Now's The Time For Delaware To Capitalize On Its Business-Friendly Reputation
Known by some as the “Corporate Capital of the U.S.” due to its business-friendly courts and tax structure, Delaware is well-positioned for companies and individuals looking for bargains — but it has a golden opportunity to do more.
Philadelphia may have taken longer than some other major cities to emerge from the recession, but Northern Delaware was still further behind, which means that as Philly enters the late stage of this cycle and margins shrink, its southern neighbor is still in a growth phase.
“The Philly apartment market is overbuilt, and I think it’s safe to say Delaware’s not there yet,” Cinnaire Vice President of Business Development Hughlett Kirby said. “We were slower to recover from the recession, and we seem to be going at a steadier pace.”
Steadiness is necessary for Delaware, where the northern part of the state is largely made up of bedroom communities for Philly and Wilmington, as Diamond State Management partner Robert Wittig put it. It is unlikely to support a massive development like the all-encompassing live-work-play ambitions of Philadelphia and other major markets.
“I don’t know that we’re peaking, or if we’ve just been consistent,” Wittig said. “There are some unique things going on, but we haven’t had a massive development come online in the last few years, so we’ve been more defined by small infill development and consistency.”
The more humble size of most Delaware projects is a particular boon to affordable housing, especially in a state with lower cost of living than any of its neighbors. With the constant crisis nationwide over affordable housing, projects like Cinnaire’s The Flats in Wilmington, a seven-phase redevelopment of a 100-year-old housing community, are a breath of fresh air.
“It’s going to create beautiful, affordable housing that should last for another 100 years,” Kirby said of the income-restricted development. “It has amenities that are not superfluous, but rather make these units livable and comfortable.”
But affordability is an asset that only goes so far, and for Northern Delaware to thrive economically, it also needs projects that add value to the area. And for that, the business-friendly state may need to get even friendlier.
“Our tax structure puts us at an advantage, and contrary to popular belief, we really aren’t congested in terms of traffic as a state,” Wittig said. “We have to get the Delaware Department of Transportation out of our way.”
“The process [for permitting projects] is too onerous, too capital-intensive and it drives potential tenants away,” Wittig said. “To take a plan through DelDOT, even for a small subdivision, could take as much as a year and a half, and that’s far too long.”
Though a massive percentage of companies incorporate in Delaware because of the court system, getting them to establish footprints in favor of larger cities is an intensive process of all-hands recruitment.
“When a major pharmaceutical company recently held talks about locating in Northern Delaware, the governor of Delaware came to that meeting,” Kirby said. “And it’s not uncommon — the state is small enough if that you need something or someone, they’re literally a phone call away.”
As it stands now, the region has two bread-and-butter industries, both of which provide reason for optimism — banking and chemistry/life sciences. Capital One and Barclays have increased their footprints in Wilmington in recent months, and though DuPont’s merger with Dow is a sizable blow that took jobs out of state, offshoot Chemours remains.
Perhaps more significantly, the vacuum is beginning to be filled by some of the former employees left behind. W.L. Gore and Insight were founded in Delaware by former DuPont employees, and innovation centers by the Buccini-Pollin Group and McConnell Johnson have been growing. It is no surprise, given the success of similar incubators in Philadelphia, but it provides a plausible source of sustainable economic growth that does not require home run swings on big business recruitment.
And yet, such growth will be on a small scale for years, and any major office tenant in Wilmington could bring needed jobs and consumers to the area. Every city looks for such deals, but Delaware needs to push harder than most.
“We can’t grow the state of Delaware if developers such as myself aren’t putting products on the market, and we can’t do that if businesses won’t come to the state,” Wittig said.
