For brokers throughout the Wilmington area, 2015 has been a robust year.

Companies moving to the region, including franchises opening multiple locations, and existing firms expanding has helped lead to busy leasing and selling periods during 2015, brokers say.

Retail properties leased from July to September had a market-wide average of 270 days on the market, according to a recent retail market report by Nicholas Silivanch, vice president of retail for and a partner in Eastern Carolinas Commercial Real Estate.

That echoed trends in previous quarters, which saw some spaces on the market for 255 days in the first three months of 2015 and 310 days in the second quarter, Silivanch wrote in the report, which was based on regional commercial Multiple Listing Service data.

“The importance of this statistic shows that with the market improving, the space that has been active on the market is now being filled, with properties that have been vacant for years now moving,” Silivanch wrote in his report. “This is one of the great indicators for space demand, as the properties formerly deemed as ‘not right’ are now the only option in a specific trade area for a retailer to locate.”
 

National outlook

Across the U.S., commercial trends have varied slightly from the Wilmington market, national experts said recently.

Fred Schmidt, president and COO of Coldwell Banker Commercial Affiliates, spoke to a group of brokers during Wilmington-based Coldwell Banker Commercial Sun Coast Partners’ Regional Conference held Oct. 26-27 at the Blockade Runner hotel in Wrightsville Beach.

“Generally speaking, it’s been a pretty healthy market overall,” Schmidt said, pointing to some gains in all sectors of commercial real estate throughout the country.

Some categories have exhibited more activity than others, he said.

“Warehousing and distribution is the investment of preference, and it does connect with the e-commerce and the supply chain,” Schmidt said in October.

From a local perspective, the Wilmington industrial property market has been improving but is not the same as the national trend.

“We’re not a distribution hub yet,” said Grayson Powell, managing partner for Coldwell Banker Commercial Sun Coast Partners. “Stuff is delivered to us instead of delivered from us.”

But Powell and other brokers said they see cause for optimism as far as more products made in the Wilmington area being shipped from here. New Hanover County officials are working on increasing economic development efforts to make the area more attractive to manufacturing, and activity for existing businesses has increased, with some firms expanding or making plans to expand into additional commercial space.

Rail cars are under construction at a relatively new player, Vertex Railcar Corp. on Raleigh Street in Wilmington.

And Wilmington’s office market has finally come back, Powell said, with new office space open and more expected to come. Schmidt said the national market for office space, meanwhile, shows demand outpacing supply.

The millennial impact

Although the year isn’t over yet, brokers are already looking at how future trends could affect the local commercial property market.

People ages 18 to 35, generally referred to as millennials, make up one of the largest groups in Wilmington based on population numbers, according to city of Wilmington statistics.

Schmidt told Coldwell Banker brokers from around the region that this group is expected to have a profound impact on their industry.

“They will dictate the demand for commercial real estate for the next 15 to 25 years,” he said.

In good news for brokers and brick-and-mortar stores, Schmidt pointed out a recently released Coldwell Banker Commercial Affiliates survey that showed some surprising results related to millennials. While 65 percent of U.S. adults overall enjoy the experience of being in a store or mall, 75 percent of those in the 18 to 35 age group said they enjoy that experience, according to the survey.

Additionally, the survey showed, 72 percent of millennials prefer to buy items in a store, and 87 percent make most purchases based on the best price, regardless of whether the item is in a store or online.

The survey was based on the responses of 2,045 American adults ages 18 and older and conducted for Coldwell Banker Commercial Affiliates by Harris Poll.

The information shows that retail space is still relevant despite competition from e-commerce, brokers said. Schmidt stressed the importance of omni-channel retailing during his presentation to regional brokers and in a recent Coldwell Banker news release. The release pointed out the growing use of mobile wallet technologies.

“As mobile payment systems evolve, physical retail space will continue to adapt,” Schmidt said in the release. “Technology provides new opportunities to improve the overall in-store checkout experience for retailers and consumers alike.”

Another factor in retail space’s favor is the fact that shopping is still a social experience, Powell said. The survey showed that 58 percent of U.S. adults agree that shopping at a store or mall is an activity they enjoy with others; 73 percent of millennials concurred.
 

Retail ramp-up

Developers appear to be banking on local demand for places to shop, with some new retail space under construction and planned throughout the Wilmington area.

“Right now, with the strength of the market and the marketwide average rental rate remaining in the mid-teens for existing product, there have been four or five transactions our company’s facilitated since the end of the third quarter,” Silivanch said. “In addition, we’re actively engaged in roughly 15 properties encompassing new construction, as well as existing space.”

Some of the new space ECCRE has been handling is Bayshore Commons. At the new Porters Neck shopping center, anchored by Wal-Mart, four businesses signed leases in the second half of 2015 to occupy buildings there: Shoe Show, Dollar Tree, San Felipe Mexican Restaurant, Tropical Smoothie Cafe and Dunkin’ Donuts.

Steve Hall, a broker with Maus, Warwick, Matthews & Co., said October was an extremely busy month for him, and he highlighted eight office and retail leases in which he was involved on his Facebook page. Previous months were also busy, he said.

“I think the third quarter has been really strong for leasing,” Hall said, including the local office sector in that assessment.

As a retail example, he pointed to Racine Commons on Racine Drive, a shopping center where Hall represented the landlord in the lease of space recently by a paint and art supply store called Brushin’ Up.

“We’re 100 percent over there, which is wonderful,” Hall said.