NORTHEAST SNAPSHOT, SEPTEMBER 2005

Delaware Retail Market

Recently, the Delaware retail market has experienced significant growth in conjunction with the state’s rising population. According to Susan Amato, a commercial broker with Coldwell Commercial Banker Amato & Associates of Newark, Delaware, big box retailers are showing increased interest in entering the market as the state’s major and secondary cities welcome new residents relocating from more crowded Northeast and Mid-Atlantic urban markets. Wal-Mart, Lowe’s Home Improvement Warehouse, The Home Depot, Circuit City and Costco have all been busy developing stores.

A low vacancy rate of 3.2 percent in existing retail properties has led to a boom in development. “In Kent and Sussex counties, much of the farmland is being secured by local and out-of-state developers for both residential and commercial development,” Amato says. These counties have already implemented programs to increase sewer capacity and modify existing infrastructure to accommodate the increased development that will take place over the next 3 to 5 years. In Smyrna in Kent County, a 250,000-square-foot shopping center is underway with Wawa, Happy Harry’s and Wilmington Trust Company already signed on. Several towns in Sussex County are also seeing interest from developers and retailers. In Delmar, a project is under development that will feature Wawa, Happy Harry’s and an additional 49,000 square feet of space, and in Seaford, an additional 30,000 square feet will be developed in conjunction with a new Lowe’s.

“The reason why Kent and Sussex counties are growing is because retirees are relocating here from Washington, D.C., and New York,” Amato explains. “There is also continued development taking place in New Castle County, the northern most county in the state. However, because of saturation, it is not occurring at as high a rate as in Kent and Sussex.”

Both of the southern counties, Sussex and Kent, are poised for more growth in the coming years. “New construction is at an all-time high and the local government is inundated with plans for development, both residential and commercial,” Amato says.

The cities in southern New Castle County are experiencing a marked increase in retail development as the cities to the north, which are suburbs of greater Philadelphia, begin to fill up. “The town of Middletown has been the fastest growing area in the county,” Amato says. “In the last 3 years, the town has exploded with both residential and commercial development.”

Numerous projects and retailers have opened in the past 12 months. Perhaps the most significant developments were Wal-Mart’s new store and its distribution center in Middletown. Lowe’s also made a big splash in the state, starting construction on a 170,000-square-foot location in Seaford and a 155,000-square-foot store in New Castle. The two home improvement warehouses will open in the second and fourth quarter of 2006, respectively. A 29,000-square-foot strip center from developers Robert Wittig and David Cantera just got underway at Middletown Commons, where Dollar Tree and Buffalo Wild Wings have recently opened stores in existing space.

Also in New Castle County, the Governor’s Square Shopping Center in Bear has seen Hollywood Video, T-Mobile and Krispy Kreme all sign leases in the past 12 months. Plans to add 80,000 square feet of new space are underway at the shopping center.

In short, retail development is ongoing in every corner of the state. And the boom in retail is directly linked to Delaware’s astounding residential growth. “To give you a sense of the growth in Sussex County alone,” Amato offers, “the town of Bridgeville has a population of approximately 1,400 and has 3,000 new homes in the pipeline to be built in the next 5 to 7 years. Equally as surprising, the town of Milton has a current population of approximately 1,500 with 4,500 new homes in the pipeline.” According to the U.S. Census Bureau, Delaware is expected to experience a 12.9 percent growth in population from 2000 to 2010. The New Jersey population is projected to grow by 7.2 percent, while Pennsylvania is expected to experience a 2.5 percent increase in population over that same 10-year period.

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