NORTHEAST SNAPSHOT, SEPTEMBER 2008
Delaware Industrial Market
In terms of Delaware’s industrial market, I tend to use the 4 C’s: chemicals, corn, credit and cars. Pharmaceuticals, farming, financial companies and car manufacturing plants are all major players in Delaware, and all of these seemingly separate industries are related to each other within the market.
With Isogen’s move into Delaware and the construction of their new 200,000-square-foot drug manufacturing facility, you may see a slight trend of pharmaceutical companies relocating to the region. Isogen hopes to begin construction on the new facility, which is located on Delaware River & Bay Authority land near New Castle County Airport, next year, with completion expected in 2010. Isogen also recently leased space in DuPont’s Stine-Haskell Research Center in Newark, and plans to relocate its headquarters to this location in January.
For the most part, Wilmington is hoping to pull in more pharmaceutical companies to take the place of the financial companies that have left the office market in the past few years. The pharmaceutical companies are looking for office, flex, R&D and industrial space throughout the northern Delaware area, mostly because of Wilmington’s strong port activity and channel depth.
Despite the positive outlook for Delaware’s future in the pharmaceutical sector, the industrial market continues to cool, as the leasing activity slows to a crawl and rent trends remain flat. Volume is down and prices have not declined since the investment market peaked in late 2006 and early 2007. Rates for industrial product in the state range from $2.50 to $7 per square foot, depending on the product type. While Class B and C runs the entire price range, Class A flex space can range from $5 to $8 per square foot. The overall vacancy rate for Delaware’s industrial market currently averages 12.8 percent.
Joining the financial firms that have exited the market are many of the state’s automakers, including Chrysler, which will close its 244-acre plant by the end of 2009. Currently, sealed bids have been submitted, with the University of Delaware expected to be a major player in the acquisition of the property. Cosmetic company Avon is also set to close its Newark plant this year.
One bright spot, though, is local heavyweight Dupont’s renewal of its lease at 1800 Ogletown Road in Newark. The property had recently been sold for $11 million, or $42 per square foot.
Stoltz has put out some bids in the New Castle area for future development, but nothing is set in stone just yet. If approved, the project would not be in development until mid-to-late 2009 or possibly 2010.
New Castle and Newark are areas to keep an eye on for the future. They both have logistic benefits with interstates 95, 295 and 495, as well as Route 141, in close proximity. Newark is closest to the I-95 Maryland border, which should see a spike in development based on the BRAC relocation of Fort Bragg to Aberdeen Proving ground in Aberdeen, Maryland. New Castle County, on the other hand, is extremely built out with limited availability, though there are some pockets throughout the county that could see future activity. Near-term focus should be on land or developable areas around the ports in Wilmington.
— Bert Root is an associate with Wilmington, Del.-based GVA Smith Mack.
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