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Net Absorption
(all product types)
Thousands
Vacancy Rate
(all product types)
13.0% 12.0% 11.0% 10.0% 9.0% 8.0% Q3 2009
> Larger spaces are being leased quickly, which should translate to higher rents in the second half of 2014 > Continued cap rate compression
mARKEt INDICAtORS
Q3 2013 VACANCY NET ABSORPTION CONStRUCtION RENtAL RAtE Q4 2013
> Average rental rates for bulk Class A & B space has changed very little, hovering around $4.50 NNN for the past two years > Average rental rates for flex Class A & B space rose the second half of 2013 to $11.50 NNN
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RESEARCH & FORECAST REPORT | Q4 2013 | INDUSTRIAL usE | BaltiMOrE MEtrO arEa
Distribution Warehouse Asking Rental Rates
$5.40 $5.20 $5.00 $4.80 $4.60 $4.40 $4.20 $4.00 Q4 2012 Q1 2013 Q2 20113 Q3 2013 Q4 2013
DEfINItIONS > Catalogued Inventory: > Market Area: > Vacancy Rate: > Net Absorption: > Average Asking Rent: Class A & B flex buildings over 10,000 sf and distribution warehouse buildings over 100,000 sf. This inventory includes a total of 1,446 buildings consisting of more than 137,000,000 square feet of space. Baltimore City and the surrounding counties of Anne Arundel, Howard, Baltimore, Cecil, Harford and Carroll. Total vacant space divided by the total inventory. The difference in physically occupied space within a given time period. Weighted average rent per square foot, triple net
LEASING ACTIVITY
PROpERty ADDRESS Keith Ave @ Broening Hwy 8235 Patuxent Range Road 7629 Gambrills Cove Road 1413 Tangier Drive 7521 Pulaski Highway 4801 Hollins Ferry Road 531 Chelsea Road LEASE DAtE Nov-13 Nov-13 Nov-13 Oct-13 Oct-13 Oct-13 Oct-13 LEASE SF 1,150,000 192,179 352,850 449,299 105,486 sf 101,945 655,000 Amazon Feld Entertainment Metro Logics Reliable Churchill Price Busters Furniture FedEx Sephora LESSEE RAtE Withheld $6.95 $4.50 $4.85 Withheld Withheld Withheld TypE Warehouse Warehouse Warehouse Warehouse Warehouse Warehouse Warehouse SUbmARKEt Baltimore Southeast Route 1 Corridor Route 2 Corridor Baltimore County East Baltimore County East Arbutus Aberdeen
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RESEARCH & FORECAST REPORT | Q4 2013 | INDUSTRIAL usE | BaltiMOrE MEtrO arEa
Submarkets
HOWARD COUNty The industrial market in Howard County straddles I-95 and Route 1. The industrial market represents over 30,000,000 square feet of space. Vacancy rates dropped to 12.3%, the lowest they were all year. One of the largest deals of the quarter was Feld Entertainment, which took 192,179 sf at 8235 Patuxent Ridge Road in Jessup. Terreno Realty acquired 8215 Dorsey Run Road for $6 million, and 7715 Assateague Drive sold for $1,900,000 to Baldor Specialty Foods. United Stationers renewed their lease for 186,500 sf at 7090 Troy Hill Drive, while Sutherland Logistics signed a 38,802 sf lease at 7045 Troy Hill Drive. A win for Howard County beer connoisseurs, Black-Eyed Susan Brewery signed a 22,500 sf lease at 9570 Berger Road. ANNE ARUNDEL COUNty The industrial and flex market in Anne Arundel County is adjacent to Howard County and consists of over 23,700,000 square feet of space. Major employers include Fort George G. Meade, Under Armour and the National Security Agency. With a second consecutive quarter of negative absorption, vacancy rates rose again to 10.1%. ADSCOM signed a lease for 33,748 sf at 7600 Energy Parkway, and Cort Furniture signed a 38,000 sf lease at 7466 Candlewood Road. Thompson Pump and Manufacturing leased 4.61 acres at 711 Pittman Road for their regional office and distribution center. HARfORD/CECIL COUNtIES The Harford and Cecil County submarket spans the I-95 & the Rt 40 corridor up to the Delaware line and represents over 26,000,000 square feet of space. Vacancy rates in this submarket are at record lows at 3.1%, dramatically lower than 16.7% vacancy the market showed at the beginning 2011. One of the more significant transactions for the region was Sephora signing a 656,000 sf build-to-suit lease at 531 Chelsea Road due to deliver in June of 2014. Zenith Global Logistics will relocate and expand their local hub to 1501 Perryman Road. Acer Exhibits purchased 1601 Clark Road, a 167,270 sf warehouse which will become their new headquarters. BALtImORE EASt This submarket encompasses the northeast and southeast portions of Baltimore City, as well as the eastern portion of Baltimore County, and contains over 24,700,000 square feet of industrial and flex space. Vacancy rates decreased to 12.4% with the help of positive absorption rebounding from the 3rd quarter, and several large deals announced. Amazon quieted rumors by signing a 1,150,000 sf lease for a fulfillment center at a to-be-built warehouse on the site of the former General Motors Assembly plant. Reliable Churchill signed a 449,299 sf lease at 1413 Tangiers Drive, another build-to-suit. 7521 Pulaski Highway was recently purchased by Blue Ocean Realty, which also signed Price Busters Furniture to a 105,489 sf lease. 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 7,300,000 square feet of space. Vacancy rates rose to 15.0% as absorption went negative for only the second time in nearly two years. Leasing was relatively slow in this submarket, but there was sales activity. A five building 263,000 sf industrial warehouse complex on Washington Boulevard sold for $8 million to FRP Development. The Horstmeier Lumber Company sold its warehouse at 1600 Ridgely Street for a reported $3.4 million. PRINCE GEORGES COUNty Although Prince Georges county is not included in the Baltimore regional statistics, it remains an important and strategic location for the Baltimore area. P.G. County consists of 230 buildings and approximately 21,400,000 square feet of space. At the end of the 4th quarter of 2013 more than 3,000,000 square feet of that space was vacant, equivalent to a vacancy rate of 14.7%.
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