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8/2/2019 Baltimore AMERICAS Market Beat Office Q12012
1/2
Cushman & Wakefield of Maryland, Inc.500 East Pratt Street, Suite 500
Baltimore, MD 21202www.cushmanwakefield.com/knowledge
The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy orcompleteness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawalwithout notice, and to any special listing conditions imposed by our principals.
2012 Cushman & Wakefield, Inc. All rights reserved.
ECONOMIC OVERVIEW
Despite the recent uptick in private sector
employment, the market remained cautiously
optimistic due to rising gasoline costs and
recent concerns over the sustainability of the
improving labor market. According to the latest
February 2012 ADP National Employment Report, the service-
producing sector from January to February 2012 created a total of
170,000 jobs. The national unemployment rate in February 2012,
according to the Bureau of Labor Statistics, was 8.3%. Maryland
continued to experience a stronger labor market than the rest of thenation, as its preliminary January 2012 unemployment rate was 6.5%.
LIMITED POSITIVE ABSORPTION IN THE MARKETIn the first quarter of 2012, the Baltimore office market saw little
overall growth in the market as its year-to-date overall net
absorption was positive at 28,668 square feet (sf). Significant tenant
occupancies in the quarter were: the 53,800-sf Bill Me Later
occupancy at 55 Schilling Road, the 35,000-sf Johns Hopkins
University occupancy at 1300 Thames Street and the 30,784-sf Algeco
Scotsman Group occupancy at 901 South Bond Street. Aegon USA,
LLCs 150,000-sf move-out at 520 Park Avenue in Baltimore City was
the largest tenant movement of the quarter, which resulted in
Baltimore Citys year-to-date overall net absorption to stand negativeat 19,720 sf. Despite fairly strong leasing activity levels in the second
half of 2011, absorption is expected to remain modest in the first half
of 2012 as tenant occupancies from late 2011 leases largely reflect
tenants swapping space rather than expansion in the market.
Examples of such movements expected in the second quarter of 2012
include: PNC Banks 134,671-sf occupancy at 1 East Pratt Street from
2 Hopkins Place and Ciena Corp.s 87,830-sf occupancy at 7035 Ridge
Road from 1201 Winterson Road.
LEASING ACTIVITY STRONG IN CLASS A PRODUCT
From the first quarter of 2011 to the first quarter of 2012, year-to-
date leasing activity in the Baltimore office market, at 355,366 sf,
decreased 5.9%. Leasing activity continued to be concentrated in class
A office product as it accounted for 80.2% of new deals signed.
Notable class A lease transactions were: Lockheed Martin Corp.s
52,692-sf lease at 410 National Business Parkway, Roadnet
Technologies, Inc.s 27,892-sf lease at 849 Fairmount Avenue and
University of Maryland Faculty Physicians, Inc.s 25,102-sf expansion at
250 West Pratt Street. A total of 70,374 sf of lease transactions were
executed in class B product during the quarter which included the
30,023-sf Trail Blazers International Christian Center lease at 1710-
1722 Gwynn Oak Avenue.
OUTLOOK
The Baltimore office markets vacancy rates are expected to increase
in 2012 due to a lack of prelease activity in 2012 construction
deliveries. Expected second quarter 2012 construction deliveries,
which total 416,979 sf, include: 6514 Meadowridge Road, 8160 Maple
Lawn, 650 McHenry Road, 3401 Box Hill Corporate Center Drive
and 801 Long Drive. These construction deliveries will have the
largest impact in Harford County as its overall vacancy rate, at 26.2%,
will tick up significantly as the 120,000-sf 801 Long Drive and the
95,200-sf 650 McHenry Road and are expected to deliver fully vacant
STATS ON THE GO
1Q11 1Q12 Y-O-Y
CHANGE
12 MONTH
FORECAST
Overall Vacancy 13.5% 14.3% 0.8pp
Direct Asking Rents (psf/yr) $24.26 $23.43 -3.4%
YTD Leasing Activity (sf) 377,614 355,366 -5.9%
DIRECT RENTAL VS. VACANCY RATES
OVERALL ACTIVITY
8.0%
11.0%
14.0%
17.0%
20.0%
$22.00
$22.75
$23.50
$24.25
$25.00
2008 2009 2010 2011 1Q12
psf/yr
DIRECT GROSS RENTAL RATE DIRECT VACANCY RATE
1.7
2.4 2
.9
2.4
0.4
2.4
1.6
0.5
1.7
0.2
0.0
0.8
1.5
2.3
3.0
2008 2009 2010 2011 2012 YTD
msf
LEASING ACTIVITY SALES ACTIVITY
Q1 2012BALTIMORE, MD
OFFICE SNAPSHOTMARKETBEAT
A Cushman & Wakefield Research Publication
8/2/2019 Baltimore AMERICAS Market Beat Office Q12012
2/2
Cushman & Wakefield of Maryland, Inc.500 East Pratt Street, Suite 500Baltimore, MD 21202
www.cushmanwakefield.com/knowledge
The market terms and definitions in this report are based on NAIOP standards.
No warranty or representation, express or implied, is made to the accuracy or completeness of theinformation contained herein, and same is submitted s ubject to errors, omissions, change of price, rental orother conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.
2012 Cushman & Wakefield, Inc. All rights reserved.
BALTIMORE, MD
SUBMARKET INVENTORY OVERALL
VACANCY
RATE
DIRECT
VACANCY
RATE
YTD LEASING
ACTIVITY
UNDER
CONSTRUCTION
YTD
CONSTRUCTION
COMPLETIONS
YTD DIRECT
NET
ABSORPTION
YTD OVERALL
NET
ABSORPTION
OVERALL WTD. AVG
ALL CLASSES GROSS
RENTAL RATE*
DIRECT WTD. A
CLASS A GRO
RENTAL RAT
Baltimore CBD 13,381,776 16.9% 16.1% 61,952 0 0 (23,156) (11,278) $ 20.99 $ 23.4
Baltimore City North/West 4,325,210 15.3% 15.2% 0 0 0 (118,912) (122,364) $ 19.71 $ 25.2
Baltimore City South 4,496,353 12.0% 11.5% 35,070 0 0 113,922 113,922 $ 29.29 $ 35.3
Baltimore City 22,203,339 15.6% 15.0% 97,022 0 0 (28,146) (19,720) $ 21.83 $ 25.6
Howard County North 1,742,933 6.0% 5.4% 8,110 68,779 0 31,874 27,630 $ 23.71 $ 24.4
Howard County South 7,650,538 13.9% 13.4% 49,114 105,000 0 3,685 4,739 $ 27.84 $ 29.3
Downtown Columbia 2,078,844 17.5% 17.4% 0 0 0 (9,703) (12,015) $ 23.70 $ 24.6
Howard County 11,472,315 13.3% 12.9% 57,224 173,779 0 25,856 20,354 $ 26.47 $ 27.7
Fort Meade District 4,598,926 16.0% 15.5% 52,692 171,300 0 (29,689) (26,689) $ 25.38 $ 27.2
BWI District 3,616,543 18.2% 18.0% 0 87,830 0 (39,158) (39,158) $ 24.19 $ 25.8
Anne Arundel County East 755,512 8.4% 8.4% 0 0 0 4,454 4,454 $ 21.21 $ 22.5
Anne Arundel County South/Annapolis 2,308,268 6.6% 5.7% 5,750 0 0 (1,351) (16,828) $ 25.80 $ 30.9
Anne Arundel County 11,279,249 14.3% 13.9% 58,442 259,130 0 (65,744) (78,221) $ 24.70 $ 26.8
Baltimore County East 868,351 16.0% 11.9% 0 0 0 (3,397) (4,558) $ 18.97 $ 23.8
Baltimore County North 9,390,997 11.5% 11.1% 74,822 126,460 0 67,546 70,954 $ 21.23 $ 22.8
Owings Mills/Reisterstown 4,422,650 15.3% 15.3% 2,397 0 0 35,967 35,967 $ 21.40 $ 21.6
Baltimore County West 3,055,760 10.8% 10.7% 60,191 0 0 11,867 11,867 $ 19.92 $ 23.0
Baltimore County 17,737,758 12.5% 12.1% 137,410 126,460 0 111,983 114,230 $ 20.87 $ 22.5
Harford 1,316,717 26.2% 25.1% 5,268 318,200 0 5,002 (7,975) $ 32.21 $ 32.5
HARFORD COUNTY 1,316,717 26.2% 25.1% 5,268 318,200 0 5,002 (7,975) $ 32.21 $ 32.5
Non-CBD 50,627,602 13.6% 13.2% 293,414 877,569 0 72,107 39,946 $ 24.23 $ 26.9
TOTALS* 64,009,378 14.3% 13.8% 355,366 877,569 0 48,951 28,668 $ 23.32 $ 26.1
* RENTAL RATES REFLECT ASKING $PSF/YEAR
MARKET HIGHLIGHTS
Significant 1Q12 Lease Transactions SUBMARKET TENANT BUILDING CLASS SQUARE F
410 National Business Parkway Fort Meade District Lockheed Martin Corp A 52,6
1710-1722 Gwynn Oak Avenue Baltimore County West Trail Blazers International Christian Center B 30,0
849 Fairmount Avenue Baltimore County North Roadnet Technologies, Inc A 27,8
Significant 1Q12 Sale Transactions SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE F
3700 Koppers Street Baltimore City North/West St. John Properties, Inc N/A 100,0
7030 Hi Tech Drive Fort Meade District TECORE $3,910,400/ $81.47 psf 48,0
Significant 1Q12 Construction Completions SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE F
N/A
Significant Projects Under Construction SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE F
225 Schilling Circle Baltimore County North EA Engineering, Science & Technology Inc 3Q12 126,4
801 Long Drive Harford County N/A 2Q12 120,0
8160 Maple Lawn Boulevard Howard County South N/A 2Q12 105,0
* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS