NORTHEAST SNAPSHOT, SEPTEMBER 2007
Delaware Retail Market
Delaware’s retail market is expected to continue its growth as there is a steady rate of in-fill construction in northern New Castle County and a high volume of growth in the southern part of this county, as well as in Sussex and Kent counties.
In addition to the increase in in-fill strip centers in New Castle County, the state is trending towards the construction of lifestyle centers that include a major anchor, such as The Promenade at Middletown in Middletown and The Vineyards at Nassau Valley in Lewes. The Promenade, located on Main Street, is a development of Chetty Builders and will feature 175,000 square feet of retail space including a 30,000-square-foot Starplex Cinemas, a fitness center, a dry cleaners, a coffee shop, a variety of restaurants and clothing stores, as well as 282 luxury condominiums. Completion of the first phase is scheduled for fall 2008.
The Vineyards, a development of Ocean Atlantic, will feature 215,000 square feet of retail and office space and 984 residential units, all located on an 82-acre site adjacent to Delaware’s only vineyard.
In addition to these two lifestyle centers, a retail center is proposed between Newark and the Pine Creek area that will provide some competition for Delaware’s popular Christiana Mall located off of Interstate 95 in Newark.
Retail developers and brokers are taking advantage of the continued housing growth in Delaware, specifically in the Middletown area because with this residential upswing comes continued retail growth. In this respect, Sussex County is also seeing a steady interest in new retail development.
Redevelopment initiatives, such as the one underway in Newark, have also caused moderate growth in the retail market in the past few years. These initiatives are causing job growth in all sectors, which is a positive for the retail economy.
Retail tenants entering Delaware are entering a market that has changed very little from last quarter. Triple net leases are holding steady at $14 to $40 per square foot, and vacancy rates are measuring between 5 percent and 10 percent with no change from last quarter.
With rental and vacancy rates remaining firm and retail construction continuing to grow moderately, growth in the Delaware retail market should remain steady in the second half of 2007 and into 2008.
— Paul Bryant is the vice president of Corporate Real Estate Services for NAI Emory Hill in New Castle, Delaware.
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