Вы находитесь на странице: 1из 4

Savills Studley Research

Baltimore

Savills Studley Report


Baltimore office sector Q2 2017

SUMMARY
Market Highlights
LEASING WELL UNDER LONG-TERM INCREASE IN CLASS A ASKING RENT
AVERAGE The overall asking rent for the Baltimore "Baltimores office market seems to be
Tenants have leased 4.9 msf in the four most region has increased by 1.3% year-on-year
recent quarters, nearly 15.0% below the to $22.89. Class A asking rent has jumped facing a bit of a space mismatch. Tenants
long-term historical average of 5.9 msf. Deal more sharply rising from $24.25 to $26.86 can find ample space options in most
volume for the region has not attained its year-on-year.
historical average since late 2014. suburban submarkets, but larger tenants
SALES HIGHER will face more challenges along Pratt
SHARP DROP IN AVAILABILITY Year-to-date office property sales totaled
Despite tepid leasing, Baltimore posted an $559 million rising by 65% compared to
Street as well as the micro-markets that
80 basis point decrease to 17.2% in the the $340 million sold during the same period tech firms prefer such as Fells Point and
second quarter. The Class A availability rate in 2016. Camden."
fell by a full percentage point to 22.1%, but
has increased by nearly a full percentage
point compared to a year ago. Ryan Miller, Managing Director
Savills Studley Report | Baltimore

Eds and Meds Expand, other


Office-Using Employment Trends Sectors Shrink
Millions Following a long-term trend, the Baltimore
0.34 7.0% regions employment base continues to
shift away from traditional office space
0.32 5.0%
users (banking and professional/business
0.30 3.0%
services) to education and medical/
healthcare so-called eds and meds.
0.28 1.0% Over the course of this cycle the region has
seen consistent rightsizing among many
2009

0.26 -1.0% of the traditional sectors that occupy the


highest-caliber office space. Law firms,
0.24 -3.0% including some that are expanding or
holding their payroll steady, are reducing
0.22 -5.0% occupancy due to heightened efficiency in
2010
2008

2011

2012

2013

2014

2015

2016

2017
the properties they are moving to. McGuire
0.20 Baltimore Office Emp. Baltimore % Change U.S. (% Annual Change)
-7.0% Woods, for example, recently signed a
21,000-sf lease at 500 E Pratt Street that
Source: Bureau of Labor Statistics
will enable it to shrink its space by 16.5%.

Baltimores financial sector has shed nearly


Availability Rate Trends 2,700 jobs since last fall. More layoffs
(%) Availability Rate Trends could be on the horizon. Legg Mason said
it will lay off 3.0% of its corporate staff,
30%
attributing the cuts to disruption in the
money management industry.
25% 22.1%
22.6%
On the other hand, growth among local
healthcare and medical research firms is
20% 17.8% being supplemented by companies drawn
to the region from other markets. These
15% 13.5% tenants typically absorb little higher-caliber
office space. Some lease medical office
or industrial/flex space. Vitreon America
10% recently announced that it will move from
Linden, Virginia to Baltimore. The botanical
5% research firm will bring 200 jobs to the
region and has subleased temporary space
Class A Class B & C at 1100 Wicomico Street in Downtown
0% Baltimore. The company currently has 23
2Q12 2Q13 2Q14 2Q15 2Q16 2Q17 employees, and plans to add at least 177
more over the next two years. Collaboration
between area universities, hospitals and
Asking Rent Trends research institutions is an integral part of
($/sf) Rental Rate Trends the region's economy. Additionally, they
$30 announced plans to team up with Morgan
$26.86 State University on plant-based research.
$24.83
$25 Baltimore is also home to one of three
$20.15 laboratories designated by the U.S.
$20 Health and Human Services Department
$20.00 to develop and produce vaccines in the
case of a public health crisis. Emergent
$15 Biosolutions based in Gaithersburg,
recently doubled the size of its vaccine
$10 manufacturing operations in Bayview to
112,000 sf. The company has already
worked on responses to Ebola and Zika.
$5 The University of Maryland-Baltimore and
Class A Class B & C Johns Hopkins University collaborate with
$0 Emergent and also serve as a feeder for
2Q12 2Q13 2Q14 2Q15 2Q16 2Q17 talent to the company.

02
Q2 2017

Space Mismatch
Availability Rate Comparison Overall Rental Rate Comparison
Baltimores office market seems to be Baltimore City North 5.7% Submarket Cluster US Index $33.13
dealing with a slight space mismatch Carroll County 7.6% Anne Arundel $29.47
availability is very low in a handful of Route 2 Corridor 8.4% South Suburbs $24.84
micro-markets. Additionally, the supply Baltimore County West 9.0% Howard County $23.63
of medical office space as well as R&D Baltimore City 11.3% Baltimore Region $22.89
space is much tighter than traditional CBD 12.7% CBD $22.48
office space. Baltimore City South 13.2% Harford County $22.26
Towson 14.4% Baltimore City $22.16
Space has also tightened in some parts Baltimore County East 15.7% Baltimore City South $21.86
of Howard County particularly in Howard County 16.6% BWI $21.30
Columbia and the cybersecurity corridor US Index 17.0% Baltimore City North $21.01

surrounding Fort Meade. Konica Minolta Baltimore Region 17.2% Route 2 Corridor $20.35

inked a 19,344-sf lease at 6711 Columbia Anne Arundel 17.8% Route 83 Corridor $20.30

Gateway in Columbia. South Suburbs 17.8% Baltimore County East $20.21


Route 83 Corridor 19.6% North Suburbs $20.15

Larger tenants looking for space on Pratt Reisterstown Rd Corridor 22.4% Reisterstown Rd Corridor $19.97
Towson
Street, in Fells Point and Canton, have North Suburbs 23.5% $19.40

BWI Baltimore County West $18.46


fewer options. Tenants remained active 37.3%

Harford County 50.6% Carroll County $15.74


in the subset of Pratt Street properties in Submarket Cluster

0% 10% 20% 30% 40% 50% 60% ($/sf) $0 $5 $10 $15 $20 $25 $30 $35
the quarter. PriceWaterhouse Coopers (%)

leased 36,626 sf at 100 E Pratt Street.


Additionally, Hord Copland Macht took
just under 35,000 sf at 750 E Pratt Street. Major Transactions
Tenant Sq Feet Address Market Area
Ample Options in Most Suburban
Bank of America 377,332 11333 McCormick Road Route 83 Corridor
Locations
GSA - Internal Revenue Service 43,121 100 S Charles St CBD
PWC 36,626 100 E Pratt St CBD
On the other hand, tenants have plenty
Hord Copland Macht 34,435 750 E Pratt St CBD
of options in many other submarkets,
Northrop Grumman 28,753 6956 Aviation Blvd BWI
including locations North and West of
McGuireWoods, LLP 20,972 500 E Pratt St CBD
the City. The Route 83 Corridor ended
Konica Minolta Business Solutions 19,344 6711 Columbia Gateway Dr Howard County
midyear with an availability rate of 19.6%
Davenport Preschool 15,200 120 Sparks Valley Rd Route 83 Corridor
and Reistertowns rate was 22.4%. Many
Rosen, Sapperstein & Friedlander, LLC 14,000 York Rd Towson
suburban locations stand to have difficulty
Janney Montgomery Scott, LLC 6,000 145 W Ostend St CBD
competing with exciting town-center
developments such as Port Covington. Sum of Top Leases 595,783

One suburban area with fewer options


has been Hunt Valley where the vacancy Investors Target Micro-Markets & require extensive repositioning. Investors
rate is currently 4.8%. Hunt Valley has Value-Add Opportunities see an upside to properties with large
captured some significant relocations vacancies, particularly when they can be
and leasing activity in the last year Investor demand for assets in Fells purchased at a price that is well under
or so. Earlier this spring Johnson, Point remains very strong. Continental replacement cost. Boston-based Grander
Mirmiran & Thompson moved to their Realty recently acquired Browns Wharf Capital Partners made its first purchase
new headquarters at 40 Wight Avenue, on Thames Street in Fells Point for $21 in Baltimore, paying merely $24.5 million
relocating from Sparks. Million. The local developer plans to ($68/sf) for the M&T Bank Building at 25
spend about $2 million in renovations to S. Charles Street. Buffalo based M&T
Other companies are consolidating, building systems and common areas at currently uses the 359,254-square-foot,
though. Local mainstay McCormick is the 104,000-sf building. The site includes 22-story building as its local headquarters
putting two sites on the market, which a 270-foot waterfront promenade.With the but is reportedly pondering a move to 1
could add some additional opportunities planned upgrades, the project is expected Light Street. Grander Capital has confirmed
for firms. The sales are part of the spice to benefit from what Continental sees as that it will execute a value-add initiative
makers plans to consolidate its four a renaissance of the Harbor East / Harbor at the property to include upgrades to the
current headquarters buildings into a Point / Fells Point area, including corporate building amenities, including the fitness
single 323,000 sq. ft. corporate campus in headquarters relocations and the opening center and conference area.
Hunt Valley. McCormick plans to dispose of new restaurants and multi-family
of two of its headquarters buildings, developments.
with a combined total of 273,000 sf. One
facility is located in Hunt Valley, the other Investment sales are heating up. Some
in Sparks. McCormick is expected to investors are showing confidence in the
vacate the buildings by the end of 2018. market, taking a risk on opportunistic
assets with elevated vacancy that will

savills-studley.com/research 03
Savills Studley Report | Baltimore

Net Absorption & Available Availability Asking Rents


Submarket Total
Leasing Volume SF Rate Per SF

% pp %
Inventory Leasing Leasing Change
Change Year This Year This Change Year
SF (This (Last 12 This Quarter from
from Ago Quarter Ago Quarter from Ago
(1000's) Quarter) months)
Last Qtr. Last Qtr. (1) Last Qtr.

CBD 19,419 176 683 2,476 -15.2% 3,252 12.7% -2.3% 16.7% $22.48 1.8% $21.61
CBD - Class A 8,375 141 566 1,656 -9.1% 1,743 19.8% -2.0% 20.8% $24.75 1.5% $24.13
Baltimore City South 9,928 31 296 1,311 -10.4% 1,356 13.2% -1.5% 13.7% $21.86 0.0% $18.73
Baltimore City South - Class A 5,697 18 191 877 -8.8% 860 15.4% -1.5% 15.1% $27.03 -7.7% $26.61
Baltimore City North 8,227 44 203 468 -17.4% 497 5.7% -1.2% 6.1% $21.01 6.4% $19.35
Baltimore City North - Class A 1,183 10 18 58 -11.9% 72 4.9% -0.7% 6.1% NA NA N/A
Carroll County 1,302 7 27 99 -3.6% 107 7.6% -0.3% 8.2% $15.74 -13.1% $18.07
Carroll County - Class A 181 0 3 2 125.6% 2 1.2% 0.7% 1.0% $20.00 -14.3% $23.71
Reisterstown Rd Corridor 6,033 105 897 1,351 -1.1% 1,389 22.4% -0.3% 22.9% $19.97 0.5% $21.53
Reisterstown Rd Corridor - Class A 2,949 49 554 828 -3.3% 892 28.1% -1.0% 30.3% $22.97 4.0% $22.45
Route 83 Corridor 8,239 137 424 1,613 -4.4% 1,635 19.6% -0.9% 19.6% $20.30 -0.9% $21.12
Route 83 Corridor - Class A 4,383 61 202 1,038 1.4% 930 23.7% 0.3% 21.2% $23.02 -0.6% $22.41
Towson 6,849 109 323 989 -9.4% 1,075 14.4% -1.5% 15.7% $19.40 -3.1% $20.37
Towson - Class A 2,404 37 104 414 -11.3% 389 17.2% -2.2% 16.2% $22.40 -2.0% $23.33
Baltimore County East 3,127 16 162 492 13.0% 768 15.7% 1.8% 22.3% $20.21 -1.2% $20.70
Baltimore County East - Class A 679 2 26 167 -4.9% 181 24.5% -1.3% 26.7% $22.40 -4.2% $23.53
Harford County 5,394 14 91 2,729 1.3% 2,694 50.6% 0.6% 50.0% $22.26 -7.3% $22.92
Harford County - Class A 2,210 0 1 1,573 4.3% 1,517 71.2% 2.9% 68.6% $25.53 -8.1% $27.52
Howard County 16,387 163 1,034 2,716 -4.2% 2,934 16.6% -0.4% 17.6% $23.63 -1.6% $23.65
Howard County - Class A 8,065 94 603 1,375 -16.7% 1,718 17.1% -2.7% 20.5% $25.33 -4.9% $26.96
Baltimore County West 5,360 15 201 482 1.5% 546 9.0% 0.1% 10.2% $18.46 -4.0% $18.79
Baltimore County West - Class A 278 0 35 0 N/A 36 0.0% 0.0% 12.8% $0.00 -100.0% $23.50
BWI 4,492 3 88 1,676 -2.2% 1,570 37.3% -0.8% 35.0% $21.30 -1.3% $21.66
BWI - Class A 2,180 0 42 787 -4.6% 848 36.1% -1.8% 38.9% $24.77 -1.8% $24.98
Anne Arundel 13,974 123 460 2,485 -1.1% 2,377 17.8% -0.2% 13.8% $29.47 1.2% $27.00
Anne Arundel - Class A 8,904 58 270 1,771 0.5% 1,659 19.9% 0.1% 13.6% $33.36 5.8% $28.82
Route 2 Corridor 2,061 5 64 174 1.4% 220 8.4% 0.1% 10.7% $20.35 -2.0% $21.27
Route 2 Corridor - Class A 227 2 9 8 103.9% 0 3.7% 1.9% 0.0% $20.73 -13.4% $25.90
Baltimore City 37,573 251 1,183 4,255 -14.0% 5,105 11.3% -1.8% 13.6% $22.16 1.0% $20.62
Baltimore City - Class A 15,256 170 774 2,592 -9.1% 2,675 17.0% -1.7% 17.5% $25.17 26.0% $21.12
North Suburbs 30,944 387 1,924 7,272 -1.4% 7,667 23.5% -0.3% 24.4% $20.15 -6.8% $21.82
North Suburbs - Class A 12,808 149 890 4,022 -0.3% 3,911 31.4% -0.1% 30.5% $23.30 -5.3% $24.40
South Suburbs 42,274 308 1,847 7,533 -2.2% 7,647 17.8% -0.3% 16.7% $24.84 -3.2% $24.52
South Suburbs - Class A 19,654 154 960 3,942 -7.1% 4,260 20.1% -1.2% 18.4% $29.47 10.1% $26.34
Baltimore Region 110,791 947 4,954 19,060 -4.8% 20,420 17.2% -0.8% 17.8% $22.89 -1.6% $22.58
Baltimore Region - Class A 47,718 473 2,624 10,556 -5.1% 10,846 22.1% -1.0% 21.2% $26.86 10.3% $24.25

Please contact us for further information


Savills Studley Office Contact Corporate Research Contact
102 West George Santos Keith DeCoster
Pennsylvania Ave Senior Managing Director Director
Suite 302 GSantos@savills-studley.com kdecoster@savills-studley.com
Towson, MD 21204 (410) 844-3903 (212) 326-1023
(410) 844-3900

(1) Percentage point change for availability rates.


Unless otherwise noted, all rents quoted throughout this report are average asking gross (full service) rents psf.
Statistics are calculated using both direct and sublease information.
Short-term sublet spaces (terms under two years) were excluded.

The information in this report is obtained from sources deemed reliable, but no representation
is made as to the accuracy thereof. Statistics compiled with the support of The CoStar Group.
Copyright 2017 Savills Studley

04 www.savills-studley.com @SavillsStudley

Похожие интересы