Wilmington’s Commercial Construction Outlook

“While economic headlines continue to create uncertainty, the conversations we’re having with manufacturers, distributors, and business owners tell a different story. Many companies remain focused on long-term growth, and Southeastern North Carolina continues to attract investment because of its workforce, infrastructure, and quality of life.”

– Andrew Cooke, Vice President, Business Development

Market Update: Wilmington’s Commercial Construction Outlook Remains Strong Despite National Headwinds

While the national economy continues to navigate inflationary pressures, elevated interest rates, and tighter lending standards, Southeastern North Carolina remains one of the more active and resilient commercial construction markets in the region.

Nationally, commercial construction activity remains historically strong, with total construction spending exceeding $2.1 trillion annually. However, growth has slowed considerably compared to the post-pandemic expansion. Inflation increased to 4.2% year-over-year in May, construction wages continue to rise, and lenders remain selective in their approach to commercial real estate financing. As a result, developers and investors across the country are placing greater emphasis on projects with durable demand, strong sponsorship, and clearly defined end users.

Closer to home, Wilmington continues to benefit from population growth, business investment, tourism, healthcare expansion, and significant infrastructure improvements. The Wilmington MSA maintained a low unemployment rate of 3.3% in April, while construction employment grew 6.3% year-over-year to approximately 15,300 workers. Those numbers reflect a market that remains active despite broader economic uncertainty.

Industrial Development Continues to Lead

Industrial and flex space remain among the strongest sectors in the local market. While industrial vacancy increased modestly to 5.3% during the first quarter of 2026, market fundamentals remain healthy and continue to compare favorably with national averages. The region’s logistics advantages—including the Port of Wilmington, Wilmington International Airport (ILM), Interstate 40 access, and expanding industrial parks such as Wilmington Trade Center, Blue Clay Business Park, and Holly Shelter—continue to attract manufacturers, distributors, and logistics users seeking a strategic East Coast location.

Recent investments at the Port of Wilmington, including turning basin improvements and expanded intermodal rail capabilities, further strengthen the region’s competitive position. Likewise, ILM continues to experience record passenger growth and ongoing infrastructure expansion, creating additional opportunities for industrial, commercial, and hospitality-related development.

Healthcare and Medical Office Growth Remains a Bright Spot

Healthcare continues to be one of the most attractive sectors for commercial development throughout the Cape Fear region. Continued population growth, an aging demographic, and significant investments by healthcare providers are driving demand for medical office buildings, outpatient facilities, specialty practices, and healthcare support services.

As healthcare systems continue expanding their regional footprint, well-located medical office and healthcare-adjacent developments are expected to remain among the most stable asset classes in the local market. For developers and investors, these projects offer the benefit of long-term demand drivers that are less dependent on economic cycles than many traditional commercial sectors.

Retail Fundamentals Remain Exceptionally Strong

Retail remains one of Wilmington’s strongest performing commercial sectors. First quarter vacancy measured just 1.6%, significantly below national averages, reflecting continued consumer demand and limited available inventory. Neighborhood retail centers anchored by grocery stores, service providers, restaurants, and daily-needs retailers continue to perform particularly well as residential growth expands throughout New Hanover, Brunswick, and Pender Counties.

For developers, this environment creates opportunities for carefully planned retail projects in underserved growth corridors, particularly those integrated with residential and mixed-use developments.

Office and Multifamily Require Greater Selectivity

While Wilmington’s office vacancy rate remains remarkably low at 2.7%, recent absorption trends suggest developers should proceed cautiously with speculative office construction. Demand remains strongest for high-quality space in premier locations and build-to-suit opportunities where tenant demand is clearly established.

Multifamily remains the most challenged major property type. Although rents have begun to stabilize, vacancy remains elevated at approximately 13.1% as the market continues to absorb significant new supply delivered over the past several years. Well-positioned multifamily projects can still be successful, but underwriting assumptions should reflect longer lease-up periods and a more competitive operating environment.

Infrastructure and Resilience Will Shape Future Growth

Looking ahead, several major public investments are expected to influence development patterns and property values across the region. The replacement of the Cape Fear Memorial Bridge, continued expansion at ILM, port infrastructure improvements, and investments in transportation and utility systems will all play an important role in supporting long-term economic growth.

At the same time, resilience planning is becoming increasingly important in project development. Stormwater management, flood mitigation, site elevation, and coastal resiliency are no longer secondary considerations—they are becoming central components of successful project planning and underwriting in coastal North Carolina.

The Bottom Line

The Wilmington market continues to offer compelling opportunities for commercial development, but success is becoming increasingly dependent on project selection, execution, and long-term planning. Industrial, healthcare, medical office, and necessity-based retail continue to demonstrate the strongest fundamentals, while infrastructure investments and regional population growth provide confidence in the market’s long-term outlook.

As always, thoughtful planning, strong preconstruction efforts, and a disciplined approach to development remain essential. While national conditions may create challenges, Southeastern North Carolina continues to distinguish itself as one of the most attractive commercial construction markets in the state.

At McKinley Building Corporation, we remain optimistic about the opportunities ahead and are grateful for the clients, partners, subcontractors, and community leaders who continue to invest in the future of our region.