As with many North Eastern markets, Delaware has endured its share of hardship over the last couple of years, culminating in the expectation for an improvement in conditions during 2017.
In the last six months of 2016, while the average class A vacancy rate dropped, full service lease rates remained relatively stagnant. Given that rental rates are not experiencing major changes, it is implied that there has not been, nor is there expected to be, an increase in demand for the construction of new office space. However, based on recent trends, it can be surmised that the office market will experience positive absorption in 2017.
Delaware Retail: Great Real Estate = Great Tenants
If you have it, they will come. If you don’t have it, but build it, they will come.
The Delaware retail market has rebounded impressively in the wake of the protracted recession from a few years ago. Significant vacancy levels created by the downturn rapidly evaporated, even with the construction of a significant amount of new retail space during that time.
The rapid recovery can be primarily attributed to landlord willingness to modify earlier leases to provide struggling tenants the time and latitude to reestablish profitability, and secondly, the readiness and willingness of municipal planners to move new projects through approval processes on an expedited basis.
National retailers and restaurants have flocked to the state to join existing centers, as well as several new major projects, including an expansion and renovation of the Christiana Mall, and the development of large projects in Middletown and Dover. Both Middletown and Dover, once considered tertiary or middle-markets by retailers, have evolved into substantive consumer markets and therefore, preliminary plans point to developable retail space in these areas.
Additionally, the migration of retirees to Delaware, particularly Sussex County, continues to feed an already growing population that demands commercial goods and services. This expansive retail development and growth cycle throughout the state is expected to continue into the foreseeable future.
By Tripp Way is managing partner at DSM Commercial.