Commercial real estate has suffered some setbacks due to the coronavirus pandemic, but remains a significant player in the local market. Brokers and other industry professionals say some sectors are doing extremely well, despite COVID-19, and major projects in the form of public-private partnerships are advancing.
1. PPPs are making progress
As completion neared this year of the city’s 13-story River Place mixed-use project, a public-private (P3) partnership, New Hanover County moved forward on two P3s.
Construction was scheduled to begin in March for the $ 120 million redevelopment of the county government center property off South College Road in Wilmington.
This was after the New Hanover County Board of Commissioners approved a revised development agreement tied to funding for the project.
Developer Cape Fear Stonewater FD plans to build commercial and residential spaces, while also managing the construction of new county offices.
In addition, county officials were due to hold a public hearing on March 15 on a draft memorandum of understanding for a public-private partnership between the county and Wilmington-based Zimmer Development Co.
The proposed $ 107 million Grace project would transform a 3-acre county-owned block in downtown Wilmington, bordered by Grace, Third, Chestnut and Second streets, into a modern mixed-use project with public and private facilities .
2. Industrial steam
Commercial real estate brokers say one of the hottest sectors is the industrial market.
The vacancy percentage for flexible spaces “is in the few numbers and we are seeing huge demand from large industrial users,” said Brian Eckel, partner of GHK Cape Fear Development and co-founder of commercial real estate company Cape Fear Commercial based in Wilmington. “I am extremely confident that we will see a continued push for last mile logistics facilities as e-commerce continues to grow.”
A development team is working on an $ 8.5 million industrial building in the North Carolina International Logistics Park, one of two megasites near the county line of Brunswick and Columbus. The International Commerce Center, a specific building, will be the first development of the international logistics park and could be delivered from the second quarter of 2021.
(For more on the industrial market, click here to read a column by local economic development leader Bill Early, to read a profile of Cape Fear Commercial, click here.)
3. The woes of retail
The retail market was in flux before the coronavirus pandemic kept people at home. But COVID-19 has accelerated the demise of some national retailers, leaving larger storefronts empty.
A few that had locations in the Wilmington area that closed last year include Pier 1; clothing store Stein Mart; and children’s retailer Justice.
“More national retailers and restaurants will close,” said Hansen Matthews, partner at Wilmington-based commercial real estate firm Maus, Warwick, Matthews & Co.. “I’d like to think we’ve seen the worst of the carnage and maybe, but we haven’t seen it all.
Local commercial real estate appraiser Cal Morgan, owner of JC Morgan Co., said that at the start of the COVID-19 pandemic, many national retailers stopped paying rent or were paying reduced rent.
“I think most have started paying their rent again or part of their pre-COVID rent. When it comes to local retailers, I have observed several landlords and tenants working together to get through the pandemic, ”Morgan said.
He said based on what his business has seen, tenants who survived COVID have exceeded their rent deferrals or are currently working with them.
4. A high level of detail
Some retailers are not expected to close their doors anytime soon, having seen their activity increase due to COVID-19.
With the onset of the pandemic, a national phenomenon emerged: people began to spend time exercising and sharing activities with each other… outdoors.
Bicycles, for example, quickly became a popular commodity.
“Any truly open bicycle store sells whatever it has or can get its hands on,” said Jim Mincher, owner of Wilmington’s Two Wheeler dealership, during the summer of 2020. “There is a serious shortage. bikes in this country. “
In June 2020, bicycle sales rose 63% from the previous year, according to analytics firm The NPD Group.
Persistent shortages mean less sales as people keep looking for bikes.
Diane Hodapp, owner of Shore Break Bikes in Wilmington, said: “It looks like it is leveling off, but this opinion is also based on the fact that there will be a shortage of bikes for at least a year.”
5. Investment property
Income-generating properties are extremely popular right now, Matthews said.
“There is a huge demand for income properties of all types, be it apartments, office buildings, industrial buildings,” he said.
In an example of a major local investment, the Yelverton family bought The Villages at Brunswick Forest, excluding some outparcels, for $ 16.8 million in December from entities managed by Lord Baltimore Capital Partners LLC.
Brunswick Forest Villages are located across from the planned Brunswick Forest community of Leland in northern Brunswick County.
The Yelvertons, who have homes in New Hanover County and Raleigh, have been in the real estate business for more than 50 years, said George Yelverton, but this is the first time they’ve owned a mall as a business owner. ‘investment.
They bought the property as part of a 1031 exchange after selling the Cameron Hills Apartments in Raleigh. The center, whose mainstay is a Lowes Foods grocery store, is 100% occupied.
Morgan said demand for low-quality, local income-producing properties, usually made up of local tenants from small businesses, is also extremely high.