The Buccini/Pollin Group has purchased the historic DuPont Building from Chemours and will lease it back to the Wilmington chemical company on a long-term basis as part of a significant redevelopment that could turn the 110-year-old landmark into a mixed-use facility.
Under the agreement signed Monday, Buccini/Pollin will only acquire the office portion of the property at 1007 Market Street. The legendary Hotel du Pont, which is attached to the building, but separately owned by DuPont, was not included in the sale. A 2,800-seat theater, also part of the DuPont Building complex, was sold to The Grand Opera House in January 2015.
The deal — a purchase price was not disclosed – brings together two of Wilmington’s most recognizable businesses in its most iconic downtown building. Chemours will get an upgraded world headquarters without having to relocate while Buccini/Pollin expands its portfolio of downtown Wilmington properties.
“This is an ideal location for us,” Mark Vergnano, president and CEO of Chemours, told The News Journal. “The tradition of the building will remain, but as a modern space that links the past and present together. We are very excited about attracting top talent here and this new building is going to help us do that.”
Vergnano did not disclose the length of Chemours’ lease or how much space it planned to occupy in the building. Buccini/Pollin filed documents with the state in June indicating it intended to lease 252,000 square feet on floors 4 through 13 to Chemours for 15 years after completely gutting the building in a $92 million renovation.
The state had approved $1 million for the renovations. It is not clear how Buccini/Pollin will finance the rest. In May, the Delaware Economic Development Authority approved about $7.9 million in taxpayer grants to Chemours for the renovation of a new headquarters.
Chemours, with about 700 employees in the DuPont Building and another 300 scattered throughout Delaware, will no longer occupy the entire 13-story building, Vergnano confirmed. The sale gives Chemours the right to lease any empty office space before Buccini/Pollin redevelops it.
“This deal gives us expansion capabilities without us having to pay for all of it up front,” Vergnano said.
Chris Buccini, co-president of the Buccini/Pollin Group, said the company is considering transforming the empty floors into mixed-use space. When asked if the mixed-use portion of the building would include a residential component, Buccini said it depended upon “the ultimate scope of what Chemours is doing here.”
Other renovations planned for the building include ground-floor retail shops and restaurants. Vergnano said such amenities were key to attracting and retaining talent.
“It is a great fit for the workforce we have and the workforce we want to attract,” Vergnano said of the plans. “It is going to get us to a place where we are proud of our headquarters.”
Buccini said more details about the building’s redevelopment will be unveiled later this year. He called the project ”a significant investment for the city.”
“This is going to be a substantial investment by all the parties involved,” he said. “It will create a significant number of construction jobs and ultimately retail jobs.”
Wilmington Mayor Mike Purzycki called Chemours decision and subsequent redevelopment “a shot in the arm” for the city.
“We’ve lost our confidence, but when Chemours makes a statement that they are committed to the city, it changes our confidence,” Purzycki said. “And I think that is the real gift here. Having Chemours stay sends a strong message to investors and others thinking of spending money in Wilmington.”
Keeping Chemours in downtown Wilmington is a huge economic victory for the city and state. In addition to keeping 1,000 direct jobs in Delaware, Bernice Whaley, director of economic development for the state, said in May the loss of Chemours could cost the state 3,409 direct and indirect jobs along with $554 million of revenue. Chemours’ downtown workers generate more than $70 million in annual payroll, according to data from the Wilmington Office of Economic Development. In addition, those workers generate more than $850,000 in annual wage taxes for the city.
Construction on the Market Street side of the DuPont Building is expected to start in March and be completed sometime in mid-2018. Vergnano said Chemours’ employees may occupy office space in other Buccini/Pollin properties until the renovations are finished.
Chemours announced in August its intent to remain in downtown Wilmington but said it would look at other options. At that time, Vergnano indicated his preference was to remain in the DuPont Building, but it needed upgrades. Sources familiar with Chemours’ search said last fall the company considered purchasing Bracebridge IV, part of the Bank of America office complex in downtown Wilmington. Chemours was said to have entered discussions with Bank of America about the property that sits just across Rodney Square from the chemical company’s current headquarters.
Vergnano said the company “seriously considered” other options in the city, but felt remaining in its current headquarters was the best option.
“This was the best economic choice for us and the best choice for our employees,” he said. “All those other spaces would have worked, but this allows us to create exactly the space we want because it is being renovated to our specifications. Everything else would have been a bit of a compromise.”
Political leaders across the state praised Chemours for remaining in the historic building where the company first began as a unit within DuPont.
“This is the answer to a lot of people’s prayers, including my own,” said Sen. Tom Carper.
Gov. Jack Markell, who will step down later this month, called the announcement, “the best outcome we could have hoped for.”
“It is fitting that the company, a newly formed entity out of a former portion of DuPont, should be part of the plans to redesign the iconic DuPont building into a new and modern facility in the heart of downtown Wilmington,” Markell said.
Markell’s successor, Governor-elect John Carney, called the move “great news.”
“This agreement means that we’ll see significant private investment, not just downtown, but in one of our city’s most historic landmarks,” he said. “The DuPont Building will remain a sign of economic strength in Wilmington.”
Sen. Chris Coons agreed.
“I am thrilled that the Board of Directors and leadership of Chemours has chosen to remain in Wilmington and signal their belief that Wilmington’s best days are ahead of it. With new city, county, and state leadership we will help make downtown Wilmington a wonderful place to live and to work.”
Chemours’ Bright Future
Chemours struggled after its initial spinoff from DuPont in July 2015. Saddled with $4 billion debt and required to indemnify its former parent for any legal damages related to the release of the toxic chemical C-8 at DuPont’s Washington Works plant, near Parkersburg, West Virginia, some raised doubts about the company’s future. Those fears increased during Chemours’ first three-quarters, when it declared a net loss in each, including an $86 million loss in the fourth quarter of 2015.
But Chemours has caught fire with investors in recent months after exceeding analyst expectations and reporting a $204 million profit for the 2016 third quarter. Since then the company has earned investor confidence with a record stock price of $27 per share in late November. In fact, Chemours’ stock jumped 36 percent in the two weeks after its third-quarter earnings announcement.
Wall Street analysts credit the company’s turnaround to an increased demand for its Opteon line of environmentally friendly refrigeration products. The company reported two high-profile sales of Opteon to Dutch supermarket Ahold and Johnson Controls, a Milwaukee-based conglomerate that produces car batteries and HVAC systems. In addition to Opteon’s success, the market for Titanium Dioxide, Chemours’ flagship product, has rebounded. Demand for Titanium Dioxide is so strong, the company has raised the price of the product twice in the past year.
For many, Chemours decision to remain in the DuPont Building is a symbolic one.
“The last thing we need is for the DuPont Building, which is an iconic building in downtown Wilmington to be empty for a month, a year, a decade or more,” Carper told The News Journal. It is a situation we need to avoid at all costs.”
Delaware’s pride in the building dates back to 1904 — three years before it was completed — when DuPont eschewed building a new corporate headquarters in New York or Philadelphia in favor of downtown Wilmington. The move helped shift Wilmington’s identity from an industrial town into one noted as the headquarters for a Fortune 500 company and executive jobs.
At 11 stories, the DuPont Building was the city’s tallest structure when it opened and underwent many expansions over its first quarter century. A hotel, ballroom, restaurants, theater, and a one-and-a-half story boardroom was added. A 12th and 13th floor were added in the 1930s.
Some in Delaware were stunned in December 2014, when DuPont announced it would abandon the building it called home for 107 years in favor of new digs in suburban Chestnut Run. The news sent shockwaves throughout Delaware with many concerned the building would sit empty.
Vergnano said he’s pleased Chemours will retain a symbolic connection its former parent.
“We have the history of this building, but it is going to be a new, modern space,” Vergnano said. “It mirrors the way we’ve been portraying ourselves as a startup with a 200-year head start.”
Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or [email protected].
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