Abigail Olvera can see why some people want to work from home.
“I think it’s very dependent on everyone’s specific work. I don’t think there’s one set rule that’s across-the-board gonna work for everyone,” said Olvera, the property manager for Wilmington-based MegaCorp Logistics and its owner, Ryan Legg.
But Olvera (shown above), who manages five office buildings and more than 100,000 square feet for Legg in the Mayfaire area, finds more energy and efficiency in working with clients in person.
“I like to have my feet on the ground. I like to go and see if tenants are having issues, if people are having issues, if anything’s wrong. It’s better for me personally, and it’s better for personal relationships to have those face-to-face interactions,” she said.
Those who work in the commercial real estate industry in the Wilmington area say companies here seem to be holding on to their office space or seeking more, despite the massive acceleration of remote-working trends spread by the COVID-19 pandemic.
Lindsey Hess, senior vice president at Wilmington-based real estate firm Cape Fear Commercial, represents office building owners in securing tenants.
“I think most people in our market feel like there’s a benefit to being in the office for socialization and collaboration,” said Hess, who prefers working at the office herself.
This view makes sense coming from commercial agents whose jobs can rely on finding office tenants and buyers, but the numbers seem to support the claim.
A recent CoStar Group report showed the area had a 2% office space vacancy rate in 2022 and the first quarter of 2023.
It’s difficult to measure exactly how many people in the Wilmington area are working from home. Regional economist Mouhcine Guettabi, a member of the University of North Carolina Wilmington’s economics faculty, said a Google Mobility Report from October last year (when Google stopped updating the report) suggests that the return to work in New Hanover County has happened at a faster rate than some of the bigger metros around the country.
According to the Google report, people in New Hanover County are spending only 11% less time in workplaces relative to pre-pandemic times, Guettabi said.
Despite some well-known Wilmington vacancy examples that include the 12-story Thermo Fisher Scientific Inc. building downtown and the former Verizon call center off Shipyard Boulevard, developers continue to build offices in the area, and investors are still buying space.
In late February, MegaCorp’s Legg was in negotiations to buy another 32,000 square feet of office space in the Mayfaire area.
“We have about 400 employees here in town, and we’re going to hire at least 30 to 40 a year,” Legg said in late February. With another 32,000 square feet, “I could probably get 250 people in there.”
In another part of the Wilmington area, Brunswick County, the development of office space is also proceeding.
Hess and Bryce Morrison, of Cape Fear Commercial, partnered at the end of last year with Wilmington-based SAMM Properties on The Offices & Shoppes of Waterford, 2040 Olde Regent Way next to the Waterford Harris Teeter. SAMM Properties developed the popular Offices at Mayfaire, in some cases filling the buildings before they were complete.
The Leland complex will have two, 38,000-square-foot buildings. The first of its three floors will feature high-end retail with an outdoor patio, while the second and third floors will be designed as Class A office/medical space.
The same development group has additional projects elsewhere, including a proposed $30 million office park in South Carolina.
“With projects in different stages in Wilmington, Brunswick County, Mount Pleasant, South Carolina, and Raleigh, we are having incredible activity, and the majority of it is coming from clients, especially medical clients, wanting the ability to purchase and there currently being a limited supply,” said Steve Anderson and Parker Anderson of SAMM Properties, in an emailed statement.
Some real estate industry professionals expect office development to slow this year. A slowdown would further limit supply, said Cal Morgan, a real estate appraiser and owner of JC Morgan Co., adding that as the market continues to grow in Wilmington, demand should increase here. Articles examining office exoduses are mainly focused on some of the largest metro areas, such as New York and Los Angeles.
“It will probably impact us less here because we have many smaller businesses that need the office space and don’t swell, don’t have more office space than they need,” Morgan said.
A variety of local employers, including MegaCorp Logistics and Live Oak Bank for just two examples, are adding space as a result of a growing workforce.
Scheduled to be complete in early 2024, the fourth building on Live Oak Bank’s campus in midtown Wilmington, off Independence Boulevard, is expected to accommodate 200 new Live Oak employees. In a joint venture, Monteith Construction Corp. and Swinerton broke ground on the structure in March.
“Designed by LS3P, the four-story building, surrounded by trees and situated in front of an expanded pond, features many biophilic elements intended to create a happier, healthier, more productive work environment,” stated a Monteith news release about the start of construction on Building 4.
Legg said amenities such as those offered by Live Oak and MegaCorp help bring workers to the office. Like Live Oak, MegaCorp’s offices include a restaurant and fitness center, as well as a salon, where employees can pay half of what they might normally shell out for food and services.
“They (his employees) love our restaurant. It’s called The Hub, and it’s phenomenal,” Legg said. “Our chef does a great job.”
Despite its amenities, the tallest office building in the city is basically empty and on the market after a pharma company said it makes more sense to look for a different space for its hybrid workforce. But the building might not be on the market too much longer.
Earlier this year, Wilmington city officials announced plans to offer $68 million to buy the 12-story Thermo Fisher office building and campus in downtown Wilmington to replace what they characterized as inefficient and insufficient city office space. Existing city office buildings, which are spread out around downtown and would cost well over $68 million to fix and replace, would be sold.
Under the plan, the city would use up to half of the floors in the former PPD global headquarters and rent the other half out, officials have said.
In February, the Wilmington City Council approved a resolution to declare nine city-owned properties downtown as surplus contingent on its purchase of the Thermo Fisher campus.
Morgan said the prospects of buyer interest for office buildings that become available downtown are high.
“Whenever a quality multi-tenant property hits the market in Wilmington, it’s gobbled up pretty quickly due to the limited supply in our market,” he said.
A low supply of available office space isn’t the norm in some larger North Carolina cities.
“We’re getting ready to open up an office in Charlotte, and there’s a lot of space to look at,” Legg said.
MegaCorp also has offices in Jacksonville, Florida, and Cincinnati, Ohio. The firm has two in West Virginia, where Legg was born.
Most of Legg’s employees have come back to the office. His firm manages freight for hundreds of companies, including heavy-hitters Safeway, Harris Teeter and Walmart, and his sales team works to bring in new clients to connect with carriers.
“In a sales environment, just to have people and the energy and listen to the guy next to you make the phone call or have conversations with customers is vital to the sales,” Legg said. “We definitely encourage everybody to come in.”
But the company doesn’t have a strict policy about remote work, and those who do work from home have the same level of productivity as if they were in the office, said Legg, who was working at home during his WilmingtonBiz Magazine interview.
Legg sometimes likes remote working to cut down on distractions, but he said, “I would go crazy if I worked from home every day.”
