Residential and commercial real estate in the Wilmington area is expected to thrive in certain areas and struggle in others this year.
Brian Eckel, GHK Cape Fear Development partner and co-founder of Wilmington-based commercial real estate firm Cape Fear Commercial, said that the area’s growth will continue in 2021“so I see a very positive outlook for the single-family residential and multifamily sectors. The recent zoning change by the city of Wilmington will be tricky to navigate and will likely stifle many multifamily projects, unless already entitled.”
The change he is referring to is a requirement (with exceptions) of 20% commercial space in mixed-use projects that fall within commercial districts and the Commercial District Mixed Use (CDMU) zoning designation. In October, city officials approved the change, now considered a closed loophole, but some developers say the requirement negatively impacts potential financing and viability of projects.
“When it was adopted back in 2002 it was intended to be primarily a commercial development with some residential mixed in, but there were never any percentages specified,” said Glenn Harbeck, the city’s director of planning, development and transportation. “It was kind of like discovered, ‘Hey I could do a CDMU development and I’ve got 1,000 feet of nonresidential space, then that’s a mix of use.’”
He also said, “It really was undermining the whole intent; it wasn’t helping our traffic problem; it wasn’t really providing services closer to where people lived.”
Eckel said apartment projects that were already approved or where a rezoning is not required “will likely do well in 2021. The absorption rate through the pandemic has been extremely solid, and I don’t see a slowdown in sight.”
In one of the latest apartment projects in the Wilmington area to get started, crews have broken ground on a high-end apartment community in Renaissance Park off Military Cutoff Road in Wilmington.
GHK Cape Fear Development is the firm behind Renaissance Apartments, which includes 198 units in two buildings and 2,530 square feet of ground-level retail space. The community sits on 8 acres off Ashes and Fresco drives and includes oneand two-bedroom floor plans.
Near the end of December, Eckel said that one of the hottest sectors in commercial real estate is the industrial market.
The flex space vacancy percentage “is in the low single digits, and we are seeing tremendous demand from larger industrial users. I believe we will see multiple spec industrial buildings start in 2021. I am extremely confident we will see a continued push for last-mile logistics facilities as e-commerce continues to surge.”
In an example announced in August last year, a development team has broken ground on an $8.5 million industrial building in the International Logistics Park of North Carolina, one of two megasites near the Brunswick and Columbus county line.
The International Commerce Center, a spec building, will be the first development in the International Logistics Park, and could be delivered as soon as the second quarter of 2021, officials said.
At the start of the pandemic in the U.S. in March last year, workers who previously didn’t work from home but could make the switch did so, leaving their offices dark and empty in many cases.
Commercial real estate brokers, and some other businesspeople, like to think that more workers will come back to offices when the outlook is brighter and as more people receive COVID-19 vaccines.
“It will be interesting to see what the new normal looks like in 2021 and beyond post-pandemic. While millions are working from home across the country, I don’t underestimate team work, easy collaboration and face-to-face business interaction to draw businesses back to the office when workers can safely return,” he said.
“There are several projects in the works that will keep our new office square footage under construction on pace, but I do think you will see a slowdown on new spec office product.”
The retail market was in a state of flux before the coronavirus pandemic kept people at home. COVID-19 sped up the demise of some national retailers.
“This sector has been evolving in front of our eyes for years now,” Eckel said. “The pandemic was a crushing blow to in-store and restaurant sales, but I believe this will also rebound in mid-2021 as the vaccine spreads across our country.
“I do not believe you will see much retail development in 2021 other than the grocery-anchored centers, which continue to do very well in this region.”
Wilmington was already a market to which people were relocating, but COVID-19 seemed to escalate the desirability of the region, said Tom Gale, president of Cape Fear Realtors.
By the end of 2020, a lack of inventory was causing more multiple- offer situations.
“There are new homes that come on the market every day, though, so persistent buyers will find a home,” Gale said.
What does he expect to happen this year?
“In general, experts are predicting a strong first half of the year in 2021. The above-average sales in November and December certainly indicate that the start of the year will be strong,” Gale said.
A lot depends on the vaccine.
“Availability, adoption and effectiveness of the vaccine will play a large part in how the economy fares in 2021,” Gale said. “I’m hopeful the vaccine rollout will be successful and, if so, the second half of the year should provide strong real estate sales as well.
“Although Southeastern N.C. is where many people want to be, we’re still reliant on people being able to sell their homes elsewhere in order to be able to purchase here.”