Real Estate Journal — November 22 - December 12, 2019 — Inside Back Cover A
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Continued strategic capital investment within the Baltimore market Cushman & Wakefield Q3 Baltimore, MD Office Market Report M id A tlantic R eal E state J ournal
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conomy The Baltimore Metro continues to see a de- crease in the unemployment rate. At 3.8%, the unemploy- ment rates decreased 10 basis points year-over-year (YOY), sitting just 10 bps over the national average of 3.7%. Edu- cation and healthcare services continue to be a driver in the market with a YOY increase of 2.4% in employment and em- ploying 18.4% of the workforce in Baltimore. The Baltimore metro is pushing to become a global leader in cybersecurity piggybacking off the National Security Agency (NSA) sitting it its back yard. Since 2010 the are has awarded 10,000 bach- elor’s degrees in cybersecurity and continues to grow its wal- let share in the industry with incubators feeding off the NSA. Market Overview Vacancy rates in the Balti- more Metro continued to drop as the vacancy rates dropped 90 bps YOY to 12.7% in the third quarter of 2019. Year to date, the market has seen over 1 million s/f (m s/f) of net posi- tive absorption with 304,338 s/f of positive absorption hap- pening in the third quarter of 2019. The Greater Annapolis submarket continues to lead the way with 380,504 s/f of positive absorption year-to- date. Howard County South’s 152,351 s/f of net, class A, positive absorption is pushing rental rates north to $34.45 psf. The overall rental rates in the Baltimore Market continued its steady growth in the third quarter of 2019 with a 1.5% increase YOY to $23.95 psf. Class A projects are receiving a 38.6% premium, over their class B competition, achieving asking rents of $28.10 psf. The limited new inventory expected to hit the market over the next 18 months, the separation of class A and B rental rates will continue to grow. Baltimore office leasing fun- damentals remain healthy for the third quarter of 2019. The market saw over 480,000 s/f of new deals signed in the third quarter, bringing the year- to-date total to 1,573,383 s/f. While leasing has been below the historical average, the mar- ket continues to see vacancy rate compression as new de- velopments in the market has decreased to keep up with the leasing demand in the market. Tessco Technologies renewal of 102,164 s/f at 375 W Padonia
Ave. was the top deal. The sale of 650 McHenry Road in Harford county set the pace for sales in Baltimore for the third quarter of 2019. The $18,000,000 sale to Upper Chesapeake Health System, which will develop a new medi- cal campus around the 95,200 s/f project. The market steady decline in vacancy rates and stable environment continues to be attractive to investors. Currently the Baltimore Market has 846,894 s/f of inven- tory that is under construction. This dip below the ten-year
average of inventory that has been under construction in the market is a welcome sign as the market catches up with the new inventory in the market. Baltimore’s Southeast submar- ket continues to be the hotbed of activity in the city with a majority of the proposed and under construction properties falling into this submarket. The suburbs of Baltimore include major live, work, play develop- ments like Towson Row, Metro Centre at Owings Mills, and the redevelopment of Downtown Columbia.
OFFICE SUBMARKETS BALTIMORE, MD
Baltimore market rental rates continue to see contin- ued steady growth YOY. Gross rental rates in the Baltimore market grew 1.5% YOY with rental rates reaching $23.95 psf. The Howard County sub- market class A rental rates are the highest in the metro
at $31.96 psf. The greater An- napolis submarket is home to the highest class B rental rates at $23.42 psf. The Howard County and Greater Annapolis submarkets sit in the Baltimore Washington Corridor and are home to a highly educated workforce.
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