As the world continues to emerge from pandemic fears, commercial real estate trends from last year are continuing in 2022.
1. Office Space
The COVID pandemic undoubtedly led to the emptying of some large office buildings across the U.S. But in Wilmington and elsewhere, the office sector of commercial real estate seems to be recovering and thriving.
“I don’t foresee the massive changes coming to the office market that the early stages of COVID made it appear like,” said David Branton, broker in charge at Eastern Carolinas Commercial Real Estate. “A recent Forbes article found that by 2025, 70% of the workforce will be work-from-home at least five days a month, but the issue comes from the time that is spent in the office.
“Unless companies go to two- to three-day WFH per week, you don’t really have the ability to double bunk offices/desks with an A/B shift-type setup because of the overlap in hours.”
In some areas of the Cape Fear region, including at Autumn Hall in Wilmington and in the northern Brunswick County town of Leland, new office space is on the rise.
2. Orders Up
Restaurants often come and go, particularly in a foodie town like the Port City. COVID signaled massive restaurant shutdowns in various parts of the country, and some Wilmington eateries caved in to the pressure or felt the pandemic as the last straw amidst other struggles.
At the same time, many establishments persevered, and in some cases, like that of the popular Indochine empire, expanded.
“Very surprising to me has been the relative steadiness in the restaurant market,” Branton said. “There was an expectation that as businesses began to reopen following lockdowns, the supply of available second-generation restaurant spaces was going to be enormous. That has not been the case; through grants, landlord relief and PPP, most of these businesses have thankfully remained.”
At the start of 2022, numerous restaurants had recently opened or were setting up shop at one of the area’s largest shopping centers, Independence Mall.
3. Industrial Evolution
In New Hanover, Brunswick and Pender counties, industrial space is still in demand.
“The industrial sector remains extremely competitive as retailers and e-commerce giants alike look to improve their last mile logistics as the growth of Wilmington and the surrounding continue to make timely deliveries more difficult,” Branton said.
Investors have taken notice of the region’s industrial real estate successes.
Late last year, a New York-based real estate developer, owner and investor bought a two-building industrial portfolio in Wilmington.
Treeline acquired 3700 and 3720 U.S. 421 N. from Burgess Corp., a construction and project management company, in an off-market transaction.
The properties include a 66,274-square-foot building renovated into class A industrial space at 3700 U.S. 421 N. and a newly constructed 40,000-square-foot industrial property at 3720 U.S. 421 N.
The buildings were fully leased to market rate tenants at the time of the sale.
4. Rethinking Retail
Yes, we know, a lot of people shop online. But they’re also getting out of the house and going to stores, just maybe not the same-old, same-old stores.
“Retail remains strong although we have seen a shift from traditional consumer products to retail services such as urgent care, dental and optical uses,” Branton said.
Services and experiences have been making their mark on the Wilmington retail scene for several years. At Mayfaire Town Center, creative arts studio Pinspiration opened its doors last year.
While some spaces have remained empty at the start of 2022, others are filling with niche retailers, like Isa Roe Boutique, also at Mayfaire Town Center. The store caters to tweens and young teen girls, who struggle to find clothes that aren’t too cutesy or too mature.
Isa Roe owner Britany Rivera, who named the store after her 13-year-old daughter and her daughter’s friend, said moms and teens, especially young teens who are hard to fit, still enjoy heading to the shops.
5. Demolition Derby
Tearing down aging commercial structures, particularly along high-traffic thoroughfares, is becoming more commonplace in the Wilmington area.
For hotel owner Devang Patel, starting over at the site of the 134-room Baymont by Wyndham Wilmington made the most sense. The hotel was severely damaged in 2018 by Hurricane Florence.
“It was a sound decision after two years of going back and forth to see if it was feasible to repair,” Patel said. “It made no sense to be in a premier location and have an older property. It needed a brand-new look.”
Hansen Matthews, commercial broker with Wilmington-based Maus, Warwick, Matthews & Co., said that 15 to 20 years ago, buyers could still find some vacant property in Wilmington.
“Now when we are doing site selection, finding these sites where you don’t have to tear something down is just about impossible to do in the city,” Matthews said.