In search of space, Wilmington leaders look to buy downtown's PPD building

Wilmington leaders are considering buying the PPD building on the northern end of the city’s downtown.

On Tuesday, the Wilmington City Council will consider a $500,000 refundable deposit that would give city leaders and staff 120 days to explore the purchase of the 12.5-acre downtown campus. Buying the building could give the city more space for offices and parking along with providing more opportunities for downtown redevelopment, according to Wilmington Mayor Bill Saffo.

The 12-story building currently houses Thermo Fisher Scientific's Wilmington offices. PPD, the clinical research company bought in 2021 by Thermo Fisher Scientific Inc., has owned and occupied the building since 2007. The building includes 370,000 square feet of office space along with a 1,000-space parking deck and two adjoining development tracts, according to Dylan Lee, a spokesperson for the city.

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In April 2022, Thermo Fisher Scientific announced plans to sell the building as it looked for new office space in Wilmington. The move aimed to "enable the business to better match current and future workspace needs with flexible work models," according to a statement from Ned Glascock, senior director of communications and public affairs with Thermo Fisher Scientific Inc.

PPD employs approximately 1,700 people, making it one of Wilmington's largest private employers.

City leaders began discussing a potential purchase about four weeks ago, Saffo said, when real estate representatives hired by Thermo Fisher Scientific approached city leaders. The company had enlisted three firms to help with the sale of the building, including global commercial real estate firms JLL and Cushman and Wakefield along with local commercial real estate company Cape Fear Commercial.

Saffo said he believes the company heard "through the grapevine" the city was looking for more space and was facing significant maintenance and redevelopment costs for its office building at 305 Chestnut Street.

“It was the opportunity that presented itself, we weren't looking for this,” Saffo said. “But when it presented itself … it just made sense for us to evaluate it and really do a deep dive into it to make certain that it fulfills the needs of the city and that we can financially afford it.”

In 2021, Wilmington leaders hired an architecture firm to conduct a long-term space needs assessment. The firm's final report, which was presented in November, estimated it would cost between $90 million and $96 million to redevelop a right-sized city administration building.

“In view of our space needs assessment, acquiring this 12.5-acre campus in northern downtown could provide a highly creative and far more cost-effective solution to the city’s long-term space needs,” according to City Manager Tony Caudle.

A potential purchase agreement would lease part of the building to Thermo Fisher for at least three years, according to Lee. The city would then occupy a “significant proportion” of the building and lease the rest of the space at market rate. The negotiated price for the entire campus, including office furnishings, is $68 million.

An appraisal from New Hanover County places the property's value at more than $71.7 million, according to property records. The building cost approximately $80 million to build in 2007.

The purchase cost could be offset by the sale of several city-owned buildings, not including the historic Thalian Hall/City Hall, according to Lee. Selling the two adjoining development lots and leasing the extra space within the PPD building would also help offset the city’s acquisition costs.

If the city council approves the $500,000 deposit, city leaders and staff will start digging into the details of a potential sale -- an endeavor that could include evaluating condition of the building, looking at the financial structure of a potential purchase along with the city's financing plan, Saffo said. If it moves forward, the purchase will also be subject to closer scrutiny from the state's Local Government Commission.

Still, buying the building could help the city address a number of issues, ranging that range from the need for more office and parking space to security and high maintenance costs, Saffo said.

“On paper, it makes a lot of sense to me,” he said. “It's a heck of a lot more (space) than we need, but it poses a lot of opportunities and answers a lot of questions and concerns that we have from parking to space to security to even IT.”

But this is just the first step in investigating the purchase, which has seen high interest in the months it's been on the market, according to Glascock.

"Interest in the property has been high, with a number of proposals received from interested parties, including from the City of Wilmington," Glascock wrote in an emailed statement Thursday. "Our business is evaluating various proposals, but no agreements have been signed at this time."

Reporter Emma Dill can be reached at edill@gannett.com.

This article originally appeared on Wilmington StarNews: Wilmington leaders weigh buying downtown's PPD building