City leaders approved an upset bid process for leasing most of the eighth floor of Skyline Center to engineering firm McKim & Creed at their regular meeting Tuesday.
After the Wilmington City Council voted unanimously in favor of the resoultion, the next step is for city staff to post a bid application form online for the property and post a public notice in a newspaper of general circulation on or before June 23. A qualifying upset bid must be submitted within 10 days of publication. Bids would be due on or before 3 p.m. July 3.
A qualifying upset bid must be an amount that is at least 10% of the first $1,000 of the original offer plus 5% of the remainder. If a qualifying bid is received, the public notice process would repeat until no additional qualifying upset bids are received.
If no additional bids are received, the council can award the lease to the highest responsive, responsible bidder or reject all bids.
According to agenda documents, the 22,580-square-foot lease would have an initial 11-year term, with the option to renew for two additional five-year terms. The lease would be one of the largest in the building so far, said Lindsey Hess, a senior vice president with Cape Fear Commercial.
“It's a big lease ...The average lease that we have in the building to date, not including Thermo Fisher, is a little over 3,200 square feet, which is close to the average in the market, as well,” Hess said.
Hess represents leasing efforts in the city-owned building alongside Cape Fear Commercial’s Paul Loukas and Julia Lackey. The city acquired the building in July 2023 with its $68 million purchase of the former Thermo Fisher Scientific and PPD campus.
If the lease is finalized, about 5,000 square feet of leasable space would remain on the building’s eighth floor, Hess said.
McKim & Creed pursued the Skyline Center lease because of a need for more office space, said Addie Rising, a senior communications specialist. The company, which was founded in Wilmington in 1978, has been in its downtown office at 243 N. Front St. for nearly 40 years, according to Rising.
“We wanted to remain in downtown Wilmington,” she said. “We've been in the region for decades, and we've been in downtown for decades, and we want to stay there.”
Because the lease term is longer than 10 years, state statute requires an upset bid process, Hess said. On Tuesday, the Wilmington City Council will consider authorizing an upset bid process on McKim & Creed’s lease offer.
The initial annual rent would be $541,920, which would escalate 2.5% each year. The offer is expected to generate between $5.6 million and $6.4 million in revenue over the initial 11-year lease period, according to agenda documents.
“The length of terms is highly desirable on the landlord’s side,” Hess said. “For the market, being 11 years in a second-generation space is extremely rare and unique, so we're excited about that.”
Hess said they’ve been working on the McKim & Creed lease for over a year. The company has plans to modernize and improve the space by adding conference rooms, reconfiguring offices and investing in other updates, she added.
Overall, Hess said leasing in the 12-story Skyline Center is on a positive trajectory.
“Given the challenges of converting a single-tenant building to multi-tenant, it's gone extremely well, we have a ton of interest," Hess said. “We've leased a lot of square footage, and we're certainly excited about the McKim & Creed partnership and what that will do for the city and for the Skyline building and for McKim & Creed’s future here in Wilmington.”
