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Downtown In Demand

By Cece Nunn, posted Jan 21, 2022
Businesses and developers are looking to capitalize on downtown Wilmington’s popularity. (Photo by Michael Cline Spencer)
During a recent search of listings, real estate broker Todd Toconis found only 37 commercial spaces available for lease in the downtown Wilmington zip code of 28401.
 
Hardly any of the listings, pulled from the N.C. Commercial Multiple Listing Service on Jan. 11, involved retail space. That bodes well, Toconis said, for existing downtown restaurants and retailers.
 
“The businesses all feed off each other. If you have two restaurants next door to each other and you go to one and there’s a line, you go to the other one, so it helps everybody,” said Toconis, owner of Town & Country Real Estate. “And it’s better to see all the storefronts full than vacancies. On a recent trip to Charleston, I was astonished by how many storefronts were closed up.”
 
While suitable live, work and play space – and places to create more – are in high demand in downtown Wilmington, the inventory is low. But new development is on the way.
 
PLACES TO LIVE
 
Toconis, who is also a resident of downtown Wilmington, plans to build affordable apartments at South Front and Wright streets. He’s seen the residential demand increase over the past decade in and around the downtown core.
 
“The residential population in that area has, I believe, quadrupled in the last 10 years,” Toconis said.
 
He noted the arrivals of numerous apartment and condo complexes, including City Block, Sawmill Point, River Place, The Flats on Front and Pier 33 Apartments. The Flats on Front, a 273-unit luxury apartment complex on the northern riverfront, sold for $97.5 million in December to Brookfield Real Estate Income Trust Inc. It’s the highest price per apartment, a little over $357,000, ever paid in the area, underscoring how valuable downtown Wilmington real estate has become.
 
The evolution of downtown Wilmington is one of the reasons New Hanover County officials embarked on the redevelopment of a county-owned downtown block into a mixed-use project. The county has partnered with Wilmington-based Zimmer Development Co. on the effort, currently dubbed Project Grace, to build a new county library and museum along with potential commercial and residential space.
 
Talking about downtown in general, Adam Tucker, Zimmer’s director of development, said, “The not-sorecent development of medium and high density [residential development] along the riverfront has ignited a significant investment in support services such as gyms, restaurants and professional services. The steady, increasing volume of permanent residents has caught those businesses’ interest and has so far shown to be sustainable.”
 
In 2010, said Clark Hipp of Hipp Architecture & Development, “downtown folks were real concerned about getting what we called heads in beds – hotels, residential – because we felt like that would lead to more retail and more business occupancy. I think we’ve done that.”
 
Hipp, who lives and works downtown, is the architect on Toconis’ South Front project, which could hold 84 apartments.
 
“Affordable rents have basically disappeared from downtown,” Toconis said, “so what I’m aiming to do is build what I consider workforce housing.”
 
Multifamily residential units – in other words apartments or condos – are also expected to be part of Project Grace, which is being planned on the 3-acre block bordered by Grace, Third, Chestnut and Second streets. Under the memorandum of understanding that Zimmer has with New Hanover County regarding Project Grace, “the developer has committed to no less than 5% of the multifamily units being workforce housing for a period of no less than 10 years,” according to the county’s website.
 
Meanwhile, Clancy & Theys Construction crews broke ground in October near Harnett and Nutt streets on The Metropolitan at The Riverwalk. With 293 units, The Metropolitan is under development by Virginia-based firm Kettler.
 
PLACES TO WORK
 
Toconis has been working in the downtown real estate market since 1989. He moved to the Port City after getting out of the Army in 1988.
 
“I just fell in love with downtown so I started working downtown, buying houses downtown, buying buildings downtown and built up a portfolio of real estate in and around the downtown area,” Toconis said. “That morphed into property management, and that morphed into opening up my own real estate company.”
 
The office of Town & Country is also downtown, on the first floor at 401 Chestnut St., though it handles residential and commercial real estate throughout the Wilmington area. Toconis said there’s not a lot of office space currently available downtown, with more Class B office space in older buildings than newbut- costly Class A space.

According to the commercial MLS listings, rents in the downtown core range from about $13 per square foot to $32 per square foot for brand new commercial space.
 
The largest office building in downtown Wilmington, the headquarters of the pharmaceutical company formerly known as PPD, changed hands in December when pharma giant Thermo Fisher completed its purchase of PPD. Although the building has empty space as a result of employees working remotely, Thermo Fisher officials said in December that no changes in facilities are planned.
 
An upcoming public-private partnership that the city of Wilmington is spearheading, the Northern Gateway project, could add office space, along with residential units, a hotel, a grocery store, a visitors center and parking decks at the northern entrance to downtown Wilmington.
 
City officials and the development firm that hopes to build the project, East West Partners, are expected to revisit the Northern Gateway planning process this year.
 
PLACES TO PLAY
 
Downtown residents Erik and Rachel Hemingway bought the Old Wilmington City Market in 2020 and have been keeping the 15,000-squarefoot retail building filled.
 
“We’ve got one vacancy that just came up, and we’re getting that filled,” Erik Hemingway said Jan. 17. “I know from talking to my other tenants when they found our place they’d been looking around at other places and couldn’t find much of anything to rent down there.”
 
Some say downtown needs more restaurants or a pharmacy or hardware store, but one commercial use seems to be a ubiquitous desire.
 
“Every time you talk about downtown it comes up – a grocery store – that’s what we really need,” Erik Hemingway said.
 
While the DGX urban market at River Place and Better Basket, also a small food market, are welcome additions to downtown, residents are still hoping for a full-service grocery store, Toconis said.
 
At the same time, retail spaces that would fit some of the smaller businesses looking to come downtown are in the works. Toconis and his partners recently gutted a retail space that was formerly an optometrist’s office, that of Arnold Sobol, who operated his business in downtown Wilmington from 1953 to December 2021. One challenge with the former Sobol office at 251 N. Front St., Toconis said, is that it’s only 15 feet wide. He said downtown has a lot of nonconforming spaces like that.
 
“You build something like Mayfaire, you’re building boxes and you can subdivide those boxes. So if you have a 10,000-square-foot box, you can make it a 5,000-square-foot box,” Toconis said. “Downtown you’re dealing with these old buildings.”
 
New retail construction could be part of the Northern Gateway project, which is still in the early planning stages, and Project Grace, which wouldn’t see private development until after the public facilities are complete.
 
Tucker said, “Even though it is years in the future, we have already had some inquiries for the retail space associated with Project Grace.”
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