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Wilmington closes on Thermo Fisher building without resolving occupancy questions

The ThermoFisher building, formerly the PPD headquarters.
Benjamin Schachtman
The ThermoFisher building, formerly the PPD headquarters.

The city initially said it would complete an analysis of the costs and benefits of which floors of the 12-story Thermo Fisher building staff would occupy prior to making a final decision to purchase the downtown campus. After the city closed on the deal, it acknowledged a space allocation study had generated “more information resulting in more questions.”

On Thursday, the City of Wilmington announced it had officially closed on Thermo Fisher’s ‘downtown office campus,’ the 12.5-acre property that includes the former PPD headquarters building. The $68-million deal also includes a parking deck with over 1,000 spots and two undeveloped parcels.

As the sale process evolved after the initial announcement in January, city council members discussed which floors staff would occupy, since early estimates showed the city would use at most around 185,000 square feet – less than half of the available space available in the building. Thermo Fisher has since committed to leasing two floors in the building for at least three years, with an option to renew; according to the city, Thermo Fisher’s recent plans for layoffs won’t impact that lease.

Some city council members, including Mayor Pro-Tem Margaret Haynes and Councilman Charlie Rivenbark have previously expressed interest in leasing the upper floors and penthouse of the building; Councilman Luke Waddell expressed concern that those floors, which lease at a higher rate, would cost taxpayers unduly – although how much remains an open question.

In April, a city spokesperson told WHQR that architecture firm LS3P would lead a “space allocation study,” focusing on three priorities: “(1) accessibility, ease and efficiency for the public, especially with departments and operations that interface regularly with the public; (2) locating certain departments and functions in close proximity to create synergies and enhance collaboration; (3) evaluating upfit needs and costs associated with using certain parts of the building over others.”

In June, the spokesperson said there would be a presentation of the study “before any decision is made” – although likely not before the Local Government Commission reviewed the city’s proposal to buy the campus.

However, a month later the city has closed on the deal, but still hasn’t come to any conclusion on which floors it intends to occupy.

According to the city, LS3P produced a “high level analysis” rather than a “final decision” on where, exactly, city staff would move into the building. The city is now seeking additional consulting help to figure that out.

“Rather than producing a final decision, that study proved the classic example of more information resulting in more questions, which the city is currently working to answer. An RFP for architectural consulting services related to building occupancy is set to close on July 18, with council likely awarding a contract in late August or early September. Some questions regarding building occupancy may not be resolved until that work is underway,” a city spokesperson told WHQR on Friday.

The spokesperson said “it’s a complex decision that the city continues to work through in a methodical way," noting that the priorities remained largely the same, with the goals being to, “(1) provide easy public access to key forward-facing city functions, (2) improve collaboration by locating certain departments and divisions in close proximity, and (3) minimize upfit costs to the city.”

Background on the deal

Thermo Fisher completed its purchase of Wilmington-based research company PPD in early 2022, and several months later began exploring the sale of the 12-story headquarters building located on the northern riverfront. With a waning commercial real-estate market, heavily impacted by a shift to remote and hybrid work, the building languished on the market until early this year.

The city has argued the deal will save over $55 million compared to earlier construction plans to meet the city’s parking and operational needs, a nine-figure response to a needs study that included a roughly $90-million redevelopment of the city offices at 305 Chestnut Street.

City officials have also argued the deal represents over $43 million in savings based on the $111-million appraised value of the Thermo Fisher Campus.

The deal did not require any tax increase in the 2023-2024 fiscal year; city officials say that the cost be at least partially offset by selling its existing office space and other properties as staff consolidate operations into the Thermo Fisher building. Several city properties have already been designated as surplus as part of the Thermo Fisher acquisition process. Historic Thalian Hall, which doubled as City Hall and home to the Mayor's office and City Council meetings, is not part of those surplus properties and is not slated to be sold.

Some, including several residents who made public comments during city council meetings and State Treasurer and Republican candidate for Governor Dale Folwell, have asked if the sale price is fair. According to city staff, earlier private offers in the $50-million range were turned down by Thermo Fisher. The city’s own initial $60-million offer went unanswered, but a subsequent all-inclusive $68-million offer was accepted and in February the campus went under contract, with Cape Fear Commercial Broker-in-Charge and Partner Paul Loukas serving as a local broker.

Folwell also expressed concerned that Councilman Charlie Rivenbark, who is a senior vice-president for Cape Fear Commercial, would be voting on the sale. Rivenbark told WHQR he is an independent contractor for the company, and had no role in – and did not receive any financial benefit from – the Thermo Fisher deal. During a June vote to move forward with the sale process, Rivenbark asserted the same and said the city attorney’s office had confirmed he had no conflict of interest and was thereby required to vote.

Ben Schachtman is a journalist and editor with a focus on local government accountability. He began reporting for Port City Daily in the Wilmington area in 2016 and took over as managing editor there in 2018. He’s a graduate of Rutgers College and later received his MA from NYU and his PhD from SUNY-Stony Brook, both in English Literature. He loves spending time with his wife and playing rock'n'roll very loudly. You can reach him at BSchachtman@whqr.org and find him on Twitter @Ben_Schachtman.