NORTHEAST SNAPSHOT, DECEMBER 2007
Delaware Retail Market
High quality development and a dense population have stimulated the retail sector in Delaware. However, it is important to understand the dynamic of retail in the state of Delaware to fully understand the market as a whole.
The Delaware retail market vacancy rate remains healthy, although the number does vary from county to county. Northern New Castle County, the most densely populated area in the state of Delaware, remains tight, boasting vacancy rates below 5 percent as well as few large tracts of developable land. Furthermore, county officials in New Castle often frown on new development, making the construction of new retail centers difficult. However, many developers are finding solace in Middletown and Smyrna in lower New Castle County. As unincorporated cities, Middletown and Smyrna are not subject to the same rules and regulations as New Castle County, and, therefore, are much more business friendly. Dover is attracting attention from retailers as well. Located in Kent County, the state capital has been exhibiting strong growth.
Cities in Sussex County such as Milford, Bridgeville and the resort areas of Lewis, Rehoboth and Bethany are also viable retail markets. Once primarily farm land, Sussex County is now home to prime retail development that aims to serve the needs of the growing population of retiring baby boomers.
The level of activity among developers in Delaware varies. While mainly local developers have been the most active, an increased number of institutional developers are present in the area and showing interest.
Eager to serve such a robust demographic, well-known retailers are making their way into the Delaware market. Neiman Marcus, Whole Foods and Christmas Tree Shops are all new to the market. In addition, several leases have recently been closed at some of Delaware’s prime retail centers. Approximately 400,000 square feet of leases have been closed at Centerpoint II in Christiana, including Best Buy, Olive Garden, La-z-boy, Red Lobster, Pet Smart, Golf Gallery, Eastern Mountain Sports. Also in Christiana, Red Robin, Famous Dave’s BBQ, Bertucci’s, Boscov’s, Old Navy, Linens ’n Things, DSW Shoe Warehouse, Five Below, Jo-Ann and Staples recently closed leases with Christiana Town Center.
In Middletown, several retailers are taking space at Delaware’s first lifestyle community, Promenade at Middletown. Starplex Cinemas, which has signed a lease for 30,000 square feet, will be included among the development’s 170,000 square feet of retail space. Athlete’s Foot and Saladworks have also committed to space. In addition to the retail space, the Promenade will include 282 luxury condominiums and several dining and entertainment tenants. Phase I is set to be complete fall 2008.
Another new development attracting the attention of retailers is Vanguard Commercial Property’s new 217,380-square-foot shopping center, Dover Crossroads. Located at Route 13 in Dover, Christmas Tree Shops, Dick’s Sporting Goods, Ross Dress for Less, Bed, Bath & Beyond and Raymore and Flanagan have all signed on for space.
Middletown and Smyrna, as well as Milford, Bridgeville and the resort areas of lower Delaware are already going strong, but keep an eye on them for more growth in the future, as they bring much potential to the retail market.
— Joseph Latina is a vice president and partner, and Michael Woods is a broker at Patterson Woods Commercial Properties in Wilmington, Delaware.
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