REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET...REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET Q1 2016 3BALTIMORE OFFICE MARKET FIRST QUARTER 2016 OFFICE SUPPLY AND DEVELOPMENT Well pre-leased

REAL ESTATE OUTLOOK

BALTIMORE OFFICE MARKETFIRST QUARTER 2016

The Baltimore metro area office market experienced steady conditions during the first quarter, as net absorption was negative 151,000 SF due to a handful of mid-sized move outs. The vacancy rate was stable at 10.3%, which is below the 10-year average of 11.5%. As a result, asking rents remained relatively unchanged this quarter. The construction pipeline is robust at 2.1 million SF underway and holds a healthy pre-lease rate at 56%.

ECONOMY

Healthy year-over-year job growthPayroll employment increased 24,100 during the 12 months ending January 2016, which is more than double the 20-year annual average of 11,800. The Baltimore Suburbs took 18,600 or 77% of these new jobs. The professional/business services sector was the leader in job growth during the past 12 months, adding 8,000 new jobs. The construction sector followed with 5,800 new jobs.

The Baltimore metro area unemployment rate is 4.8% at December 2015, down from 5.4% one year ago. The unemployment rate is below the 10-year average of 6.1%. The Baltimore metro area unemployment rate is comparable to the national unemployment rate of 4.8% at December.

We expect the economy to remain healthy during the balance of 2016 and 2017. Through 2020, we expect job growth to average 13,100 per year with the peak of job growth occurring during 2016. We project the strongest growth to occur in health, education, technology, and food services fields.

Office market steady during Q1 Vacancy rates and rents stable

OFFICE TRENDS

10-YEAR TREND FIRST QUARTER 2016

DIRECT VACANCY

10.3%Vacancy rate edges down

ABSORPTION

(151,000) SFDemand weakens

RENTAL R ATES

$21.57 PSFAsking rents stable

UNDER CONSTRUCTION

2.1 Million SFGrowing pipeline

JOB GROW TH

24,100 jobsDuring 12-months ending January 2016

2 REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET Q1 2016


OFFICE VACANCY AND DEMAND

Net absorption sluggish due to move-outs The direct vacancy rate in the Baltimore metro area was 10.5% at March 2016, down 10 basis points from December 2015. This compares favorably to the 10-year average rate of 11.5%.

Baltimore South, which includes the submarkets of Columbia, Route 1 North, BWI, and Anne Arundel South, holds a direct vacancy rate at 10.0% at March 2016. This compares favorably to Baltimore North at 10.5%, which is due in part to the elevated vacancy in Baltimore CBD and Baltimore County West.

Net absorption totaled negative 151,000 SF during the first quarter of 2016, as limited demand could not keep pace with tenants vacating space. Net absorption for Class A space totaled negative 19,000 SF, while Class B/C totaled negative 131,000 SF. Net absorption totaled 1.0 million SF during 2015, which compares to the 10-year average of 1.4 million SF.

The vacancy rate edged down despite the negative net absorption as 225 N. Calvert Street, a vacant 396,100 SF office building in the Baltimore CBD, was demolished and removed from office inventory. A 346 unit multifamily building is currently being constructed in its place.

The Balance of Baltimore City submarket experienced the strongest positive net absorption during the first quarter, contributing positive 63,000 SF. Baltimore County North experienced the weakest net absorption at negative 81,000 SF. This was due to Cobham vacating 32,000 SF at 10713 Gilroy Road and Insurance Designers of Maryland leaving 29,000 SF at 950 Ridgebrook Road.

Notably, MedStar Health pre-leased 92,000 SF at 10600 Little Patuxent Parkway in Columbia which is expected to break ground later this year. Due to this, the health sector represented a majority of the leasing activity during the past three months at 53%. The Columbia submarket represented the largest share of leasing activity at 68%. Some other smaller deals include the 6,000 SF Annapolis Pediatrics lease at 3158 Braverton Street and the 6,000 SF Resource Energy lease at 10480 Little Patuxent Parkway, both in the Anne Arundel South submarket.

UNEMPLOYMENT RATE

PAYROLL JOB GROWTH

-4%

-3%

-2%

-1%

0%

1%

2%

3%

06 07 08 09 10 11 12 13 14 15 16*

UNITED STATES BALTIMORE METRO AREA

BALTIMORE METRO AREA OFFICE NET ABSORPTION AND VACANCY

6%

7%

8%

9%

10%

11%

12%

13%

14%

-0.5

0.0

0.5

1.0

1.5

2.0

07 08 09 10 11 12 13 14 15 16*

NET ABSORPTION IN MILLIONS DIRECT VACANCY RATE

* At December 2015 SOURCE Bureau of Labor Statistics, Transwestern.

0%

2%

4%

6%

8%

10%

12%

06 07 08 09 10 11 12 13 14 15 16*

UNITED STATES BALTIMORE METRO AREA

* 12 months ending January 2016 SOURCE Bureau of Labor Statistics, Transwestern.

* At first quarter 2016 SOURCE CoStar, Transwestern.

REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET Q1 2016 3


OFFICE SUPPLY AND DEVELOPMENT

Well pre-leased pipeline due to deliver this yearThere were four deliveries during the last three months. St. John Properties delivered a total of 49,000 SF at 11560 and 11570 Crossroads Circle, also known as the Baltimore Crossroads development. The Motor House, located at 120 W. North Avenue in the Balance of Baltimore City submarket, delivered 100% leased by the Robert W. Deutsch Foundation. The redevelopment transformed a historic car dealership into an art incubator providing art-based non-profits studio and office space.

There is 2.1 million SF of office space under construction or renovation at March 2016. Projects are 56% pre-leased, above the 10-year average pre-lease rate of 47%. The majority of the pipeline, at 85%, is currently on pace to deliver during 2016 with the remainder to deliver in 2017. The Balance of Baltimore City submarket has the greatest amount of space under construction, totaling 821,000 SF. This is highlighted by 477,000 SF at 100 Block Street currently being constructed for Exelon. Also underway, Under Armour’s 175,000 SF IT and Finance Office at 2601 Port Covington Drive and 1812 Ashland Avenue which is 100% pre-leased to Johns Hopkins University Health System.

OFFICE RENTAL R ATES

Asking rents constant YTDThe average rental rate in the Baltimore metro area was $21.57 PSF at March 2016, relatively unchanged from year-end 2015. Class A office rents averaged $25.56 PSF, while Class B/C rents averaged $20.29 PSF. Baltimore South holds a higher asking rate at $23.94 PSF at March 2016, compared to Baltimore North at $20.63 PSF.

BALTIMORE METRO AREA OFFICE ASKING RENTAL RATES

$10

$12

$14

$16

$18

$20

$22

$24

$26

$28

07 08 09 10 11 12 13 14 15 16*

CLASS A CLASS B/C


BALTIMORE METRO AREA OFFICE DEVELOPMENT PIPELINE MILLION SF

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

06 07 08 09 10 11 12 13 14 15 16*

COMPLETED UNDER CONSTRUCTION PRE-LEASED UNDER CONSTRUCTION AVAILABLE

* Completed YTD SOURCE CoStar, Transwestern.

4 REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET Q1 2016


OFFICE INVESTMENT MARKET

Investment sales steady YTD Investment sales volume totaled $27.7 million or $331 PSF in the Baltimore metro area during the first quarter. Investors focused capital on Class B assets, which is notable in comparison to past years. However, the sample size during the past three months is small and should shift during the balance of 2016. Not surprisingly, 100% of the total capital YTD was focused on assets located in highly and somewhat walkable neighborhoods with access to transportation, retail, and other amenities.

The most notable deal during the first quarter of 2016 was the Hammes Company’s purchase of Riverside Wharf, 1420 Key Highway, off-market for $23 million or $511 PSF in the Balance of Baltimore submarket. This asset is 100% leased to MedStar Health, Walgreens, and, most recently, Core Power Yoga.

OFFICE MARKET OUTLOOK

Market conditions set to improve We expect the Baltimore metro area office market to improve during the balance of 2016, driven by cybersecurity, cloud computing, and health care industries. Improving conditions will be felt more in the suburbs surrounding BRAC-related military bases compared to the Baltimore CBD. We expect the vacancy rate will decline to the mid-9% range by year-end 2017. As the vacancy rate declines, asking rents should rise 1.5% to 2.5% during 2016. n

Baltimore Metro Area Office Market Indicators

SUBMARKET INVENTORYUNDER

CONSTRUCTIONQ1 NET

ABSORPTIONYTD NET

ABSORPTIONDIRECT

VACANCYSUBLEASE

SPACEOVERALL

VACANCYAVERAGERATE PSF

Harford County 3,668,302 119,000 (4,000) (4,000) 21.0% 0.1% 21.1% $22.71

Baltimore County West 13,059,476 223,600 13,000 13,000 11.0% 0.1% 11.1% $20.14

Baltimore County North 16,297,276 45,000 (81,000) (81,000) 9.6% 0.2% 9.8% $20.73

Baltimore County East 2,831,762 60,000 7,000 7,000 11.7% 0.1% 11.8% $19.25

Baltimore CBD 20,390,451 0 (40,000) (40,000) 11.2% 0.0% 11.2% $20.62

Balance of Baltimore City 20,144,365 821,456 63,000 63,000 8.1% 0.1% 8.2% $20.28

Baltimore County North 76,391,632 1,269,056 (42,000) (42,000) 10.5% 0.1% 10.6% $20.63

Columbia 15,130,849 642,312 (15,000) (15,000) 7.6% 0.3% 7.9% $23.61

Route 1 North 1,145,773 0 7,000 7,000 11.3% 0.8% 12.1% $20.13

BWI 11,111,990 153,540 (78,000) (78,000) 10.7% 0.1% 10.8% $24.31

Anne Arundel South 7,241,703 25,000 (23,000) (23,000) 13.7% 0.2% 13.9% $24.41

Baltimore County South 34,630,315 820,852 (109,000) (109,000) 10.0% 0.2% 10.2% $23.94

Total 111,021,947 2,089,908 (151,000) (151,000) 10.3% 0.1% 10.5% $21.57

SOURCE CoStar, Transwestern.

Copyright © 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.


T 443.285.0770www.transwestern.com

7160 Columbia Gateway Drive, Suite 210Columbia, Maryland 21046

Baltimore Metro Area Office Market Indicators

PROPERTY CLASS INVENTORYUNDER

CONSTRUCTIONQ1 NET

ABSORPTIONYTD NET

ABSORPTIONDIRECT

VACANCYSUBLEASE

SPACEOVERALL


Class A 35,301,882 1,863,308 (19,000) (19,000) 9.8% 0.2% 10.0% $25.56

Class B/C 75,720,065 226,600 (131,000) (131,000) 10.6% 0.1% 10.7% $20.29

Total 111,021,947 2,089,908 (151,000) (151,000) 10.3% 0.1% 10.5% $21.57


Baltimore Metro Area Office Market Notable Lease Transactions

TENANT DEAL TYPE ADDRESS SUBMARKET SQUARE FEET

MedStar Health Pre-Lease 10600 Little Patuxent Parkway Columbia 92,000

Calvert School Renewal 10713 Gilroy Road Baltimore County North 15,000

Toll Brothers Renewal 7164 Columbia Gateway Drice Columbia 10,000

National Conference Services Renewal 5565 Sterrett Place Columbia 10,000

Abrams, Foster, Nole & Williams PA Renewal 2 Hamill Road Balance of Baltimore City 8,000

Resource Energy New Lease 10480 Little Patuxent Parkway Columbia 6,000

Geico Renewal 231 E. Baltimore Street Baltimore CBD 6,000

SOURCE CoStar, County Newsletters, Baltimore Business Journal, Transwestern.

Baltimore Metro Area Office Market Construction Activity

SUBMARKET SQUARE FEET UNDER CONSTRUCTION PERCENT PRE-LEASED

Harford County 119,000 84%

Baltimore County West 223,600 0%

Baltimore County North 45,000 100%

Baltimore County East 60,000 21%

Balance of Baltimore City 821,456 88%

Columbia 642,312 40%

BWI 153,540 13%

Anne Arundel South 25,000 35%

Total 2,089,908 56%


METHODOLOGY

The information in this report is the result of a compilation of information on office properties located in the Baltimore metro area. This report includes single-tenant, multi-tenant and owner-user office properties 15,000 SF and larger, excluding properties owned by a government agency.

CONTACT

Elizabeth NortonManaging Research Director | Mid-Atlantic [email protected]

Mallory CasonResearch Associate | Mid-Atlantic [email protected]

REAL ESTATE OUTLOOK

The Baltimore metro area flex/industrial market experienced healthy conditions during the first quarter of 2016, as the direct vacancy rate decreased 40 basis points and net absorption was positive 1.2 million SF due to several tenants leasing large blocks of space. Due to these conditions, landlords increased asking rents by 1.3%.

ECONOMY

Healthy year-over-year job growthPayroll employment increased 24,100 during the 12 months ending January 2016, which is more than double the 20-year annual average of 11,800. The Baltimore Suburbs took 18,600 or 77% of these new jobs. The professional/business services sector was the leader in job growth during the past 12 months, adding 8,000 new jobs. The construction sector followed with 5,800 new jobs.

The Baltimore metro area unemployment rate is 4.8% at December 2015, down from 5.4% one year ago. The unemployment rate is below the 10-year average of 6.1%. The Baltimore metro area unemployment rate is comparable to the national unemployment rate of 4.8% at December.

We expect the economy to remain healthy during the balance of 2016 and 2017. Through 2020, we expect job growth to average 13,100 per year with the peak of job growth occurring during 2016. We project the strongest growth to occur in health, education, technology, and food services fields.

Flex/industrial thrives in Q1Large lease deals drives market expansion

FLEX/INDUSTRIAL TRENDS

10-YEAR TREND FIRST QUARTER 2016

DIRECT VACANCY

8.3%Vacancy rate edges down

ABSORPTION

1.2 Million SFActive large leasing drives absorption

RENTAL R ATES

$6.06 PSFAsking rents rise 1.3% YTD

UNDER CONSTRUCTION

1.4 Million SFPipeline will deliver in 2016

JOB GROW TH

24,100 jobsDuring 12-months ending January 2016

BALTIMORE FLEX/INDUSTRIAL MARKETFIRST QUARTER 2016


2 REAL ESTATE OUTLOOK BALTIMORE FLEX/INDUSTRIAL MARKET Q1 2016

FLEX /INDUSTRIAL VACANCY AND DEMAND

Robust market conditions during Q1The direct vacancy rate in the Baltimore metro area was 8.3% at March 2016, down from 8.7% the quarter prior. This compares favorably to the 10-year historical average of 9.1%. Flex/warehouse has the lowest vacancy rate among the three product types at 6.6%, down 50 basis points from year-end 2015.

Net absorption totaled positive 1.2 million SF in the Baltimore metro area during the first quarter of 2016, well above the 10-year quarterly average absorption of positive 406,000 SF. Performance in the first quarter is just shy of the 10-year annual absorption average of 1.6 million SF and well above the 2015 net absorption of 563,000 SF.

The Baltimore City submarket contributed the strongest positive net absorption during the first quarter, accounting for positive 315,000 SF. This was due in large part to Johns Hopkins signing for 87,500 SF at 5500 E. Lombard Street as well as a 263,000 SF pre-leased delivery at 1530 Broening Highway, which came online 77% leased. The Baltimore County North submarket experienced the weakest quarter as net absorption was zero due to minimal activity.

FLEX /INDUSTRIAL SUPPLY AND DEVELOPMENT

Pipeline solid with healthy pre-lease rateThree projects delivered during the first quarter of 2016 totaling 384,000 SF at 53% pre-leased. In addition to the 1530 Broening Highway delivery, St. John Properties delivered 40,000 SF at 11675 Crossroads Circle in the Baltimore County East submarket and FRP Development Corporation delivered 80,000 SF at 1921 62nd Street in Baltimore City.

BALTIMORE METRO AREA FLEX/INDUSTRIAL NET ABSORPTION AND VACANCY

BALTIMORE METRO AREA FLEX/INDUSTRIAL ASKING RENTAL RATES

BALTIMORE METRO AREA FLEX/INDUSTRIAL DEVELOPMENT PIPELINE MILLION SF

4%

5%

6%

7%

8%

9%

10%

11%

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

07 08 09 10 11 12 13 14 15 16*

NET ABSORPTION IN MILLIONS DIRECT VACANCY RATE

$0

$2

$4

$6

$8

$10

$12

$14

06 07 08 09 10 11 12 13 14 15 16*

BULK WAREHOUSE FLEX/WAREHOUSE FLEX/R&D

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

06 07 08 09 10 11 12 13 14 15 16*

COMPLETED UNDER CONSTRUCTION PRE-LEASED UNDER CONSTRUCTION AVAILABLE



* Completed YTD SOURCE CoStar, Transwestern.


REAL ESTATE OUTLOOK BALTIMORE FLEX/INDUSTRIAL MARKET Q1 2016 3

Projects under construction or renovation total 1.4 million SF at March 2016. The pipeline is currently 59% pre-leased, which is above the 10-year average pre-lease rate of 21%. All pipeline projects are due to deliver during the remainder of 2016. Baltimore City has the greatest amount of space under construction, with two projects totaling 557,000 SF. They are located at 5300 Holabird Avenue and 301 E. Cromwell Street and are 496,000 SF and 61,000 SF, respectively. Sagamore Spirit Distillery will fully occupy 301 E. Cromwell Street.

FLEX /INDUSTRIAL RENTAL R ATES

Asking rents rise 1.3% YTDFlex/industrial asking rents increased 1.3% during the last three months to $6.06 PSF. Bulk warehouse and flex/warehouse both experienced a rise of 1.4%, followed by Flex/R&D rising 1.0%.

FLEX /INDUSTRIAL INVESTMENT MARKET

Investment activity steady in 2016Investment sales totaled $24 million or $52 PSF in the Baltimore metro area during the first quarter. This compares to $511 million in sales recorded at $61 PSF during all of 2015.

The BWI submarket accounted for 56% of the total sales volume in the first quarter, followed by Route 1 North at 18%. Investors have focused 100% of capital on flex/warehouse so far this year.

The most notable deals during the first quarter were IDI Gazeley’s purchase of 521 McCormick Drive for $4.5 million or $67 PSF and Trammell Crow Company’s purchase of 7565 Harmans Road for $6 million or $31 PSF, both in the BWI submarket. In addition, GoldLeaf Associates bought a warehouse at 7269 Washington Boulevard in the Route 1 North submarket for $4.4 million or $164 PSF.

FLEX /INDUSTRIAL MARKET OUTLOOK

Healthy market conditions to continue We expect demand for flex/industrial product in the Baltimore metro area to remain on a healthy pace during the balance of 2016. As demand rises, we expect the vacancy rate to decline to the high-7% range by year-end 2016. As the vacancy rate declines, we expect asking rents to rise 3.0% to 3.5% during 2016.

The age of the current inventory suggests future ground breakings, as tenants are showing preference for newer product with efficient floor plates and adequate loading docks. We anticipate a rise in spec ground breakings during the remainder of 2016 and into 2017. n


4 REAL ESTATE OUTLOOK BALTIMORE FLEX/INDUSTRIAL MARKET Q1 2016

Baltimore Metro Area Flex/Industrial Market Indicators

SUBMARKET INVENTORYUNDER

CONSTRUCTIONQ1 NET

ABSORTIONYTD NET

ABSORPTIONDIRECT

VACANCYSUBLEASE

SPACEOVERALL


Bulk Warehouse 16,573,845 0 265,000 265,000 8.4% 0.7% 9.1% $4.91

Flex/Warehouse 6,466,216 0 19,000 19,000 4.4% 0.0% 4.5% $8.37

Flex/R&D 518,210 0 (1,000) (1,000) 17.0% 0.0% 17.0% $10.67

Harford County 23,558,271 0 283,000 283,000 7.5% 0.5% 8.0% $5.99

Bulk Warehouse 3,260,056 0 (46,000) (46,000) 12.4% 0.0% 12.4% $4.13

Flex/Warehouse 12,902,243 0 51,000 51,000 6.9% -0.1% 6.8% $6.37

Flex/R&D 3,001,887 0 33,000 33,000 13.1% 0.3% 13.4% $10.34

Baltimore County West 19,164,186 0 38,000 38,000 8.8% 0.0% 8.8% $6.61

Bulk Warehouse 1,169,658 0 2,000 2,000 7.3% 0.0% 7.3% $5.79

Flex/Warehouse 7,899,634 0 4,000 4,000 1.9% 0.0% 1.9% $12.20

Flex/R&D 1,507,350 0 (6,000) (6,000) 7.7% 0.0% 7.7% $10.50

Baltimore County North 10,576,642 0 0 0 3.3% 0.0% 3.3% $11.25

Bulk Warehouse 14,185,242 120,000 71,000 71,000 19.3% 0.0% 19.3% $4.29

Flex/Warehouse 14,312,539 306,016 113,000 113,000 3.4% 0.0% 3.4% $2.99

Flex/R&D 670,966 0 (3,000) (3,000) 7.3% 0.0% 7.3% $7.44

Baltimore County East 29,168,747 426,016 181,000 181,000 11.2% 0.0% 11.2% $3.73

Bulk Warehouse 11,249,060 496,000 193,000 193,000 5.7% 0.0% 5.7% $4.75

Flex/Warehouse 40,334,108 61,000 35,000 35,000 8.6% -0.1% 8.5% $4.47

Flex/R&D 1,279,787 0 87,000 87,000 1.4% 3.1% 4.5% $7.11

Baltimore City 52,862,955 557,000 315,000 315,000 7.8% 0.0% 7.8% $4.59

Bulk Warehouse 2,776,253 0 6,000 6,000 4.6% 0.0% 4.6% $7.15

Flex/Warehouse 7,386,375 0 200,000 200,000 6.3% 0.0% 6.3% $9.37

Flex/R&D 3,165,250 0 (19,000) (19,000) 8.6% 0.4% 9.0% $13.01

Columbia 13,327,878 0 187,000 187,000 6.5% 0.1% 6.6% $9.77

Bulk Warehouse 17,306,362 219,400 138,000 138,000 10.7% 0.3% 11.0% $5.86

Flex/Warehouse 11,131,000 0 (35,000) (35,000) 6.4% 0.1% 6.5% $6.71

Flex/R&D 536,163 0 12,000 12,000 2.7% 0.0% 2.7% $9.79

Route 1 North 28,973,525 219,400 116,000 116,000 8.9% 0.2% 9.1% $6.26

Bulk Warehouse 12,918,980 244,500 0 0 8.9% 0.0% 8.9% $6.18

Flex/Warehouse 12,958,745 0 21,000 21,000 8.7% 0.5% 9.3% $5.28

Flex/R&D 2,311,489 0 7,000 7,000 12.3% 0.6% 12.9% $8.18

BWI 28,189,214 244,500 28,000 28,000 9.1% 0.3% 9.4% $5.93

Bulk Warehouse 163,727 0 0 0 0.0% 0.0% 0.0% $0.00

Flex/Warehouse 3,284,088 0 10,000 10,000 3.5% 0.0% 3.5% $12.39

Flex/R&D 1,028,437 0 3,000 3,000 10.2% 0.0% 10.2% $14.91

Anne Arundel South 4,476,252 0 13,000 13,000 4.9% 0.0% 4.9% $12.99

Bulk Warehouse 79,603,183 1,079,900 629,000 629,000 10.5% 0.2% 10.8% $5.25

Flex/Warehouse 116,674,948 367,016 418,000 418,000 6.6% 0.0% 6.6% $6.07

Flex/R&D 14,019,539 0 113,000 113,000 9.6% 0.5% 10.1% $10.50

Total 210,297,670 1,446,916 1,161,000 1,161,000 8.3% 0.1% 8.4% $6.06



Copyright © 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.

METHODOLOGY

The information in this report is the result of a compilation of information on flex/industrial properties located in the Baltimore metro area. This report includes single-tenant, multi-tenant and owner-user office properties 15,000 SF and larger, excluding properties owned by a government agency.

CONTACT

Elizabeth NortonManaging Research Director | Mid-Atlantic [email protected]

T 443.285.0770www.transwestern.com

7160 Columbia Gateway Drive, Suite 210Columbia, Maryland 21046

Baltimore Metro Area Flex/Industrial Market Indicators

PROPERTY TYPE INVENTORYUNDER

CONSTRUCTIONQ1 NET

ABSORPTIONYTD NET

ABSORPTIONDIRECT

VACANCYSUBLEASE

SPACEOVERALL


Bulk Warehouse 79,603,183 1,079,900 629,000 629,000 10.5% 0.2% 10.8% $5.25

Flex/Warehouse 116,674,948 367,016 418,000 418,000 6.6% 0.0% 6.6% $6.07

Flex/R&D 14,019,539 0 113,000 113,000 9.6% 0.5% 10.1% $10.50

Total 210,297,670 1,446,916 1,161,000 1,161,000 8.3% 0.1% 8.4% $6.06


Baltimore Metro Area Flex/Industrial Market Notable Lease Transactions

TENANT DEAL TYPE ADDRESS SUBMARKET SQUARE FEET

U.S. Lumber New Lease 1805 Fashion Court Harford County 259,000

W.B. Mason New Lease 9420 Gerwig Lane Columbia 187,000

Caprock Milling and Crushing New Lease 8907 Bethlehem Boulevard Baltimore County East 120,000

Old Dominion Supply New Lease 6945 San Tomas Road Route 1 North 81,000

Packaging Corporation of America Renewal 8301 Sherwick Court Route 1 North 75,000

Calvert School Renewal 11100 Gilroy Road Baltimore County North 24,000

Charm City Hospitality New Lease 178 - 194 Alco Place Baltimore County West 13,000

SOURCE CoStar, County Newsletters, Baltimore Business Journal, Transwestern.

Baltimore Metro Area Flex/Industrial Market Construction Activity

SUBMARKET SQUARE FEET UNDER CONSTRUCTION PERCENT PRE-LEASED

Baltimore County East 426,016 78%

Baltimore City 557,000 11%

Route 1 North 219,400 100%

BWI 244,500 100%

Total 1,446,916 59%


Mallory CasonResearch Associate | Mid-Atlantic [email protected]

Documents

REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET...REAL ESTATE OUTLOOK BALTIMORE OFFICE MARKET Q1 2016 3BALTIMORE OFFICE MARKET FIRST QUARTER 2016 OFFICE SUPPLY AND DEVELOPMENT Well pre-leased