12B — February 22 - March 14, 2013 — Commercial Office Spotlight — Mid Atlantic Real Estate Journal
www.marejournal.com
C ommerCial o ffiCe S potlight By Nadia Kahler, Colliers International Baltimore office market recovering slowly
research & forecast report | Q4 2012 | office use | baltimore metro area
C
2012 but was still higher than the first ont. from page 11B
dipped in the 4th quarter to $24.52 after a slight jump in the 2nd quarter. Class B & C office rental rates were unchanged at 19.50 for the second half of 2012. Vacancy Vacancy rates in the Balti- more Region’s Class A office market were at the lowest they have been in 2012 at 15.2% after fluctuating slightly throughout the year. However with several large deliveries expected in the first half of 2013 that number is expected to spike for most of the coming year. While sev- eral submarkets like BWI saw 522 offices in 62 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118
dramatic drops in vacancy rates, other submarkets such as Harford County have been plagued with higher than aver- age vacancy. 2012 Sales Activity Sales activity in the market place slowed during the fourth quarter of 2012, despite some activity generated by those seeking settlement prior to December 31, 2012 and the anticipated increases in capital gains rates during 2013. In Baltimore City, certain sales of trouble office properties or their mortgages (20 S. Charles Street and 1 North Charles Street) generated acquisition prices of approximately $30/s/f. This will translate into a mid to high teens rental rate. The Annapolis submarket was mostly unchanged in the 4th quarter with an overall vacancy rate of 13.5%. No major construction is slated in the near future; however ab- sorption is not forecasted to in- crease causing vacancy to rise as a result. Multistory build- ings continue to see higher vacancy rates at 12.5% as net absorption went negative for the second consecutive quarter. Single story buildings had a spike in activity and vacancy rates dropped significantly from 21% to 18.4%. class a of- fice average rental rates rose very slightly from $28.56 psf to $28.88 psf in the 4th quarter. On the other hand, class B of- fice rental rates dipped from $24.99 psf to $24.69 psf. Significant transactions in- cluded Judicial Information center renewing their lease at Riva 400 office park for 30,000 s/f. SAIC plans on taking ap- proximately 60,000 s/f at 8193 Dorsey Road, which is about half of the building. Keep an eye on 2517 Riva Road as Hampshire Real Estate has submitted plans to convert it into a larger class a office building (it is currently about 67,800 sf). Though new office development is down overall in Annapolis, new home develop- ment is thriving with high end townhome communities pop- ping up throughout the greater Annapolis area andmany home builders fighting for a larger piece of the market share. Boz- zuto recently announced that they have contracts on all 23 townhomes built onWest street in downtown Annapolis. Nadia Kahler is vice president of research & transaction management at Colliers-International. n
half of the year. In Bal- timore City, i n v e n t o r y of pre-1961 Class B office space con- tinues to de- cline (a good trend), due
Class B & C Asking Rental Rates
Class A Asking Rental Rates
$26.00
$21.00
$25.50
$20.50
$25.00
$20.00
$24.50
$19.50
Nadia Kahler
$24.00
$19.00
in part to continued adaptive reuse of Class B office proper- ties for multi-family residential leasing. Rental Rates Class A office rental rates
$23.50
$18.50
$23.00
$18.00
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
REnTAL RATEs Class A office rental rates dipped in the 4 th quarter to $24.52 after a slight jump in the 2 nd quarter. Class B & C office rental rates were unchanged at $19.50 for the second half of 2012. 2012 sALEs AcTIVITY Sales activity in the market place slowed during the fourth quarter of 2012, despite some activity generated by those seeking settlement prior to December 31, 2012 and the anticipated increases in capital gains rates during 2013. In Baltimore City, certain sales of trouble office properties or their mortgages (20 S. Charles Street and 1 North Charles Street) generated acquisition prices of approximately $30/SF. This will translate into a mid to high teens rental rate.
2012 but was still higher than the first half of the year. In Baltimore City, inventory of pre-1961 Class B office space continues to decline (a good trend), due in part to continued adaptive reuse of Class B office properties for multi-family residential leasing. VAcAncY Vacancy rates in the Baltimore Region’s Class A office market were at the lowest they have been in 2012 at 15.2% after fluctuating slightly throughout the year. However with several large deliveries expected in the first half of 2013 that number is expected to spike for most of the coming year. While several submarkets like BWI saw dramatic drops in vacancy rates, other submarkets such as Harford County have been plagued with higher than average vacancy.
• $1.8 billion in annual revenue • 1.25 billion square feet under management • Over 12,300 professionals
REsEARchER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710
2012 sALEs AcTIVITY
Baltimore, MD 21201 TEL +1 443 543 1222 fAX +1 443 543 0191
pROpERTY AddREss
sELLER/BuYER
sALE pRIcE
sf
pRIcE/sf
Washington Real Estate Investment Trust / Atkins Companies Johnston Professional Building, LP / ProMed Properties Blue Vista Capital Management / Government Properties Income Trust Nellis Corporation / Metropolitan Management Company
104 Plumtree Road
$8,750,000 32,921 $265.79
3333 N. Calvert Street
$21,750,000 4 floors $274.07
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7210 Ambassador Road
$14,450,000 78,131 $184.95
10 Light Street
$6,000,000 435,817 $13.77
2012 sELEcT LEAsE sIGnInGs
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NBC Securities
4,058 6 North Park Drive
Hunt Valley
7172 Columbia Gateway Dr., Suite 400 Columbia, MD 21046 Benefits Ad inistr tion Corpor tion 10,80
100 North Charles St., Suite 1710 Baltimore, MD 21201 9411 Philadelphia Road Baltimore
443 297 9000 www.colliers.com
RBC
16,000 225 Schilling Circle 22,500 225 Schilling Circle 60,000 8193 Dorsey Road 17,000 1304 Concourse Drive
Hunt Valley Hunt Valley Annapolis Linthicum
Willis of MD
SAIC
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