Delaware’s State of CRE Market Event

The eastern side of the Christina River in Wilmington, Delaware, has been hyped for years as laden with potential for mixed-use development.

Now, Wilmington is enjoying a historically fertile time for new development, though the Riverfront Development Corporation of Delaware is still searching for how to introduce a mix of uses at the 86-acre brownfield site, panelists said Feb. 16 at Bisnow’s Delaware State of the Market event at 1313 North Market St. in Downtown Wilmington.

Riverfront West has been a rousing success, with apartment buildings, hotels and restaurants popping up in the past seven years, RDC Executive Director Megan McGlinchey and Buccini/Pollin Group co-President Chris Buccini said at the event.

Over those same seven years, RDC drafted and pursued a complementary master plan for the eastern bank of the Christina, but the pandemic impacted Riverfront East in a similar way to the rest of the country.

“When we first planned [Riverfront East], we had 2M SF of office planned,” Wilmington Mayor Michael Purzycki said in his opening remarks for the event. “I thought it was more, but the point of it is, how much office construction are we going to be doing now? Who knows. But right now, you wouldn’t bet on having a whole lot of it. So you have to pick a Plan B.”

Seeking to capitalize on the region’s favored sector, RDC commissioned the Delaware Prosperity Partnership last year to run a feasibility study for life sciences development at Riverfront East, McGlinchey said.

“We know there’s a lot happening in that market right now out in the suburbs, but not as much in the city of Wilmington,” she said.

The study determined the site could support a small to midsized life sciences development such as a multitenant wet lab building, which BPG has expressed interest in building, McGlinchey said. But with 86 acres, one life sciences building leaves tons of room for other uses. While a sizable portion will be turned into green space, the market has sent a clear message about the site’s development potential.

“The developers that have been coming to us are pretty much exclusively multifamily,” McGlinchey said. “We’ve had a lot of interest in multifamily, but the entire development can’t be multifamily. We need to have some commercial space there.”

The preference for multifamily is born from more than just a lack of options. Multifamily development in Wilmington has roared back to life after 50 years of dormancy, with 1,000 units consistently in the pipeline and new deliveries leasing up rapidly, Buccini said.

“As soon as one delivers, another one starts back up, and so far, people keep moving in and getting these places occupied,” Purzycki said.

While 1,000 units may not represent a Philadelphian’s idea of a development boom, it also may not represent the best Wilmington can do. Over the six-month period ending in May, Wilmington will see 800 units delivered across four apartment projects, Buccini said.

“So, it’s happening,” Buccini said. “Like, it is game on.”

Even if a market has yet to take shape for commercial tenants at Riverfront East, the momentum in multifamily would be enough for many developers to want to strike while the iron is hot. But RDC and Wilmington are not quite in position to do so, having yet to purchase all the land envisioned to be part of the master plan. The pace of acquisitions has picked up in the past three years when compared to the previous four, McGlinchey said.

“We really took advantage, frankly, of Covid and the willingness of landowners to sell,” she said. “Now, we have acquired about 75% to 80% of those 86 acres.”

Considering that Riverfront East isn’t shovel-ready, McGlinchey sees little reason for RDC to lock in a commitment to a specific development plan, considering how much could still change by the time all 86 acres are assembled.

“I think we need to rethink what that mix looks like,” McGlinchey said. “And I think what we see as great about our plan is that it’s very flexible.”

Contact Matthew Rothstein at matt.rothstein@bisnow.com