For More Information Call 410.821.8585

Map: Office Submarkets

Quarter Highlights
  • Employment growth at Johns Hopkins
    Hospital and The University of Maryland at Baltimore drive demand on the east and west sides of Baltimore City. This demand bodes well for the Science and Technology Park at Johns Hopkins to the east and the University of Maryland Bio Park to the west
    to continue to make up the majority of the lease transactions outside of City Center.
  • Northrop Grumman moved into 156,215 sf at a newly delivered building at West Quest Tech Park (1550 West Nursery Road) in the BWI submarket. The building was sold by Opus East, LLC to Corporate Office
    Properties Trust in October.
  • Legg Mason's new building at 100 International Drive in Harbor East is fully leased just months after being completed. Oppenheimer and Hogan & Hartson moved in during this quarter. RSM McGladrey, Inc. and Johns Hopkins University Carey School each signed a sublease in the building for 38,536 sf and 80,469 sf respectively.
  • L-3 Communications, a defense contractor, signed a 74,334 sf lease at The GATE Office and Tech Park (6280 Guardian Gateway).
  • The Boulevard at Box Hill, a retail, office, and entertainment complex, has broken ground in Abingdon. When complete, the mixed-use campus could include more than 700,000 sf of gross leasable space. Phase 1, which includes a 144,000 sf Wegmans Food Store, is anticipated for completion in 2011.
  • Sales have virtually come to a standstill because of current bank lending practices as well as the disconnect between buyers and sellers with regard to price.
  • Baltimore's economic engines that will lead the drive to recovery are "Feds", "Eds", and "Meds"; jobs with the Federal Government, Education, and Healthcare.
Market Outlook

By Anirban Basu, Sage Policy Group

Over the past 18 months, the economy has moved from recession and crisis to recovery and expansion. Though many rightly question the sustainability of the economic recovery that began last summer, for now the economy's newfound momentum is increasingly reflected in Baltimore metropolitan area office leasing performance.

During the third quarter of 2009, the region's direct office vacancy rate rose to 15.5 percent, up from 15.1 percent during the prior quarter. By contrast, during the fourth quarter of 2009, the region's direct vacancy rate actually edged lower to 15.4 percent, though vacancy with sublet ticked slightly higher (16.8 percent). Though this performance seems perfectly unremarkable, the fact that the marketplace is no longer deteriorating substantially is newsworthy.

Stakeholders can also take heart in the region's net absorption numbers, which though not overwhelmingly positive during last year's fourth quarter represented a marked improvement vis-à-vis prior quarters. For instance, in Baltimore's City Center, net absorption year-to-date through the fourth quarter approached -520,000 square feet (sf). However, only 5 percent of total negative net absorption was associated with the fourth quarter itself.

Similarly, in the northern portion of the metropolitan area, which encompasses Towson, the I-83 corridor, Harford County and several other markets, net absorption for 2009 was positive to the tune of nearly 143,500 sf. Fourth quarter net absorption represented nearly 92 percent of this total.

Though City Center suffers some of the region's highest office vacancy rates, the City Center also produced some of the region's more noteworthy transactions. Leases of consequence signed in City Center during the fourth quarter of 2009 included a 76,000 sf lease signed by Stifel, Nicolaus and a smaller lease signed by CyberPoint International.

Despite evidence of market stabilization, renters continue to enjoy significant negotiating leverage. This is attributable to the fact that including sublet space, there are 14.7 million square feet (msf) of office space presently available in the region and another 1.3 msf under construction. Correspondingly, asking rents continue to slide lower, from $23.38 per square foot (psf) during the second quarter of last year to $22.75 psf during the third and $22.20 more recently.

Notable Transactions
Lease

Location Submarket Tenant Amount Leased SF
1 South St City Center Stifel, Nicolaus & Company 75,724 (r)
6280 Guardian Gateway Harford County L-3 Communications 74,334
100 International Dr City Center Johns Hopkins University
Carey Business School		 80,469 (sub)
9755 Patuxent Woods Dr Columbia CBIZ 32,016
7133 Rutherford Rd Baltimore County West Gannett Fleming, Inc. 25,590
621 E. Pratt St City Center CyberPoint International 21,283

Sale

Location Submarket Price PSF Building Size SF
1501 S. Clinton St
(6 properties)		 Baltimore City East $125,000,000 --- 476,910
1550 W. Nursery Rd BWI $38,000,000 $243.25 156,215
5445-5601 Loch Raven
Blvd		 Baltimore City North $11,250,000 $181.45 62,000
1333 Ashton Rd BWI $4,330,440 $120.00 36,087


*(r) Renewal
**(sub) Sublease

* All information furnished regarding property for sale, rent, exchange or financing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions, or changes in conditions, prior sale, lease or withdrawal without notice. All information should be verified to the satisfaction of the person relying thereon. Portions of the base statistics are from CoStar Property data. Data as of 12/2009.