Monday, July 15, 2024

City eyes downtown’s tallest building for $68M

The purchase would help consolidate city offices, free up properties for redevelopment

The City of Wilmington is considering purchasing the 12-story PPD building on North Front Street for $68 million. (Port City Daily/file)

WILMINGTON — The city is contemplating a multi-million dollar purchase in order to streamline its office space. 

At its next meeting, Wilmington City Council will consider approving a $500,000 fully refundable deposit to purchase the former PPD building, now home to Thermo Fisher Scientific.

READ MORE: City approves $4.8M purchase of Salvation Army property

The 12.5-acre campus in the city’s northern downtown would come with a 1,000-space parking deck, 370,000 square feet of office space and two adjoining parcels.

The goal, according to Mayor Bill Saffo, is to consolidate all city departments under one roof, excluding the Wilmington Police Department, Wilmington Fire Department and additional maintenance facilities on River Road.

Currently, employees work in eight separate buildings.

“It would equate to about half the building,” Saffo said on a call Thursday, referring to how much space the city would take up in the PPD building. 

The city’s deposit gives them 120 days to deliberate the potential buy — as well as analyze costs and benefits — before spending $68 million on the tallest building in Wilmington.

The purchase agreement would include leasing a portion of the building to Thermo Fisher, to remain in place for at least three years. Estimates show the lease could generate $2 million annually.

The remaining space would be rented out at market rate.

“We think financially it’s a great deal,” Saffo said. “We couldn’t rebuild for less than $150 million.”

The negotiated sale price covers the entire North Front campus, including interior furnishings. Combined, its real and personal property tax value is $141 million. According to past Wilmington Biz reporting, the campus was valued at nearly $72 million in 2021; $68 million accounting for the building itself.

“The whole goal is, whatever we buy it at, we would reduce that by divesting ourselves of properties currently in use and put them back into tax rolls,” Saffo explained.

By selling off other city-owned office buildings, the government entity could offset some of the purchase price. The historic Thalian Hall, which also houses City Hall, will not be sold.

Over the years, city departments expanded into multiple facilities, including some facing costly maintenance and upkeep due to age. City employees are spaced out across 305, 340 and 414 Chestnut, 115 North Third, 1502 Wellington, 302 Willard and 1702 Burnett Blvd. 

Saffo did not know off-hand what the accumulated value of those buildings would entail.

In 2021, the city hired an architecture firm to conduct a long-term space needs assessment; the company estimated up to $96 million in capital needs to redevelop a city administration building with adequate room.

“That gave us reason to pause and evaluate this piece,” Saffo said. “It makes better and better sense. The asset’s there; it addresses specific needs for the city — more opportunity for redevelopment.”

On the downside, property owned by the city does not collect taxes. So the PPD building could account for a $445,519 loss — the 2022 value of taxes paid to the city. However, with eight other facilities then up for grabs, more taxes could come in from other businesses looking to set up shop.

The mayor confirmed there would be minimal upfit or renovation on the downtown building, constructed not even two decades ago. Already, it’s set up as office space with moveable partitions allowing for flexibility.

The purchase also would expand public parking. The private 1,000-space deck, specific to the PPD building and associated employees, would be opened to public use.

“The public has told us we need more parking on the northern end,” Saffo said. “This would help us addressing that issue.”

He was referring primarily to the 30-plus concerts annually at Live Oak Bank Pavilion and the thousands of attendees shows draw in. Parking was not included in the construction plans of the city-owned park and concert venue, operated by Live Nation.

READ MORE: Riverfront Park vicinity is 800 spaces short for sold-out shows, still ‘plenty of parking’ in walking distance

Saffo also noted portions of the deck could be rented out to businesses who occupy space within the building.

There are roughly 6 acres of vacant lots included with the purchase — about 3.2 acres to the north and south.

“It poses an opportunity for development on the acreage there,” Saffo said.

Thermo Fisher, with an annual revenue of approximately $40 billion worldwide, acquired PPD for $17.4-billion. The 929 North Front St. building, owned by PPD entity River Ventures, was constructed in 2006 and went on the market in 2021.

The proposed purchase would require Local Government Commission approval before the city could seal the deal.

Wilmington City Council will vote to approve the $500,000 deposit Tuesday at 6:30 p.m. at city hall, 102 N. Third St.

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