SALISBURY – Despite improvements in transactions and sales volume, officials said Wicomico County still faces inventory challenges in its commercial real estate market.
Last week, county officials received an update on the local commercial real estate market.
John McClellan of SVN Miller Commercial Real Estate told the Wicomico County Council in the first six months of 2019 the county recorded a 36% increase in commercial transactions, a 49% increase in sales volume and a 10% increase in average sales prices.
“Last year we had 36 sales transactions with a recorded sales volume of just under $41 million and an average sales transaction of over $1.1 million …,” he said. “This year, we are up to 49 transactions, $61 million in recorded sales volume and an average sales transaction of $1.2 million.”
McClellan credited some of the growth in the commercial real estate market to outside investors. He noted several properties, including the former Arby’s and the former car wash on South Salisbury Boulevard, were purchased by those with no connections to the area.
“These are outside dollars looking at our community,” he said, “which I think is a positive sign.”
McClellan said notable commercial deals for 2019 include the $4.5 million purchase of the former Toys R Us store in Salisbury, $34.1 million in multi-family unit transactions and a lease agreement at the former Rite Aid on Mount Hermon Road. The building will be converted into office space and a daytime surgery center for Chesapeake Urology.
“It was a solid year, nothing record setting,” he said. “The biggest challenge we have is inventory. Supply and demand are all out of whack.”
Anecdotally, McClellan shared that two of the three companies that have recently sought industrial distribution space in Wicomico County are now looking in Sussex County.
“One, in particular, wants 25-foot ceilings, loading trucks and a big dock yard,” she said. “We don’t have that.”
McClellan said there are three or four options for 10,000-15,000 square feet of warehouse space in Wicomico County, five options for 2,500-3,5000 square feet of retail space on Route 13 and Route 50, and four options for 3,000-4,000 square feet of office space in Salisbury.
“We need more inventory,” he said.
McClellan argued the same could be said for residential real estate.
“Year to date in Wicomico County, there have been 564 residential sales,” he said. “Last year there were 608. So we’re on track. The problem is the active inventory right now is 389 units in Wicomico County.”
Councilman Bill McCain, president and CEO of a local real estate valuation and consultation company, said supply in the housing market is below average.
“The typical balance is 550 to 600 units,” he said.
Councilman Joe Holloway questioned the impact that sales tax and ease of permitting in neighboring Delaware had on Wicomico County.
“I’ve talked to people that say it’s so much simpler to get things done in Delaware,” he said.
McClellan, however, said a study on the cost of operating a business in both Maryland and Delaware showed no significant differences.
“It isn’t any cheaper,” he said.
Council President John Cannon questioned if certain factors, such as taxes or education, brought investors and business owners to Wicomico County.
“What do you feel is the driving force when these prospective clients come to the Wicomico County area?” he asked.
McClellan highlighted the county’s urban areas.
“They are coming because, regardless of what’s going on in Sussex or Worcester or Somerset, this is still the urban core,” he said. “This is still the center of so much commerce related to the hospital and university and businesses that are here. Unfortunately, … some are coming here and moving to Worcester County or Sussex County.”
