On a handful of vacant lots in corridors just south of downtown Wilmington, apartment projects are popping up one by one. 

At the corner of Castle and South Eighth streets, for example, site work is starting on a 10-unit apartment building. A few blocks away, another proposal would bring 82 apartments to a block between Dawson and Wooster streets. 

Back on Castle Street, construction has kicked off on the first phase of Midcastle, a 98-unit apartment project being built on the site of a former WAVE transit bus facility.

Midcastle is the biggest contiguous project local developer Dave Spetrino said he’s ever done. That’s because at 1.5 acres, the site is the largest single piece of land he’s developed. Spetrino specializes in building the small- to mid-sized projects that dot commercial corridors south of downtown.

Near the corner of Wooster Street and South Fifth Avenue, Spetrino renovated The Jewel – a 1970s-era building – into a small-scale apartment complex in 2015 and nearby completed The Pearl, a 38-unit building, in 2019 and the 32-unit Mini Pearl in 2020.

Maine-based real estate investment firm Bush Watson purchased all three projects for $11.5 million in 2021. Two years earlier, local developer Matt Scharf sold Urban Oasis Apartments, his 11-unit project on Castle Street, to a Boston-based investment group for $2.25 million.

Spetrino said those sales helped push other local developers to consider the type of small projects that would fit onto vacant lots in areas just beyond the traditional borders of downtown Wilmington.

The construction of multifamily projects – both large and small – is relatively new in the downtown market. Wilmington architect Clark Hipp remembers having conversations with other downtown leaders in the early 2010s about how to bring more density and more people back to the area. 

Hipp has worked on projects in the downtown area since 1987, he said. When a development boom started about four years ago, he started fielding calls from out-of-town developers hoping to tap his knowledge about local development and zoning guidelines.

“They moved to town and started looking at larger projects, and because Wilmington is fairly constrained, they also began to look at infill projects,” Hipp said. “That’s where I kind of got involved.”

The multifamily boom downtown was fueled by the region’s growing population, especially during the work-from-anywhere COVID-19 era, and a gap in the housing market, Hipp said. While single-family homes dominated the market, there was a lack of smaller-scale, more affordable housing alternatives such as townhomes, duplexes and apartments.

Those housing types are typically referred to as “missing middle” housing, said Linda Painter, the city of Wilmington’s director of planning and development.

“Missing middle is everything in between single-family and your traditional walk-up apartments – duplex, triplex, quadruplex, townhomes, courtyards, two-story walkups,” said Brian Chambers, the department’s assistant director. “Everything in the middle that’s missing.”

It’s a housing type that planning staff in Wilmington are trying to encourage because it can help bring denser construction to small- or medium-sized vacant lots that are ripe for infill development.

“We’ve got to provide density where it makes sense because we’re a growing city,” Chambers said, “and we are charged with planning how we’re going to grow.”

Because missing middle housing takes shape in smaller complexes, the units – whether for rent or for sale – can often be more affordable, Painter said. Building smaller infill projects on vacant lots also generates more housing supply.

“The idea is that if we can increase the number of units overall, as well as increase the types and options for people giving them more choices,” Painter said, “hopefully that will also bring affordability down and make units overall more affordable for people living in the area.”

In 2021, city leaders adopted a revised land development code that made changes to encourage the construction of missing middle units. For instance, the revision allowed some missing middle housing types, including townhomes, duplexes, triplexes and quadruplexes, to be built in residential districts that previously only allowed single-family homes.

Painter said since the change went into effect, city staff have noticed an uptick in applications for the construction of missing middle units.

Those small- to mid-scale projects are often less expensive for developers to construct, especially when building on infill lots, said Todd Toconis, owner of Town & Country Real Estate.

“It makes for some affordable projects because you’re not buying 30 acres, you’re not putting in parking lots, you’re not putting in retention ponds, you’re not putting in all the infrastructure required on most typical multifamily sites,” he said. “Those infill lots … are very desirable for mid-grade developers.”

With current higher interest rates, the lower cost of a small- or mid-sized project is also less of a risk, Toconis said.

Zoning plays a big role in drawing developers to certain tracts of land, especially along commercial corridors like Castle, Wooster and South 17th streets. City efforts, including the Southside Small Area Plan adopted in 2009, and rezonings along Castle Street that replaced the antiquated Mainstreet Mixed-Use zoning district with the Urban Mixed-Use or UMX district, helped shape development patterns the area is seeing today, Chambers said.

“There’s a lot of deliberate actions we’ve taken over the past two decades that are just now coming to fruition,” he said.

The UMX zoning district allows for the construction of denser multifamily projects by right, which means developers don’t have to go through what can be a lengthy and contentious zoning process, Spetrino said.

“I’m rarely having to do rezonings in these areas. Rezonings are unbelievably painful, they’re very expensive, and you don’t even have an answer even if you spent … a year or more trying to rezone something,” he said. “To the city’s credit, they did a really good job of adjusting their zoning, specifically in places where you’d expect to see density, and there’s also not going to be an outcry.”

Because of the UMX standards, Scharf was able to build Studio 17, a 32-unit apartment building on a 0.7-acre tract near the corner of Castle and South 17th streets.

“Geographically, we’re a small city, land-wise, and so all you can do is increase the density or go up, but there’s a limit of what that can be,” Scharf said.

By the city’s estimates, between 10% to 15% of the land within Wilmington’s city limits remains undeveloped.
That has forced developers to get creative with infill development on smaller lots.

Hipp has worked on designs for many of those projects, including the 10-unit building near the corner of Castle and South Eighth streets and Sapphire on 5th – the 82 apartments planned between Dawson and Wooster streets.

Required setbacks only make the area for potential development smaller, and parking adds more constraints, Hipp said. It’s parking considerations that often determine for Spetrino how many apartments he can include in a project, he said.

As work forges ahead on Midcastle and the other mid-scale projects along Castle, Wooster and South 17th streets, Hipp sees the potential for similar types of construction in and around other emerging districts – along Greenfield Street on the Southside, along Wrightsville Avenue as the Cargo District stretches east and around the growing Soda Pop District.

“I think,” Hipp said, “everybody’s looking for the next spot."