MARKETBEAT

Baltimore
Office Q1 2019

BALTIMORE OFFICE Economy

The Baltimore Metro economy once again saw growth to start
Economic Indicators
12-Month 2019. Baltimore unemployment dropped 10 basis points (bps)
Q1 18 Q1 19 during the first quarter of 2019 to 4.1% year-over-year (YOY) and
Forecast
Baltimore Employment 1.41M 1.43M
sits 30 bps over the national unemployment rate of 3.8%. The
education and health services, a staple of Baltimore
Baltimore Unemployment 4.2% 4.1% employment, grew 2.6% YOY, an additional 12,000 jobs to the
U.S. Unemployment 4.1% 3.8% metro. Government jobs did not fare as well YOY, as an
estimated 1,800 jobs were cut from this sector since the
beginning of 2018.
*Numbers above are quarterly average

Market Indicators (Overall, All Classes)

12-Month Market Overview

Q1 18 Q1 19
Forecast The Baltimore office market’s overall vacancy rate dropped YOY
Vacancy 13.2% 13.1% 10 bps to 13.1% in the first quarter of 2019. With a total of
410,040 square feet (sf) of positive absorption registered in the
YTD Net Absorption (sf) -48k 410k
first quarter of 2019. The Annapolis submarket was part of the
Under Construction (sf) 1.5M 851k driving force netting 144,577 sf of positive absorption year-to-
Average Asking Rent* $23.14 $23.82 date (YTD). Class A, for the Baltimore Metro, lead the way with
294,391 sf of positive absorption contributing to 62.4% of the
*Rental rates reflect gross asking $psf/year
markets absorption for the quarter. Rental rates also grew 2.9%
YOY to $23.82 per square foot (psf). The BWI Anne Arundel
Overall Net Absorption/Overall Asking Rent submarket topped all submarkets for Class A asking rates at
$33.44 psf. Market fundamentals for the Baltimore metro remain
4-QTR TRAILING AVERAGE
healthy as rents and absorption continue to grow while
700,000 $24.00 construction continues to level off to adjust for the additional
500,000 inventory delivered in previous years.

300,000 As 2019 kicks off, office leasing in the Baltimore market had a
$23.00
100,000 solid start to the year. The market saw a total of 393,151 sf
leased in the first quarter. Class B was the winner this quarter as
-100,000
$22.00
it saw 76% of the deals in the market call its inventory home.
-300,000 Notable leases in the first quarter of 2019 include, First Home
-500,000 Mortgages renewal at 5355 Nottingham Drive for 27,459 sf and
The Cleaning Authority taking 21,371 sf at 7120 Samuel Morse
-700,000 $21.00 Drive in the Columbia South Submarket.
2011 2012 2013 2014 2015 2016 2017 2018 2019
After a strong 2018, the Baltimore investment sales market had a
Net Absorption, SF Asking Rent, $ PSF cool start to 2019. Investor sales in the office market are down
50% for deals completed in the first quarter of 2019 versus the
same time in 2018. The highlights in the first quarter of 2019
Overall Vacancy
include the portfolio sale of 8970-8990 Route 108 for $9,950,000
21% that sits in that Columbia North submarket. 9200 Old Annapolis
Road traded hands for $3,800,000 and is slated for
19% redevelopment.
17%

15% Historical Average = 16.3%

13%

11%

cushmanwakefield.com I 1
 MARKETBEAT

Baltimore
Office Q1 2019

The first quarter of 2019 welcomed two new projects to the

New Supply
market, a 33,094 sf project at 37 W Cross Street that delivered 11.6 msf has delivered since 2010 with another 800,000 sf due to deliver through 2020.
vacant, and the Greater Annapolis submarket delivered 187
Harry S Truman Parkway a 128,957 sf project that delivered
fully leased. The markets pipeline has dipped under the
3
historical average of 1.2 million square feet but still looks
favorable with major projects like Port Covington looking to add
high end inventory to the market. Historical Average = 1.2 MSF
2
The Baltimore Metro office market saw gross rental rates

MSF
increase of 3.0% YOY to $23.82 psf. The
Baltimore/Washington Corridor continues to demand the
highest rents in the Baltimore Class A market including, BWI 1
Airport at $31.52 psf . The submarket cluster is one of the most
sought-after areas in the region due to its access to both
Baltimore and Washington, allowing companies to tap into both 0
regions highly educated workforce. Greater Annapolis is also 10 11 12 13 14 15 16 17 18 19 20
home to the highest rental rates for Class B space at $22.55
psf.

Average Asking Rents

Tenants continue their flight to quality as the separation between Class A and B rents
grows.

$28

$26

$24

$22

Outlook $20

• Class A rents will continue to outpace Class B as tenants $18

continue to look for quality space 2012 2013 2014 2015 2016 2017 2018 2019
Class A Class B, $ PSF
• Class B rents will remain steady as landlords look to backfill
space of tenants moving into Class A space.
Vacant Space by Submarket
• Vacancy rates will likely level off and begin to decrease as
construction begins to slow.
Baltimore City
• Possible softening of the landlord market in first half of
14.8% 2.8% Suburban North
2019.
35.9%
• Continued strategic capital investment within the Baltimore Suburban West
market. 15.5% Harford County

Howard County
5.8%
13.3% BWI Airport
11.9%
Annapolis

cushmanwakefield.com I 2
 MARKETBEAT

Baltimore
Office Q1 2019

CURRENT QTR YTD OVERALL OVERALL

SUBLET
INVENTORY DIRECT VACANT OVERALL OVERALL NET OVERALL NET UNDER CNSTR AVERAGE AVERAGE
SUBMARKET VACANT
(SF) (SF) VACANCY RATE ABSORPTION ABSORPTION (SF) ASKING RENT (ALL ASKING RENT
(SF)
(SF) (SF) CLASSES)* (CLASS A)*

BWI Airport 11,478,936 52,048 1,445,473 13.0% 208,014 208,014 0 $27.66 $30.62

Baltimore City 21,492,284 160,642 3,472,536 16.9% 39,806 39,806 330,000 $22.44 $24.88

Greater Annapolis 3,876,952 18,087 263,915 7.3% 144,577 144,577 100,000 $27.24 $30.80

Harford County 2,075,926 15,444 573,232 28.4% -2,389 -2,389 0 $29.34 $29.60

Howard County 16,769,232 116,717 1,453,078 9.4% 79,282 79,282 320,964 $23.75 $30.41

Suburban North 13,168,698 79,728 1,261,749 10.2% -29,569 -29,569 100,000 $20.46 $22.09

Suburban West 8,076,818 34,340 1,168,194 14.9% 8,120 8,120 0 $20.54 $23.39

BALTIMORE TOTALS 76,938,846 477,006 9,638,177 13.1% 410,040 410,040 850,964 $23.82 $27.17
*Rental rates reflect gross asking $psf/year

YTD
SUBLET CURRENT NET DIRECT OVERALL
INVENTORY DIRECT VACANT OVERALL OVERALL NET UNDER CNSTR
VACANT ABSORPTION AVERAGE AVERAGE
(SF) (SF) VACANCY RATE ABSORPTION (SF)
(SF) (SF) ASKING RENT* ASKING RENT*
(SF)

Class A 41,153,980 341,816 4,665,073 12.2% 294,391 294,391 850,964 $27.30 27.17

Class B 35,784,866 135,190 4,973,104 14.3% 186,194 186,194 0 $20.14 $20.01

Key Lease Transactions Q1 2019

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

3200 Lord Baltimore St 47,802 Undisclosed New Lease Woodlawn

10 Irondale St 36,040 Undisclosed New Lease Baltimore County East

5355 Nottingham Dr 27,459 First Home Mortgage Renewal Baltimore County East

7120 Samuel Morse Dr. 21,371 The Cleaning Authority New Lease Columbia South

Key Sales Transactions Q1 2019

PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Feldman Bergin Development /
8970-8990 Route 108 84,514 $9,950,000 / $117 Columbia North
Advantage Properties, Inc
The Sanford Companies, Inc. / Shaw
9200 Old Annapolis Rd 24,000 $3,800,000 / $158 Columbia North
Real Estate, LLC

cushmanwakefield.com I 3
 MARKETBEAT

Baltimore
Office Q1 2019

OFFICE SUBMARKETS
BALTIMORE, MD

PLACE MAP HERE

Cushman & Wakefield For more information, contact: About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate
One East Pratt Street David Spragg occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees
Suite 700 Senior Research Analyst in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project
Baltimore, MD 21202 Tel: +1 410 347 7552 management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow
@CushWake on Twitter.
cushmanwakefield.com David.Spragg@cushwake.com
©2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources
believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as
to its accuracy.

cushmanwakefield.com I 4