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Summer Is Over, But
Construction Is Still Hot
REGIONAL OVERVIEW
Q3 2014 | INDUSTRIAL USE
INDUSTRIAL MARKET REPORT
BALTIMORE METRO AREA
Colliers | Baltimore tracks 55
tenants and buyers in the
market searching for a total
of 3,067,800 sf of space
8 buildings currently under
construction totaling
3,110,773 sf
Almost 1 million square feet
under construction is spec
The Baltimore industrial/fex market continues to perform well as users take large blocks of
space in an already tight market. Overall vacancy rates ended at 10% for both fex and
industrial space, and over 1 million square feet of space absorbed. Industrial vacancy was
unchanged at 10% even with several deliveries during the quarter. Industrial average rental
rates evened out at $4.60 NNN and have not fuctuated much in the past 3 years. Flex asking
rates ended at $10.80 NNN, slightly lower than the past 6 months. Several large projects came
online this quarter including Reliable Churchills new 449,000 sf facility at Crossroads @95
which brings an estimated 500 workers to Baltimore County. Sephora also opened their
655,000 sf facility in Perryman bringing 400 workers to Harford County. One project expected
to begin this year was the CSX intermodal facility and Mount Clare yard in Southwest
Baltimore which was rejected by city leaders and local residents, leaving ofcials and
developers scurrying to fnd an alternative spot before larger ships begin making deliveries to
the port.
Currently, there are 8 buildings under constructions totaling 3,110,773 sf. These include 7210
Preston Gateway Drive in Hanover which will house Coca-Cola for 291,000 sf. Amazons
fulfllment center at 5501 Holabird Avenue for 1,017,550 sf is due to deliver this year. Besides
those build-to-suits, there is also over 1 million sf of spec space under construction which
speaks to the confdence developers have in the market. For example, Chesapeake Real Estate
Group has planned an additional million square feet of spec development in Baltimore County
East, and Cecil County due to break ground later this year.
Leasing activity remained strong in the 3
rd
quarter absorbing over 1 million square feet of
space. Among the largest leases signed were Restoration Hardware at 8416 Kelso Drive for
508,100 sf, and Coastal Sunbelt at 9001 Whiskey Bottom Road for 244,500 sf. Investment and
user sales increased as has been the trend for the last 24 months. Kelso Business Park sold to
FRP Development for $4,850,000. COPT sold their portfolio in White Marsh, including 4969 &
4979 Mercantile Road purchased by Hill Management for $5,900,000. Cabot Properties bought
a 6 building portfolio from First Industrial at Beltway West for $28.5 million.
Vacancy rate for bulk distribution space evened out at 10%. Even with an infux of
speculative development planned, demand will remain strong, and much of that
space will likely be preleased.
Cap rates rose to 8.4%, after declining most of 2014.
www.colliers.com/marketname
DEFINITIONS
> Catalogued Inventory: Class A & B fex buildings over 10,000 sf and distribution warehouse buildings over 100,000 sf. This inventory
includes a total of 1,339 buildings consisting of more than 138,000,000 square feet of space.
> Market Area: Baltimore City and the surrounding counties of Anne Arundel, Howard, Baltimore, Cecil, Harford and Carroll.
> Vacancy Rate: Total vacant space divided by the total inventory.
> Net Absorption: The diference in physically occupied space within a given time period.
> Average Asking Rent: Weighted average rent per square foot, triple net
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2011 2012 2013 2014
T
h
o
u
s
a
n
d
s
Net Absorption
(all product types)
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
2011 2012 2013 2014
Vacancy Rate
(all product types)
Vacancy rates for fex space steadily decrease ending at 10%, and should
continue that trend throughout the balance of the year.
Spec development is back in a big way with the If we build it, they will come
mentality.
As cap rates continue to compress on Class A product, investor surge is expected
for Class B buildings.
Colliers tracks 55 tenants and buyers in the market searching for a total of
3,067,800 SF of space
Although Prince Georges county is not included in the Baltimore regional statistics, it remains
an important and strategic location for the Baltimore area. PG County consists of 225 existing
buildings and approximately 22,300,000 square feet of space. At the end of the 3
rd
quarter of
2014, more than 3,300,000 square feet of that space was vacant, equivalent to a vacancy
rate of 15%.
MARKET INDICATORS
Q2 2014 Q3 2014
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
$4.00
$4.20
$4.40
$4.60
$4.80
$5.00
$5.20
$5.40
Q3 2013 Q1 2014 Q2 2014 Q3 2014
Bulk & Warehouse Asking Rental Rates (NNN)
$9.50
$10.00
$10.50
$11.00
$11.50
$12.00
Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Flex Space Asking Rental Rates (NNN)
RESEARCH & FORECAST REPORT | Q3 2014 | INDUSTRIAL USE | BALTIMORE
www.colliers.com/marketname
INVESTMENT SALES ACTIVITY
PROPERTY ADDRESS SALES DATE SALES PRICE SIZE SF SELLER BUYER PRICE/SF SUBMARKET
504 Advantage Way 9/2014 $31,000,000 528,780 sf ZAIS Group SK Realty $58.63 Aberdeen
1812-1820 Margaret Avenue 8/2014 $4,300,000 42,214 sf Boben Joint Venture ShoreGate of Margaret Ave $101.86 Annapolis
5020 Campbell Boulevard 8/2014 $12,400,000 43,791 sf COPT Douglas Legum Development $92.20 Baltimore County East
7120-7132 Ambassador Road 7/2014 $3,450,880 46,971 sf First Industrial Realty Trust Cabot Properties $73.47 Baltimore Southwest
7155 Montevideo Road 7/2014 $12,499,999 109,540 sf DCT Industrial Trust TA Associates $73.92 Route 1 Corridor
4611 Mercedes Drive 7/2014 $7,650,000 70,133 sf DCT Industrial TA Associates $42.95 Aberdeen
2700 Lord Baltimore Drive 7/2014 $5,700,000 59,057 sf First Industrial Realty Trust Cabot Properties $92.00 Baltimore Southwest
2209 Sulphur Spring Road 7/2014 $11,500,000 313,000 sf Alliance Partners Federal Capital Partners $36.74 Baltimore Southwest
LEASING ACTIVITY
PROPERTY ADDRESS LEASE DATE LEASE SF LESSEE TYPE SUBMARKET
8416 Kelso Drive 9/2014 508,171 sf Restoration Hardware Industrial Baltimore County East
9001 Whiskey Bottom Road 8/2014 244,500 sf Coastal Sunbelt Produce Industrial Route 1 Corridor
6610 Cabot Drive 7/2014 153,452 sf W.R. Grace & Co. Industrial Route 2 Corridor
7020 Dorsey Road 8/2014 22,410 sf Brekford Corporation Industrial BWI/AA County
7195 Troy Hill Drive 7/2014 13,481 sf Comcast Flex BWI/Howard County
3121 Washington Boulevard 7/2014 70,790 sf Arnolds Factory Supplies Industrial Baltimore Southwest
UPDATE: MARKET COMPARISONS
Net Absorption New Construction Rental Rates (NNN)
SUBMARKET/COUNTY TOTAL SF VACANT SF VACANCY % CURRENT QUARTER YTD CURRENT COMPLETED WH/DIST R&D/FLEX
Baltimore Southwest 7,420,565 979,743 13.2% -2,509 40,044 0 0 $3.28 $7.22
Baltimore East 24,659,404 2,862,149 11.6% 479,835 1,114,092 2,092,133 449,299 $3.91 $10.19
Harford/Cecil County 28,088,704 1,746,734 6.2% 1,025,611 1,359,579 571,500 1,600,742 $4.36 $11.02
Anne Arundel County 24,190,523 2,793,722 11.5% -48 -204,670 291,000 243,500 $5.35 $9.19
Howard County 30,476,695 3,913,274 12.8 88,414 -9,221 156,140 241,709 $5.58 $13.36
Carroll County 6,192,816 223,713 3.6% -9,600 206,162 0 0 $8.00 $15.00
Prince Georges County 22,184,124 3,236,405 14.6% -52,260 -228,441 355,803 0 $6.01 $9.13
QUARTERLY COMPARISON AND TOTALS
QUARTER TOTAL RBA VACANT SF VACANCY %
CURRENT Q
ABSORPTION
CURRENT
CONSTRUCTION
COMPLETED
DELIVERIES
AVERAGE RENTAL
RATES (NNN)
Q3 2014 138,518,895 14,016,870 10.1% 1,537,977 3,110,773 2,535,250 $5.57
Q2 2014 135,983,645 13,019,597 9.6% 637,096 4,190,208 30,120 $5.63
Q1 2014 137,656,817 15,329,865 11.1% -938,819 3,873,920 0 $5.78
Q3 2013 137,889,397 sf 14,222,024 sf 10.3% 329,317 sf 1,008,967 sf 51,120 sf $5.70
Q4 2013 137,656,817 14,391,046 10.5% 494,644 3,582,920 80,914 $5.66
RESEARCH & FORECAST REPORT | Q3 2014 | INDUSTRIAL USE | BALTIMORE METRO AREA
Submarkets
HOWARD COUNTY
The industrial market in Howard County straddles
I-95 and Route 1. Major employers include Verizon
and Sysco. The industrial market represents more
than 30,000,000 square feet of space. Vacancy
rates ended the quarter at 12.2%, which was
relatively unchanged for the last 18 months.
Coastal Sunbelt is in the process of building a
240,000 sf facility on Whiskey Bottom Road.
Chicago Metallic signed a 27,300 sf lease at Santa
Barbara Court, and RMP National leased 38,256 sf
at 8242 Sandy Court. Merritt Properties
announced they would construct a new 88,000 sf
facility at 7775 S. Chesapeake Bay Court in
Jessup adjacent to the Maryland Seafood Market.
As for investment sales, TA Associates will now
be Elite Spices landlord at 7151 Montevideo after
buying two buildings for $12.49 million.
ANNE ARUNDEL COUNTY
The industrial and fex market in Anne Arundel
County is adjacent to Howard County and
consists of more than 24,000,000 square feet of
space. Major employers include Fort George G.
Meade, Northrop Grumman and the BWI
Thurgood Marshall Airport. Vacancy rates
continued to rise during 2014, ending the 3
rd

quarter at 11.6%. However, much of the space is
expected to be absorbed. W.R. Grace signed a
151,000 sf lease at 6610 Cabot Drive. Carrier took
180,000 sf at 7481 Coca Cola Drive. Terreno
signed Excel Group, Afterglow Lighting and
Beverage Network at Route 100 Business Park.
Hartz Mountain bought 7448 Candlewood for
$18.7 million, and 1805 Margaret Avenue sold for
$4.3 million.
HARFORD/CECIL COUNTIES
The Harford and Cecil County submarket spans
the I-95 & the Rt. 40 corridor up to the Delaware
line and represents more than 28,000,000 square
feet of space. Major employers in this market
include Rite Aid, Kohls and Sephora. Unlike ofce
vacancy in Harford County, industrial/fex space
is in high demand, and there is not enough of it.
Vacancy rates spiked slightly to 7% with the
delivery of over a million square feet of space this
quarter, however that is expected to absorb
quickly. IKEA signed a 184,000 sf lease at 1840
Clark Road. Proctor & Gamble sold their
warehouse at 1805 Fashion Court for $11.65
million to One Liberty Properties who intend to
reposition the asset after P&Gs lease comes to
end in 2015. Advantage Business Park sold for
$31 million to SK Realty Management, and TA
Associates bought 4611 Mercedes Drive for $7.65
million. Chesapeake Real Estate is expected to
break ground later this year on 610 Chelsea Road,
which will be approximately 570,000 sf spec
building. Besides that, Principio Business Park in
Cecil County is fully permitted, and is the only
property in Maryland capable of up to 600,000 sf
of development.
BALTIMORE EAST
This submarket encompasses the northeast and
southeast portions of Baltimore City, as well as the
eastern portion of Baltimore County, and contains
more than 24,800,000 square feet of industrial/
fex space. Major industrial users for this area
include Middle River Aircraft Systems, General
Motors, Allison Transmission, DAP Products, and
soon, Amazon. Vacancy rates increased to 11.5%
with several buildings delivered, and more
expected before the end of the year. There was a
lot of activity around Kelso Drive this quarter. Royal
Transport took 100,940 sf at 8410 Kelso Drive, and
Restoration Hardware signed a 508,171 sf lease at
8416 Kelso Drive. 8515 & 8525 Kelso Drive sold to
FRP Development for $4.85 million. Investment
sales in the area were hot this quarter with
4969/4979 Mercantile selling for $5.9 million to Hill
Management, and 5020 Campbell Blvd selling to
Douglas Legum Development for $12.4 million.
New life could fnally be breathed into Sparrows
Point as Redwood Capital Investments makes
strides to clean up the land and redevelop it into a
hub for transportation, manufacturing and logistics.
Sun Products has their 900,000 sf facility on
Holabird Avenue for sale, which is considered a
desirable location considering the proximity to the
Port. Chesapeake Real Estate is also expected to
break ground this year at Baltimore
Crossroads@95 for a 435,500 sf building.
BALTIMORE SOUTHWEST
The Southwest Baltimore submarket includes
properties within the citys Central Business
District, Midtown, as well as Woodlawn and
Catonsville. This smaller submarket contains
approximately 7,400,000 square feet of space. At
the end of the 3
rd
quarter of 2014, the vacancy
rate in this submarket was 13.2%, which has been
relatively unchanged for the past 12 months.
Leasing activity spiked during the third quarter
with Ahern Rentals taking 14,560 sf at 2031
Inverness Avenue, and Arnold Factory Supplies
renewing their 70,790 sf lease at 3121
Washington Boulevard. B&E Storage and Transfer
also announced they would relocate from Jessup
to 294,000 sf at Point Breeze Business Center on
Broening Highway. Several sales took place as
well, including 6 buildings on Ambassador Road,
Rutherford Road and Lord Baltimore Drive by
First Industrial for $28.5 million.
CARROLL COUNTY
The Carroll County submarket includes the cities
of Westminster and Hampstead and contains
approximately 6,100,000 sf of fex and industrial
space. Major employers include Jos. A. Banks,
Solo Cup and Random House. At the end of the
3
rd
quarter, vacancy in this submarket dropped
signifcantly to 3.6%. Though there were few
leases signed this quarter, activity surrounding
Fuchs new facility began at North Carroll
Business Park. Questions still loom over the
acquisition of Jos. A. Banks by Mens Warehouse
and how the consolidation could afect the market
if the facility closes, which currently employs over
750 workers.
Accelerating success.
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International for advertising and general information
only. Colliers International makes no guarantees,
representations or warranties of any kind, expressed
or implied, regarding the information including, but not
limited to, warranties of content, accuracy as to the
accuracy of the information. This publication is the
copyrighted property of Colliers International and/or
its licensor(s). 2014. All rights reserved.
RESEARCHER:
Nadia Kahler
Vice President, Research &
Transaction Management | Baltimore
100 North Charles Street
Suite 1710
Baltimore, MD 21201
TEL +1 443 543 1222
FAX +1 443 543 0191
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RESEARCH & FORECAST REPORT | Q3 2014 | INDUSTRIAL USE | BALTIMORE METRO AREA