NORTHEAST SNAPSHOT, APRIL 2007

Delaware Industrial Market

Generally, there is little industrial-zoned land available in Delaware; therefore, the majority of the industrial development is taking place in already planned industrial parks. There is very little speculative building, and most of the new buildings that are being built are for large distribution tenants of approximately 80,000 square feet or more. Conversely, older, smaller industrial buildings of 20,000 square feet or less are ripe for conversion to churches or schools.

The Port of Wilmington has been very active and there is significant demand for space near the port area. Located at the confluence of the Delaware and Christina rivers, and just 65 miles from the Atlantic Ocean, the port is a full-service deepwater port and marine terminal that handles more than 400 vessels per year with an annual import/export cargo tonnage of 5 million tons, making it one of the busiest ports on the Delaware River.

Rental rates for industrial buildings in Delaware currently range from $4.50 to $7.00 per square foot triple-net lease. In addition, there are occasionally large, older complexes that run on the lower end as well as new, smaller units that might sit on the higher end of the rental scale. According to CoStar, year-end vacancy was 9 percent for New Castle County and 15.7 percent for the city of Wilmington. The majority of building owners are trying to attract users for distribution space based on Delaware’s strategic location on the Interstate 95 corridor and the Port of Wilmington.

In the Twin Spans Industrial Park, Lyon, Conklin & Co., Inc., a Ferguson Enterprise, leased 83,000 square feet of a new 100,000-square-foot building, which is being built by Harvey Hanna & Associates, Inc., a local developer. Occupancy is slated for this summer.

Recently, three major corporations announced plans to close their industrial centers in Delaware. Sears announced that it will be closing its Fashion Distribution Center in Newport later this year. The 250,000-square-foot building set on 12.5 acres, which is also the site of a Sears outlet store and service center, will be sold once the distribution center closes. Avon will be closing its distribution center in Newark by 2009, but no plans for the 45-acre property have been released. DaimlerChrysler plans to idle its auto assembly plant in Newark in 2009, which will most likely affect the plants local suppliers as well. All of these announcements have the potential to put either significant buildings on the market or free up sizable industrially-zoned land parcels for development.

Although development has been lagging in the Delaware industrial sector, any markets or submarkets close and within easy access to Interstate 95 will present a good opportunity for users and investors in the future.

— J. Gregory Ellis is a sales/leasing agent for Patterson-Woods Commercial Properties/CORFAC International.


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