firms and banks are the largest office occupiers in the region.”
Key statistics for the Wilmington office market during the third quarter of 2013 are as follows:
• vacancy rate: 19.2%
• absorption: 12,169 square feet (sf)
• rental rates: Class A - $27.74/sf; Class B - $21.14/sf; Overall - $23.62/sf
“Looking forward, rents will soften amid the backdrop of persistently high vacancy,” said Wills Elliman, senior managing director. “Vacancy increases are largely a result of additions to supply rather than demand deterioration as employment gains in traditional office occupying sectors showed signs of growing, albeit slowly, as of late.”
To access the full Wilmington office report, visit www.ngkf.com/research. To speak with a NGKF market expert, please contact Mira Matic at firstname.lastname@example.org.
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