suburban maryland quarterly market report · square feet absorbed, up from the -503,622 square feet...

Quarterly Market Report

3rd Quarter 2017

Suburban Maryland

lpcwashingtondc.com

Table of Contents

Metropolitan D.C. Market Overview .....................................3

Suburban Maryland Quarterly Overview ............................5

Suburban Maryland Top Leases ........................................... 8

Suburban Maryland Top Sales .............................................. 9

Market Spotlight, 3Q 2017:

Bethesda-Chevy Chase ....................................................10

North Bethesda-Potomac ................................................ 12

Rockville ................................................................................ 14

North Rockville .................................................................... 15

Gaithersburg-Germantown ............................................. 17

Silver Spring .......................................................................... 18

Beltsville-Calverton ........................................................... 19

Greenbelt-College Park ...................................................20

Landover-Largo-Capitol Heights .................................. 22

National Harbor-Oxon Hill .............................................. 23

Columbia South ................................................................. 24

Prince George’s County Industrial ................................ 25

Baltimore-Washington Corridor Industrial ................. 26

Frederick ...............................................................................27

Frederick Flex ..................................................................... 28

Tysons Corner ..................................................................... 13

Paul Kern Senior Vice President

[email protected] | 202.513.6716

Brent Prossner Vice President


John Olson Senior Vice President


Jennifer Orr Associate


Maryland Leasing & Market Research

2

Overall Market Summary

Metropolitan D.C. Market Overview 3rd Quarter 2017

The Washington, DC Metropolitan commercial real estate market is comprised of approximately 412.2 million square feet of rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland.

The total vacancy rate decreased to 15.3% in the third quarter, down from 15.4% at the end of the second quarter. The market recorded 1,007,692 square feet of net absorption in the third quarter, a significant improvement from the -518,562 square feet absorbed in the second quarter.

Leasing activity totaled approximately 5.9 million square feet in transactions signed. The largest lease executed was by Marriott for 720,000 square feet at 7750 Wisconsin Avenue, a proposed building, in Bethesda, MD.

Four buildings, totaling 1,053,000 square feet, broke ground (0 DC, 1 VA, 3 MD); bringing the year-to-date 2017 under construction pipeline total

to 9,990,197 square feet (60% pre-leased). Four buildings, totaling 1,306,910 square feet and 66% leased, delivered this quarter (all were in Virginia).

There were nineteen sale transactions in the third quarter, totaling $1.79 billion. The largest sale was 900 16th Street, NW in Washington, DC trading for $151,000,000 ($1,238 psf).

Average asking rental rates increased $0.24 to $36.87 per square foot, Full Service.

From August 2016 - August 2017 the DC Metropolitan area had a net increase of 67,600 jobs (63,400 private sector, 4,200 government) representing 2.1% growth, while the unemployment rate increased to 3.7%. The DC Metro is ranked 7th nationally in unemployment.

DC VA MDMetro Area (YTD)

Direct Vacancy(3Q 2017) 10.3% 15.4% 15.0% 14.4%

Total Vacancy(3Q 2017) 11.3% 16.2% 15.5% 15.3%

Total Net Absorption (YTD 2017) 435,085 SF 1.1 M SF 391,739 SF 1.9 M SF

Leasing Activity (YTD 2017) 6.1 M SF 9.4 M SF 2.9 M SF 18.4 M SF

3 lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67001530 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.4600

Outlook

Metropolitan D.C. Market Overview 3rd Quarter 2017


Looking ahead, the private sector will continue to be the primary driver for employment in the Washington, DC Metropolitan area. With GSA lease approvals being held up in the Senate, expect GSA leasing activity to remain sluggish for the remainder of 2017. While overall market fundamentals improved, the Washington, DC region should remain a tenant’s market. Aggressive landlords will continue to offer generous concessions and initiate capital improvements to remain competitive. While the awarding of a new, massive FBI Headquarters has been shelved for the time being, the entire region is now vying for the for the new, and larger, Amazon “HQ2” Headquarters requirement.

The Washington, DC Metropolitan market showed signs of improvement in the third quarter as total vacancy ticked down and absorption was positive across all three markets. Asking rents and sales volume ticked up for the region as well Regional employment experienced 2.1% of growth YOY ending August 2017, primarily driven by the private sector, specifically the Educational & Health Services industry. While the unemployment rate increased slightly to 3.7%, the DC Metro area’s ranking improved to 7th in unemployment nationally (among cities of 1 million+ people).

5lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67001530 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.4600

Market Summary

Suburban Maryland 3rd Quarter 2017

The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 86.6 million square feet of rentable space in 887 office buildings of 25,000 square feet and greater.

The market recorded a significant increase in net absorption in the third quarter with 145,756 square feet absorbed, up from the -503,622 square feet absorbed in the previous quarter.

Direct vacancy decreased to 15.0%, down from 15.1% and total vacancy decreased to 15.5% from 15.7%.

There were four sale transactions in Suburban Maryland this quarter. A portfolio sale including 820 W. Diamond Avenue, 9713, 9715, and 9717 Key West Avenue in the Gaithersburg and North Rockville submarkets sold to Farallon Capital Management, LLC for $60.7 million. 9600 Blackwell Road in the North Rockville submarket sold to Royco, Inc. for $25.5 million. 77 Upper Rock Circle in the North Rockville submarket sold to DSC Partners, LLC for $19.5 million. 4630 Montgomery Avenue in the Bethesda/Chevy Chase submarket sold to Stonebridge-Carras, LLC for $15.2 million.

The largest public sector lease executed this quarter was a new lease by the U.S. Citizenship and Immigration Services for 574,767 square feet at 5900 Capital Gateway Drive in the North Bethesda submarket.

The largest private sector lease was a 720,000-square-foot pre-lease signed by Marriott at 7750 Wisconsin Avenue in the Bethesda/Chevy Chase submarket.

The year-over-year unemployment rate in Suburban Maryland decreased to 3.1% in August 2017, down from 3.4% in August 2016.

From August 2016 to August 2017 employment in Suburban Maryland had a net increase of 22,811 new jobs, representing 3.45% growth. Sectors with the greatest amount of job growth were the Government with 3,600 jobs, Mining, Logging and Construction with 3,100 and Leisure & Hospitality with 2,800 jobs.

3Q 2017 2Q 2017 3Q 2016

Direct Vacancy 15.0% 15.1% 17.0%

Total Vacancy 15.5% 15.7% 17.5%

NetAbsorption (SF) 145,756 -503,622 -200,482

Leasing Activity (SF) 1.2 M 726,067 1.0 M

Under Construction (SF) 1.1 M 292,724 233,639

Deliveries (SF) 0 0 0

Rental Rates(PSF, FS) $26.68 $26.73 $26.37

U/C Percent Pre-Leased 43% 60% 38%


Deliveries vs. Under Construction

Deliveries | Net Absorption | Vacancy Rate

Absorption & Gross LeasingThe Suburban Maryland market recorded 145,756 square feet of net absorption in the third quarter, a significant increase from the -503,622 square feet absorbed in the second quarter; totaling 391,739 square feet absorbed YTD 2017.

Five of the Top Ten leases signed this quarter were in Montgomery County and ranged between 720,000 and 13,554 square feet.

Eight of the leases in the Top Ten this quarter were private sector transactions, while two were public sector.

In the third quarter, total leasing activity totaled 1,288,196 square feet, a 77% increase from the 726,067 square feet leased in the second quarter.

The total average asking rental rate was $26.68 Full Service, down $0.05 from the previous quarter. The Class A asking rental rate was $28.50 Full Service in the third quarter, a $0.37 decrease from the $28.87 asked in the second quarter.

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Vacancy Rate

The direct vacancy rate decreased to 15.0%, down from 15.1% in the third quarter, totaling approximately 12.9 million square feet. Total vacancy decreased to 15.5%, down from 15.7%, totaling approximately 13.4 million square feet.

The sublease vacancy rate decreased to 0.5% at the end of the third quarter, representing 474,162 square feet of vacant space.

The Class A vacancy rate decreased to 16.5% from 16.7% in the third quarter, totaling approximately 7.4 million square feet. The Class B vacancy rate remained flat at 14.8% in the third quarter, totaling approximately 5.3 million square feet.


Construction


At the end of the third quarter 2017, there were six buildings under construction. Fenton Street Plaza (Class A, 96,000 sf, 57% pre-leased) is set to deliver in January 2018. 1000 Spring Street (Class A, 121,724 sf, 100% pre-leased) is set to deliver in May 2018. 5801 University Research Court (Class A, 75,000 sf, 0% pre-leased) is set to deliver in December 2018.

The three buildings that broke ground this quarter were 4000 Garden City Drive (Class A, 176,000 sf, 100% pre-leased) is set to deliver in November 2018, 4747 Bethesda Avenue (Class A, 300,000 sf, 4.2% pre-leased) and 7272 Wisconsin Avenue (Class A, 357,000 sf, 2.3% pre-leased) are set to deliver in late 2019.

Expect the private sector to continue to drive leasing activity and job growth, while the GSA (public sector) remains limited to short-term renewals and space consolidations.

Vacancy rates are expected to decline as a result of the private sector gaining confidence in an improving economy and is actively looking for longer lease terms.

Renovations to existing commodity buildings in mass transit oriented locations, should encourage tenant moves; as tenants seek more efficient, amenity rich, easily accessible space.

To be competitive landlords will continue to offer generous concession packages (TI Allowance and free rent).

Outlook



Top Ten LeasesIn the third quarter 2017, the Top Ten leases were evenly split between Montgomery and Prince George’s County, with seven of the top leases be-ing new transactions. Eight of the leases in the Top Ten this quarter were private sector transactions, while two were public sector.

The largest lease executed in Montgomery County was a pre-lease for 720,000 square feet by Mar-riott establishing their new future Headquarters at 7750 Wisconsin Avenue in the Bethesda/Chevy Chase submarket.

There were three lease renewals this quarter, including ADP, Inc. signing for 23,798 square feet,

Whiting Turner Contracting renewing and expand-ing for a total of 21,500 square feet, and the GSA signing for 13,554 square feet.

In Prince George’s County, the U.S. Citizenship and Immigration Services signed the largest lease of the quarter, by taking the entire square footage of the proposed building at 5900 Capital Gateway Drive in Camp Springs.

The Suburban Maryland market totaled 1,288,196 square feet of leasing activity in the third quarter 2017, an increase from the 726,067 square feet leased in the second quarter. This represents a 77% increase in leasing activity. The market has totaled 2.9 million square feet leased YTD 2017.

7750 Wisconsin Ave.

Tenant Marriott

Size 720,000 SF

Type New/Pre-lease

8403 Colesville Rd.

Tenant Exiger

Size 19,502 SF

Type New

5900 Capital Gateway Dr.

Tenant U.S. Citizenship & Immigration Services

Size 574,767 SF

Type New/Pre-lease

6411 Ivy Ln.

Tenant CliftonLarsonAllen

Size 19,149 SF

Type New

401 N. Washington St.

Tenant ADP, Inc.

Size 23,798 SF

Type Renewal

4550 Montgomery Ave.

Tenant Aledade

Size 15,475 SF

Type New

6110 Frost Pl.

Tenant Greenhorn & O’Mara, Inc.

Size 21,633 SF

Type New

174 Waterfront St.

Tenant CACI

Size 15,105 Sf

Type New

8455 Colesville Rd.

Tenant GSA

Size 13,554 SF

Type Renewal

6305 Ivy Ln.

Tenant Whiting Turner Contracting Co.

Size 21,500 SF

Type Renewal/Expansion


Suburban Maryland Sales

9600 Blackwell Rd.

Submarket North Rockville

Date Sold July 2017

Price $25,501,000 ($252.49 PSF)

Buyer Royco, Inc.

SellerTrue North Management Group

Class A

Occupancy 97.5%

Cap Rate N/A


77 Upper Rock Cir.

Submarket North Rockville

Date Sold July 2017

Price $19,500,000 ($83.95 PSF)

Buyer DSC Partners, LLC

Seller JBG Companies

Class A

Occupancy 0.0%

Cap Rate N/A

820 W. Diamond Ave., 9713, 9715, 9717 Key West Ave.

Submarket Gaithersburg & North Rockville

Date Sold July 2017

Price$60,720,650 ($143.03 PSF & $155.74 PSF)

Buyer Farallon Capital Management, LLC

Seller Equity Commonwealth

Class A

Occupancy 86.7%

Cap Rate N/A

Comments Part of a 7 building portfolio


Submarket Bethesda/Chevy Chase

Date Sold July 2017

Price $15,250,000 ($483.08 PSF)

Buyer Stonebridge- Carras, LLC

Seller The Goldstar Group

Class B

Occupancy 98.4%

Cap Rate N/A


HighlightsThe direct vacancy rate increased to 9.3% in the third quarter 2017, up from 8.5% in the second quarter. Total vacancy increased in the third quarter to 10.8%, up from 10.3% in the second quarter. Class A total vacancy decreased to 8.2% in the third quarter, down from 9.1% in the second quarter, while the asking rental rate average decreased to $39.90 Full Service in third quarter, down $0.62 from the previous quarter.

Total net absorption increased to -56,488 square feet in the third quarter, up from -174,313 square feet absorbed in the second quarter.

Total leasing activity increased in the third quarter to 872,992 square feet, up from 93,583 square feet leased in the previous quarter. Contributing tenants included Marriott signing a 720,000-square-foot pre-lease for their new headquarter location in downtown Bethesda.

There are currently two buildings under construction in the Bethesda/Chevy Chase submarket; 7272 Wisconsin Avenue, a 357,700-square-foot, Class A office building and 4747 Bethesda Avenue, a 300,000-square-foot, Class A Office building.

10 Year Averages (2007 - 2016)

Total Absorption 52,012 SF / Year

Deliveries (SF) 58,550 SF / Year

Leasing Activity 893,194 SF / Year

Market Stats

Inventory 10.8 M SF

Direct Vacancy 9.3 %

Total Vacancy 10.8 %

YTD 2017 Absorption -215,296 SF

Under Construction 657,700 SF

Percent Pre-Leased 0%

YTD 2017 Deliveries 0 SF

Asking Rental Rates (Full Service)

2007: $35.57

PSF

2016: $37.43

PSF

YTD 2017: $36.93

PSF

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Market Spotlight

3rd Quarter 2017Bethesda-Chevy Chase


Market Spotlight

3rd Quarter 2017Bethesda-Chevy Chase

Major Leases

Under Construction

Sales

Property Submarket Building Size Available Pre-leased Delivery Date Developer Major Tenants

7272 Wisconsin AveBethesda/Chevy Chase

357,000 SF 357,000 SF 2.3% N/A Carr Properties N/A

4747 Bethesda AveBethesda/Chevy Chase

300,000 SF 300,000 SF 4.2% N/A JBG Smith N/A

Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate

4630 Montgomery Ave.Bethesda/Chevy Chase

7/20117$15,250,000($483.08 PSF)

Stonebridge-Carras, LLC

The Goldstar Group B 98.4% N/A

7750 Wisconsin Ave.

Tenant Marriott

Size 720,000 SF

Type New/Pre-lease


Tenant Adelade

Size 15,475 SF

Type New


HighlightsThe direct vacancy rate remained flat at 20.8% in the third quarter 2017. Total vacancy also remained flat at 21.0% in the third quarter. Class A total vacancy increased to 22.3% in the third quarter, up from 22.1% in the second quarter, while the asking rental rate average decreased to $29.39 Full Service in third quarter, down $0.07 from the previous quarter.

Total net absorption increased to 1,834 square feet in the third quarter, up from the -10,112 square feet absorbed in the second quarter.

Total leasing activity increased in the third quarter to 45,790 square feet, up from 40,156 square feet leased in the previous quarter. Contributing tenants included Biophysical Society signing a 5,540-square-foot lease at 5515 Security Boulevard.


Total Absorption -43,739 SF / Year



Market Stats

Inventory 10.7 M SF



YTD 2017 Absorption 89,809 SF

Under Construction 0 SF




2007: $30.59

PSF

2016: $28.93

PSF

YTD 2017: $28.52

PSF

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Market Spotlight

3rd Quarter 2017North Bethesda-Potomac


HighlightsThe direct vacancy rate decreased to 11.3% in the third quarter 2017, down from 12.2% in the second quarter. Total vacancy decreased to 11.6% in the third quarter, down from 12.5% in the previous quarter. Class A total vacancy decreased to 18.9% in the third quarter, down from 20.0% in the second quarter, while the asking rental rate average increased to $32.63 Full Service in third quarter, up $0.14 from the previous quarter.

Total net absorption increased to 80,457 square feet in the third quarter, up from -63,998 square feet absorbed in the second quarter.

Total leasing activity increased in the third quarter to square feet, up from 98,300 square feet leased in the previous quarter. Contributing tenants included ADP, Inc. renewing a 23,798-square-foot lease at 401 N. Washington Street.





Market Stats

Inventory 9.8 M SF








2007: $32.51

PSF

2016: $30.65

PSF

YTD 2017: $31.06

PSF

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Market Spotlight

3rd Quarter 2017Rockville


Market Spotlight

3rd Quarter 2017Rockville

Major Leases

Under Construction

Sales


No new construction during this quarter Rockville N/A N/A N/A N/A N/A N/A


No new sales this quarter Rockville N/A N/A N/A N/A N/A N/A N/A

401 N. Washington St

Tenant ADP

Size 23,798 SF

Type Renewal

11300 Rockville Pke

Tenant Henry M. Jackson Foundation

Size 13,090 SF

Type Renewal

3206 Tower Oaks Blvd

Tenant I.M. Systems Group, Inc.

Size 11,462 SF

Type Renewal


HighlightsThe direct vacancy rate increased to 17.7% in the third quarter 2017, up from 17.4% in the second quarter. Total vacancy remained flat at 18.9% in the third quarter. Class A total vacancy increased to 19.2% in the third quarter, up from 19.1% in the second quarter, while the asking rental rate average increased to $28.21 Full Service in third quarter, up $0.02 from the previous quarter.

Total net absorption increased to -5,551 square feet in the third quarter, up from the -97,215 square feet absorbed in the second quarter.

Total leasing activity decreased in the third quarter to 95,754 square feet, down from 148,869 square feet leased in the previous quarter. Contributing tenants included J. Craig Venter Institute signing a 13,382-square-foot lease at 9605 Medical Center Drive.





Market Stats

Inventory 13.1 M SF








2007: $27.67

PSF

2016: $24.99

PSF

YTD 2017: $25.99

PSF

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Market Spotlight

3rd Quarter 2017North Rockville


Market Spotlight

3rd Quarter 2017North Rockville

Major Leases

Under Construction

Sales


No new construction during the quarter N. Rockville N/A N/A N/A N/A N/A N/A


9713, 9715, 9717 Key West Ave. (Part of 7 building portfolio)

N. Rockville 7/2017$60,750,650($155.74 PSF)

Farallon Capital Management, LLC

Equity Commonwealth

A 86.7% N/A

9600 Blackwell Rd. N. Rockville 7/2017$25,501,000 ($252.49 PSF)

Royco, Inc.True North Management Group

A 97.5% N/A

77 Upper Rock Cir. N. Rockville 7/2017 $19,500,000 (83.95 PSF)

DSC Partners, LLC JBG Companies A 0% N/A

9605 Medical Center Dr.

Tenant J. Craig Venter Institute

Size 13,382 SF

Type New

9211 Corporate Blvd.

Tenant SCI

Size 7,315 SF

Type New


HighlightsThe direct vacancy rate decreased to 10.5% in the third quarter 2017, down from 11.4% in the second quarter. Total vacancy decreased to 10.5% in the third quarter, down from 11.5% in the second quarter. Class A total vacancy decreased to 10.7% in the third quarter, down from 12.0% in the second quarter, while the asking rental rate average decreased to $24.47 Full Service in third quarter, down $0.01 from the previous quarter.

Total net absorption decreased to 22,221 square feet in the third quarter, down from 33,014 square feet absorbed in the second quarter.

Total leasing activity decreased in the third quarter to 12,140 square feet, down from 42,360 square feet leased in the previous quarter. Contributing tenants included Global Reimbursement Consulting signing a 7,287-square-foot lease at 656 Quince Orchard Road in Gaithersburg.





Market Stats

Inventory 9.0 M SF








2007: $22.32

PSF

2016: $23.94

PSF

YTD 2017: $23.66

PSF

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Market Spotlight

3rd Quarter 2017Gaithersburg-Germantown


HighlightsThe direct vacancy rate increased to 10.1% in the third quarter 2017, up from 10.0% in the second quarter. Total vacancy increased to 10.8% in the third quarter, up from 10.4% in the second quarter. Class A total vacancy increased to 11.6% in the third quarter, up from 10.1% in the previous quarter. The Class A asking rental rate average decreased to $30.20 Full Service in third quarter, down $0.26 from the previous quarter.


Total leasing activity decreased in the third quarter to 55,529 square feet, down from 87,289 square feet leased in the previous quarter.

There are currently two buildings under construction in the Silver Spring submarket. Fenton Street Plaza is a 96,000-square-foot, Class A building, set to deliver in October 2017 and 1000 Spring Street is a Class A, 121,724-square-foot building, set to deliver in May 2018.





Market Stats

Inventory 6.3 M SF





Percent Pre-Leased 81 %



2007: $28.66

PSF

2016: $28.69

PSF

YTD 2017: $29.05

PSF

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Market Spotlight

3rd Quarter 2017Silver Spring


HighlightsThe direct vacancy rate decreased to 36.5% in the third quarter 2017, down from 36.6% in the second quarter. Total vacancy decreased to 36.5% in the third quarter, down from 36.6% in the second quarter. Class A total vacancy decreased to 57.8% in the third quarter, down from 58.1% in the second quarter, while the asking rental rate average increased to $21.81 Full Service in third quarter, up $0.10 from the previous quarter.


Total leasing activity decreased in the third quarter to 13,398 square feet, down from 29,576 square feet leased in the previous quarter. Contributing tenants included 4 Him Covenant Church signing a 8,400-square-foot lease at 4600 Powder Mill Road.



Deliveries (SF) 0 SF / Year


Market Stats

Inventory 1.6 M SF








2007: $20.99

PSF

2016: $20.77

PSF

YTD 2017: $21.20

PSF

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Market Spotlight

3rd Quarter 2017Beltsville-Calverton


HighlightsThe direct vacancy rate decreased to 20.3% in the third quarter, down from 21.4% in the second quarter. The total vacancy rate decreased to 20.5% in the third quarter, down from 21.7% in the second quarter. Class A total vacancy decreased to 18.8% in the third quarter, down from 19.5% in the previous quarter. The Class A asking rental rate average increased to $23.56 Full Service in third quarter, up $0.18 from the previous quarter.


Total leasing activity increased in the third quarter to 85,389 square feet, up from 40,988 square feet leased in the previous quarter. Contributing tenants included Whiting Turner Consulting Company renewing and expanding for 21,500 square feet at 6305 Ivy Lane in Greenbelt.

5801 University Research Court (Class A, 75,000 sf, 0% pre-leased) is currently under construction and set to deliver in December 2018.





Market Stats

Inventory 7.3 M SF








2007: $22.97

PSF

2016: $21.15

PSF

YTD 2017: $22.03

PSF

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Market Spotlight

3rd Quarter 2017Greenbelt-College Park


Market Spotlight

3rd Quarter 2017Greenbelt-College Park

Major Leases

Under Construction

Sales


5801 University Research Court

Greenbelt/College Park

75,000 SF 75,000 SF 0%December 2018

Corporate Office Properties Trust

N/A


No new sales this quarterGreenbelt/College Park

N/A N/A N/A N/A N/A N/A N/A

6305 Ivy Ln

Tenant Whiting Turner Consulting Co.

Size 21,500 SF

Type Renewal/Expansion

6811 Kenilworth Ave.

Tenant Perfect Office Solutions

Size 10,316 SF

Type New


HighlightsThe direct vacancy rate increased to 21.1% in the third quarter 2017, up from 20.7% in the second quarter. Total vacancy increased to 21.3% in the third quarter, up from 20.7% in the second quarter. Class A total vacancy remained flat at 22.2% in the third quarter, the asking rental rate average increased to $24.95 Full Service in the third quarter, up $1.10 from the previous quarter.


Total leasing activity decreased in the third quarter to 7,112 square feet, down from 192,706 square feet leased in the previous quarter.





Market Stats

Inventory 2.8 M SF








2007: $23.90

PSF

2016: $21.71

PSF

YTD 2017: $22.25

PSF

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Market Spotlight

3rd Quarter 2017Landover-Largo-Capitol Heights


HighlightsBoth the direct and total vacancy rate decreased to 13.8% in the third quarter 2017, down from 17.8% in the second quarter. Class A total vacancy decreased to 12.1% in the third quarter, down from 18.3% in the second quarter, while the asking rental rate average decreased to $27.42 Full Service in third quarter, down $3.92 from the previous quarter.

Total net absorption increased to 40,049 square feet in the third quarter, up from 15,435 square feet absorbed in the second quarter.

Total leasing activity decreased in the third quarter to 1,792 square feet, up from 88,927 square feet leased in the previous quarter.





Market Stats

Inventory 1.0 M SF








2007: $29.39

PSF

2016: $25.12

PSF

YTD 2017: $25.54

PSF

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Market Spotlight

3rd Quarter 2017National Harbor-Oxon Hill


HighlightsThe direct vacancy rate increased to 5.7% in the third quarter 2017, up from 5.6% in the second quarter. Total vacancy increased to 5.9% in the third quarter, up from 5.8% in the second quarter. Class A total vacancy remained flat at 4.7% in the third quarter, while the asking rental rate average increased to $27.06 Full Service in the third quarter, up $0.11 from the previous quarter.


Total leasing activity increased in the third quarter to 166,070 square feet, up from 69,160 square feet leased in the previous quarter.

8110 Maple Lawn Boulevard is the only building under construction. It is a 104,412-square-foot Class A building set to deliver in December 2017.





Market Stats

Inventory 9.0 M SF


Total Vacancy 6.0 %






2007: $23.79

PSF

2016: $24.75

PSF

YTD 2017: $25.52

PSF

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Market Spotlight

3rd Quarter 2017Columbia South


HighlightsThe direct vacancy rate remained flat at 11.2% in the third quarter 2017. Total vacancy increased to 12.8% in the third quarter, up from 12.7% in the previous quarter.

Total net absorption significantly increased to 288,610 square feet in the third quarter, up from -570,167 square feet absorbed in the second quarter.

Total leasing activity decreased in the third quarter to 33,055 square feet, down from 104,864 square feet leased in the previous quarter. Contributing tenants included Launch Trampoline signing a 30,000-square-foot lease at 1001 Hampton Park Boulevard in the Capitol Heights industrial submarket.

There are currently three buildings under construction in Prince George’s County. 6240 Columbia Park Road is a Class A building containing 95,000 square feet and set to deliver in November 2018. 9300 Alaking Court is a Class A building containing 46,168 square feet and is set to deliver in January 2018. 7501 Andrews Federal Campus Drive is a 167,033-square-foot, Class A building set to deliver in September 2018.

Two buildings delivered in the third quarter 2017. 1200 Claybrick Road is a 216,000-square-foot Class A building that delivered in July 2017 and 9200 Alaking Court is a 72,000-square-foot Class A building delivered that in August 2017.




Leasing Activity 1.0 SF / Year

Market Stats

Inventory 21.3 M SF






YTD 2017 Deliveries 288,000 SF

Asking Rental Rates (Triple Net)

2007: $6.64

PSF

2016: $7.09

PSF

YTD 2017: $6.43

PSF

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Market Spotlight

3rd Quarter 2017Prince George’s County Industrial


HighlightsThe direct vacancy rate decreased to 9.5% in the third quarter 2017, down from 9.8% in the second quarter. Total vacancy decreased to 9.9% in the third quarter, down from 10.2% in the second quarter.

Total net absorption decreased to 42,883 square feet in the third quarter, down from the 233,940 square feet absorbed in the second quarter.

Total leasing activity decreased in the third quarter to 622,597 square feet, down from 628,820 square feet leased in the previous quarter. Contributing tenants included Johns Hopkins Health System signing a 165,140-square-foot lease at 5300 Holabird Avenue in the Baltimore Southeast Industrial submarket.

There are currently five building under construction. 5300 Holabird Avenue (413,100 sf, 0% pre-leased) is set to deliver in December 2017. 5350 Holabird Avenue (140,400 sf, 0% pre-leased) is set to deliver in December 2017. 8260 Lokus Road (35,000 sf, 0% pre-leased) is set to deliver in April 2018. 7149 Ridge Road (220,000 sf, 100% pre-leased) is set to deliver in June 2018. 7600 Perryman Court (500,400 sf, 0% pre-leased) is set to deliver in June 2018.




Leasing Activity 4.0 M SF / Year

Market Stats

Inventory 49.7 M SF


Total Vacancy 9.9 %

YTD 2017 Absorption 1,246,744 SF

Under Construction 1,308,800 SF


YTD 2017 Deliveries 289,550 SF


2007: $5.02

PSF

2016: $5.51 PSF

YTD 2017: $5.06

PSF

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Market Spotlight

3rd Quarter 2017

Baltimore-Washington Corridor Industrial


HighlightsThe direct vacancy rate decreased to 11.5% in the third quarter 2017, down from 14.7% in the second quarter. Total vacancy decreased to 12.4% in the third quarter, up from 15.6% in the second quarter.


Total leasing activity decreased in the third quarter to 44,978 square feet, down from 95,609 square feet leased in the previous quarter. Contributing tenants included Community Imaging Partners Inc. signing a 16,674-square-foot lease at 5202 Presidents Court and RoosterBio, Inc. signing a 14,550-square-foot lease at 5295 Westview Drive.





Market Stats

Inventory 4.3 M SF








2007: $16.71

PSF

2016: $18.31

PSF

YTD 2017: $20.21

PSF

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Market Spotlight

3rd Quarter 2017Frederick Office


HighlightsThe direct vacancy rate increased to 9.1% in the third quarter 2017, up from 8.7% in the second quarter. Total vacancy increased to 9.5% in the third quarter, up from 8.9% in the second quarter.

Total net absorption decreased to -26,865 square feet in the third quarter, down from 27,762 square feet absorbed in the second quarter.

Total leasing activity increased in the third quarter to 85,704 square feet, down from 19,140 square feet leased in the previous quarter. Contributing tenants included Equipment Manufacturers Inc. signing a 29,280-square-foot lease at 8430 Spires Way.





Market Stats

Inventory 3.8 M SF


Total Vacancy 9.5 %






2007: $14.50

PSF

2016: $13.11

PSF

YTD 2017: $10.32

PSF

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Market Spotlight

3rd Quarter 2017Frederick Flex

suburban maryland quarterly market report · square feet absorbed, up from the -503,622 square feet...

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