Developer plans 10-story building for University of Delaware research campus

Ernie Delle Donne, president of Delle Donne Associates, stands near where he is planning to build a 125,000 square-foot, mixed-use tower at the STAR campus as an adjunct to the nearly completed College of Health Sciences building. / JENNIFER CORBETT/THE NEWS JOURNAL

In a few months, the skyline of Newark, and one of the busiest roads into the University of Delaware, will begin changing as dramatically as its emerging research and development campus.

Rising as high as 10 stories above a former auto plant, the new Science, Technology and Advanced Research Campus building – a skyscraper by Newark standards – will glow at night, its softly lit, modern design visible to motorists on the interstate more than a mile away.

Developer Ernie Delle Donne says the building, which he hopes will be filled with the high-tech tenants he and the university want to attract, will be a “hood ornament” serving

Ernie Delle Donne is planning to build a 125,000 square-foot tower at the STAR campus as an adjunct to the nearly completed College of Health Sciences building. Delle Donne says the tower, which could reach 10 stories, will be a 'hood ornament' for the STAR campus that will be visible from Interstate 95. / Architect rendering

as a highly visible symbol of STAR’s stature as a center for research and development in health and life sciences, energy, the environment and national security.

The belief Delle Donne and his builder, Stephen Mockbee, chairman of Bancroft Construction Co. in Wilmington, have in the project is shown in their commitment to take the chance on the building. Even as the tower’s design and site location are finalized, Delle Donne said he is seriously considering moving forward without a single commitment from a future occupant.

In fact, the entire project, Mockbee said, is being built on “spec.”

“Absolutely on spec!” he said, laughing. “Banks were much more liberal before this current real estate downturn. Probably now, a bank would want at least 75 percent leases before they would forward funds.”

Some portions of the 272-acre campus are set and coming to life. The new College of Health Sciences building, on the site of and incorporating the same structure steel and concrete of the former Chrysler auto plant, will combine health sciences research, education and patient care under one roof. Tenants are expected to begin moving in by year’s end.

Other portions of the 15 acres Delle Donne is developing are well underway. A 70,000-square foot, two-story building now referred to as the “annex” is under construction on the south side of the Health Sciences building and slated to open next summer. The building is envisioned for health and science businesses that need offices and lab space. It will be a mixed-use building, with professional, research and related needs, such as a restaurant.

Then there is the tower and, possibly, a hotel and conference center. Those plans are in what Delle Donne calls a “fluid” state as he and UD study the marketplace and talk to prospective tenants.

“There’s been a lot of interest in the tower,” he said. “And it’s really up to us to decide how utilitarian space 80, 90, 120 feet above the ground is for research, depending on the type of research.

“Suppose you’re doing behavioral research, where you’re talking to people and you’re attaching cathodes to their head, measuring brain waves, etc.,” he said. “Well, that eighth floor’s perfect for that. But suppose you need ventilation, access to tanks, bringing dirts and geologic materials up and down through elevators. That’s not a real practical use. So what we’re doing right now is we’re trying to measure the market out.”

That’s the same sort of thinking that’s gone into the annex, which Delle Donne said might turn out to be a better fit for some tenants.

“We’re in the process right now of accepting applicants, if you will, rather than signing leases,” Delle Donne said. “We want to make sure that this first round of tenancies are the type that actually go hand-in-hand with [Dean] Kathy Matt’s College of Health Sciences.”

Delle Donne and Mockbee see their involvement and financial commitment in terms of the greater good of the school and the state.

“The goal is to have compatible entities,” said Charles Riordan, UD’s vice provost for research. The university wants to bring students, researchers, practitioners and industry together, he said, “to co-locate people from different disciplines so that they can have what I call and what other people call incidental and accidental interactions where they run into each other.”

Wills Elliman

That connection to the university is what makes the overall site so attractive, said Wills Elliman, senior managing director at real estate firm Newmark Grubb Knight Frank. He represents one of the potential tenants for the new tower. His clients are looking for new lab space, which is in short supply in the area, he said. The newly built tower, and its proximity to a university community, makes it very attractive, he said.

“Universities are drivers of innovation, and so out of universities you get new ideas, new energy that just doesn’t happen in the sleepy suburbs,” Elliman said.

And that is what makes this area uniquely qualified to be built without tenants signed on, Elliman said.

“This site is so well located, it is in the right place at the right time,” he said.

Delle Donne noted that his company is not publicly traded. “So I don’t have to worry about next quarter’s earnings,” he said. “In fact, many would argue, if you saw the costs … you would probably have me committed. … What you would see is we’re extremely sensitive to the goals and objectives that the trustees and the university and the governor had for this project.”

Mockbee is confident that the buildings will be filled.

“We believe if they build it, they will come,” said Mockbee, a ’73 UD graduate whose company has built some 40 buildings on campus. His confidence is borne of a 20-year relationship with Delle Donne. “Ernie is the type of developer. … when he feels there’s a niche market, and he feels there’s an opportunity, he invests, and we follow.”

Delle Donne says the interest is there. “The market and the tenant response to the annex building has been so dramatic that we are finding out that we are oversubscribed and we are not even near completed yet,” he said.

Likewise with the tower, he said. “The marketability of this 10-story building is, actually, it is surprising me in its reception by the marketplace,” Delle Donne said. “We are very pleased.”

Delle Donne won’t name names yet, citing the delicacy of ongoing talks. But he said he’s been speaking to a “large insurance company” about taking two floors in the tower. “We’ve already been approached by two military contractors,” he said.

While discussing the need to plan for a wide variety of possibilities before building plans are finalized, he also raised the possibility of a federal cyber-security presence on the STAR campus.

“And that is going to be one of our next tenants, I would imagine,” Delle Donne said. “In some way, shape or form. And we will be ready to accommodate them, that type of use.”

Asked if such a presence would better fit the tower or the annex, he said it would depend upon the entity’s needs.

“Well, since they are the federal government, they’re going to live wherever they want,” Delle Donne said. “If they tell me to build them a brand-new building, it’ll be a brand-new building.

“You need to set a stage that works for the unknown,” he said. “You need total flexibility. But you need to try to envision, as best you can, how the pieces are going to come together.”

Hitting the mark of 60 to 70 percent full at the annex will likely be enough to justify building the tower – even without any tenants signed on for the space, Delle Donne said.

“So I would give the odds of the tower occurring probably [in] the upper 70s to 80 percent,” Delle Donne said. “And I would say it’s going to happen next summer.”

“He is gaining confidence,” said Andy Lubin, UD’s director of real estate.

Delle Donne didn’t hesitate when asked if he’d consider moving his firm to the tower. “I see it as a lock-box cinch, he said. “I don’t see a better investment in the state of Delaware. I personally don’t.”

When UD purchased the land in 2009 it described plans for slow, deliberate development that is not expected to be completed for more than 50 years, maybe more. The land was bought as Chrysler went through bankruptcy proceedings, signaling the end of a major employer for the region.

For some, the redevelopment of this brownfield is a sign of a new kind of economic development taking root. The first to come to the site was Bloom Energy. A data center and 248-megawatt power-generating facility is proposed, but it must still gain approval from local and state officials. It also faces vocal opposition from some nearby residents.

Supporters envision STAR as a place of inspiration for innovators driven by interactions between private industry, UD faculty and students. Foremost among these is UD’s president, Patrick T. Harker.

“First, when it comes to the education of our citizens, the litmus test for anybody who goes on STAR is they have to be open to the faculty research, and in particular, student internships,” Harker said in an interview last month. “What we are trying to do is create places and experiences where students can learn by doing. Not just knowledge transfer from my head to your head, but really learning by doing.

“Of course, the second part of that is our land-grant mission,” Harker said. “We are trying to use that campus to get technology out the door, to make a difference and to create jobs for this economy. I mean, that is also part of our mission, which is different than a private university.”

Delle Donne sees the STAR campus becoming a vital engine for economic development in the state.

“Let’s make this the next Financial Center Development Act of 1981, with a research-based core,” he said. That groundbreaking legislation instituted favorable financial industry laws and brought a wave of out-of-state banks to the state that helped transform the economy.

UD owns the STAR campus land and is leasing the 15 acres being developed to Delle Donne, who will build and own the buildings, which he is leasing back to UD. It is up to Delle Donne to recruit tenants. Those who locate at the STAR campus must also agree to work with the university to give students hands-on learning opportunities. Bloom Energy, for instance, has students working on sustainable landscaping at its site.

While a hotel might not at first blush seem to be a proper fit. A recent study concluded otherwise.

“The results came back as a surprise because we didn’t really expect that for another two to three years,” Delle Donne said. “But the demand is so strong, both from academia, as well as the businesses.”

He envisions a more than 225-room hotel, with 70,000 square feet of meeting space, on his portion of the STAR Campus. He sees it being used for events such as conferences. It would connect to the health sciences building, giving students, professionals and academics a shared space to learn and collaborate.

Which would he build first?

“I can honestly see the tower and the hotel happening jointly,” Delle Donne said.

Contact Nichole Dobo at (302) 324-2281 or ndobo@delawareonline.com. Contact William H. McMichael at (302) 324-2812 or bmcmichael@delawareonline.com.