A shortage of viable class-A and -B commercial space along prime corridors across the region is beginning to take its toll on some area brokers looking to lure new retailers and businesses to the area.

It comes as no surprise that commercial interest continues to grow throughout the region as multi-family units mount, the overall housing market improves and consumer confidence improves.

Nicholas Silivanch, vice president of retail leasing and acquisition for Wilmington-based Coldwell Banker Commercial Sun Coast Partners and principal leasing agent with Team Silivanch, said a number of retailers are looking for space in the market.

But the lack of adequate space is making it difficult for retailers, particularly junior box tenants, to find a home in greater Wilmington.

“What remains in the market is a lot of inventory that falls within class-C space and below,” Silivanch said. “Much of [the older inventory] falls within a couple of categories: it’s either too old, it’s located in centers with limited signage and primary road access or the owners are asking too much per square foot.”

Silivanch said the need for more retail space is eminent.

“We needed the space yesterday,” he said. “Wilmington’s existing retail marketplace is shrinking, and we’re running out of the inventory we need to accommodate a number of tenants looking to enter the area.”

After a glut of inventory slogged through the marketplace during the Great Recession, inventories peaked, and price points per square foot plummeted.

But that all changed in 2012.

During the first quarter of that year, nearly 78,000 square feet of existing retail space was leased at an average rate of $12.93 per square foot, according to a report from the Realtors Commercial Alliance of Southeastern North Carolina Multiple Listing Service. That was a spike in activity not experienced since the start of the recession.

Since brokers are not required to record all of their transactions quarterly, the regional commercial MLS data does not reflect all of the area’s transactions.

It does, however, pinpoint parts of the region that are seeing heavy retail leasing activity, along with what property has been leased. 

The same report painted a much different picture during the first quarter of 2014, when a total of about 26,000 square feet was leased – down 67 percent from its recent leasing high in 2012 and down from nearly 57,000 square feet leased in 2013.

Overall, the report highlighted roughly 102,242 square feet of available retail space left in the marketplace at the start of 2014 – down from nearly 225,000 square feet available during the start of 2013.

But as leasing totals have dropped this year, the average price for retail square footage has steadily increased – prompting some area brokers to express a need for new retail space in the region.

“It’s all about supply and demand,” Silivanch said.

Base rental rates have increased more than $2.50 per square foot since 2012, according to the report.

Currently, the average base rate per square foot is $15.59, the report stated, which is up from $13.36 recorded during the first quarter of 2013 and an increase over $12.93 posted during the first quarter of 2012.

Silivanch said the Wilmington market is beginning to grow more suitable for secondary retail growth from new and existing businesses.

Nowhere is that more evident than in the Mayfaire area, where construction continues on more than 86,000 square feet of retail in the Mayfaire Community Center that will accommodate a new Marshalls, Dick’s Sporting Goods and 12,000 square feet of additional retail space.

The area is also seeing a substantial amount of new office development, helping to increase its average base rental rates well above $20 per square foot, the report highlighted.

Porters Neck is also set to add new retail space to the region.

Walmart and Beckley, West Virginia-based Paramount Development Corporation recently closed on nearly 44 acres of land in the 8100 block of Market Street for a new 225,000-square-foot retail development that includes an 189,544-square-foot Walmart Supercenter and a roughly 61,000-square-foot retail center.

Additional commercial activity and interest is also growing in Rocky Point, Hampstead, Leland and Monkey Junction area of New Hanover County.

Gerald Evans, a broker with Wilmington-based Laney Real Estate Co. that helped secure Walmart’s new store in the Porters Neck area, said he’s not surprised about the demand for new retail growth. He said as the region grows, the demand will continue.

“It feels as if Walmart will have a lot of interested people talking and starting to move forward with their plans, and that will be a good thing for that area,” Evans said.
Opportunities for additional retail growth could also present itself as planned shopping centers begin to come online.

Junior box retailers could find space at the New Centre Market shopping center on New Centre Drive – an area home to one of the largest concentrations of national big-box tenants in the region – after Marshalls relocates its store to Mayfaire.

Silivanch said as the region, which was recently clocked as the second-fastest growing in the state behind metro Raleigh-Cary, grows, the need for more retail space will increase.

“The reduction in immediately available space is proving there is a demand for new retail,” Silivanch said. “The growth and development phase of our region has begun, rental rates are finally rising and the addition of new space will only help to accelerate the base rental rate for new deals.”