Office Market Snapshot

Baltimore Third Quarter 2013

Market Tracker
*Arrows = Current Qtr Trend

Vacancy
16.89%

Net Absorption
343,922 SF

Deliveries
260,000 SF

Asking Rent
$22.58

Occupancy Continues to Rise in the Baltimore Office Market

The Baltimore Metropolitan office market experienced 343,922 square feet of positive absorption in the third quarter of 2013. The vacancy rate decreased to 16.89%, its lowest point since the end of 2008. The market has almost 800,000 square feet of positive absorption year-to-date. The Class A vacancy rate for the region decreased to 15.29% and the average Class A rental rate per square foot has increased from $23.40 at the end of 2011 to $26.35 currently.
baltimore office

Economic Indicators
Q3 13
Baltimore Employment Baltimore Unemployment U.S. Unemployment U.S. CCI 1.34M 7.5% 7.4% 80.83

Baltimore City continues to experience moderate improvement. The overall vacancy rate for the city is 18.84% after more than 100,000 square feet of positive absorption in the third
Q3 12
1.32M 7.0% 8.0% 65.00

quarter. The Class A market continues to tighten and now has a vacancy rate of 14.73% after more than 133,000 square feet of positive absorption in 2013. Sublet spaces that were never truly vacant have also drawn significant tenant demand and prevented absorption numbers for the market from being higher. Overall, the Baltimore City market continues to demonstrate a flight to quality trend as premier buildings continue to attract tenants. The Northern Baltimore-Washington (NBW) Corridor remains the most active office leasing market in the region. The NBW Corridor vacancy rate has decreased to 15.39% after 166,322 square feet of positive absorption in the third quarter and almost 400,000 square feet of positive absorption year-to-date. The BWI Airport submarket dominated activity with almost 185,000 square feet of positive absorption. Because of the consistent demand for office space over the past few years, the NBW Corridor is also able to support the most robust construction pipeline in the region. More than 800,000 square feet is currently under construction in the market, with very little space being constructed speculatively. The Suburban North market rebounded in the third quarter to post its first period of positive absorption in 2013. After more than 73,000 square feet of positive absorption, the Suburban North vacancy rate decreased to 13.63%, the lowest in the Baltimore Metropolitan region. Leasing activity was concentrated heavily in the North I-83 Corridor submarket where 76,878 square feet of total positive absorption in the third quarter reduced the Class A and Class B vacancy rates to 14.21% and 14.20%, respectively. Overall, the rest of the Suburban North market experienced limited changes in market activity.

Net Absorption
1,000
Square Feet ('000s)

750 500 250 0

Vacancy Rate
22%

20%

18%

Historical Average

Forecast
The availability of large blocks of Class A space in the Baltimore CBD and Suburban North markets could lead to several large new leases in the next 8-12 months.

16%

14% 2007

2008

2009

2010

2011

2012

2013

Rental rates should continue to rise if current levels of leasing activity throughout the market are consistent through the next several quarters. Overall job growth throughout the region will be needed to significantly increase current levels of demand for office space.

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Cassidy Turley Office Market Snapshot

Baltimore Third Quarter 2013
Total Bldgs Inventory Sublet Vacant Direct Vacant Average Average YTD net Under Vacancy Current net Asking RENT Asking RENT Rate Absorption Absorption Construction
(All Classes)

(Class A)

Submarket
BWI Airport Baltimore City Greater Annapolis Area Harford County Howard County Suburban North Suburban West 159 153 92 35 316 223 146 11,003,610 20,006,366 3,812,709 2,060,507 17,354,165 13,337,747 7,750,296 30,562 335,728 47,162 36,330 179,301 39,151 22,576 1,674,702 3,431,419 585,561 702,857 2,434,163 1,779,241 1,422,080 15.50% 18.83% 16.60% 35.87% 15.06% 13.63% 18.64% 184,530 105,933 3,876 6,877 -22,084 73,162 -8,372 245,485 237,201 39,002 26,346 169,531 4,418 77,367 215,310 40,000 171,900 25,160 404,400 0 730,000 $25.37 $20.89 $25.59 $29.14 $23.22 $21.48 $19.88 $29.05 $26.65 $28.58 $29.14 $26.94 $23.86 $21.45

Baltimore Market Totals

Class A Class B 322 802 1,124 33,823,113 41,502,287 75,325,400 313,309 377,501 4,858,085 7,171,938 15.29% 18.19% 16.89% 358,702 -14,780 343,922 619,283 180,067 799,350 1,340,680 121,090 1,586,770 $26.35 $21.66 $22.58 $26.35

Total
Office asking rents converted to Full Service

690,810 12,030,023

Key Lease Transactions Q3 13

PROPERTY 10150 York Road 1966 Greenspring Drive 10451 Mill Run Circle 100 International Drive 400 East Pratt Street 420 National Business Pky 7100 Columbia Gateway Drive 7080 Samuel Morse Drive SF 22,934 27,351 25,935 27,264 32,000 29,000 30,000 22,000 TENANT Wallace Montgomery & Associates Associated Catholic Charities CareFirst Blue Cross / Blue Shield Johns Hopkins Carey Business School Ellin & Tucker DeLoitte Connections Academy BB&T TRANSACTION TYPE SUBMARKET Relocation Renewal Renewal Expansion Expansion/Extension Lease Lease Lease Suburban North Suburban North Suburban West Baltimore City
140

Office Submarkets
Baltimore
Cecil Co. Harford Co.

83
Baltimore Co.

95

Baltimore City BWI Airport Howard County Howard County

Frederick Co.
Carroll Co.

Suburban North

Harford County

Suburban West
795

695
Baltimore City

70
Howard Co.

Downtown
32 100

Howard County

Bold Text = Cassidy Turley Transaction

270

Montgomery Co.

29

BWI Airport
95
Prince George's Co.
Anne Arundel Co.

97

Key Sales Transactions Q3 13

PROPERTY 7021 Columbia Gateway Drive 201 North Charles Street Rivers Business Commons SF 105,215 264,126 101,596 SELLER/BUYER Orix / Lone Star Funds Stratford Management / Blue Ocean Realty Greenfield Partners / Fernau LeBlanc Investment Partners PRICE $23,600,000 $19,667,000 $12,600,000 SUBMARKET Howard County Baltimore City Howard County

495

50

Greater Annapolis Area

Bold Text = Cassidy Turley Transaction

Matthew J. Myers
Research Analyst 100 Light Street Suite 1400 Baltimore, Maryland 21202 Tel: 410.752.4285 Fax: 410.576.9031 Email: matthew.myers@cassidyturley.com
The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. Copyright 2013 Cassidy Turley. All rights reserved.

About Cassidy Turley

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