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WILMINGTON – Fresh off the recent redevelopment of the adjacent Barley Mill Plaza and the ongoing development of the neighboring Chestnut Run Innovation and Science Park, a Wilmington real estate investment firm has reacquired a Lancaster Pike office building. The Commonwealth Group bought Chestnut Run Plaza, a nearly 94,000-square-foot office building originally designed for DuPont,
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© 2022 Delaware Business Times
WILMINGTON – Fresh off the recent redevelopment of the adjacent Barley Mill Plaza and the ongoing development of the neighboring Chestnut Run Innovation and Science Park, a Wilmington real estate investment firm has reacquired a Lancaster Pike office building.
The Commonwealth Group bought Chestnut Run Plaza, a nearly 94,000-square-foot office building originally designed for DuPont, for about $18.5 million earlier this month, according to county land records. It is the largest office sale in the state this year, according to Delaware Business Times records, and translates to a cost of about $195 per square foot. Chestnut Run Plaza adds to a portfolio of New Castle County office buildings for Commonwealth, which also includes One River Place in the Riverfront that is home to AAA.
The seller was Miami-based LNR Partners, the world’s largest commercial mortgage special servicer, which acquired the office building amid a particularly acrimonious foreclosure on the building then-owned by Commonwealth in 2017.
The Class A, three-story building is currently fully leased and home to tenants like home health care provider Bayada, business services giant CSC, global IT and business consultancy Tata, law firms like Bifferato Gentilotti and Allen & Associates, and accounting, tax and business advisory giant BDO. A small 5,000-square-foot space is reportedly becoming available for lease in January though.
“We are thrilled to have the opportunity to purchase the property. It is a Class A office building in a prime location,” Keith Quinn, director of leasing and management for Commonwealth, told Delaware Business Times.
After acquiring the property for $8.6 million in 2017, LNR will reportedly see a sale-to-sale return of nearly $10 million on the property after replenishing the tenants in the building.
The property was put to auction a few months ago with a $5.7 million starting price, meaning it’s likely that Commonwealth faced some other competitive bids in seeking to regain the property. Chestnut Run Plaza reportedly produced an annual net operating income of about $1.7 million, according to the auction listing.
Built in 2004, the office building was home to neighboring DuPont for about a decade. After it left the property, however, Commonwealth and LNR fell into dispute over contract lengths for several other tenants to help replenish the space. Eventually, LNR forced a foreclosure through the courts to take ownership.
Chestnut Run Plaza now faces a very different opportunity, however, as it lies between two major redevelopment projects. To the south, MRA Group of Pennsylvania is investing $500 million to reimagine the aging Chestnut Run labs into an innovation campus, and has already attracted major tenants in DuPont, Solenis and Prelude Therapeutics. To the north, local developer Pettinaro has razed the old DuPont campus at Barley Mill to build a new mixed-use project featuring more than 100 residential units, new offices and a number of retail storefronts anchored by the state’s first Wegmans supermarket.
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