BALTIMORE

Office Market Snapshot

Fourth Quarter 2014

Economy

BALTIMORE OFFICE

Economic Indicators

12-Month
Forecast

A fourth quarter surge in jobs has helped boost the Baltimore

metropolitan economy and reduce the unemployment rate to
approximately 5.5%, its lowest year-end point since before the
recession. The metropolitan region has added approximately 55,000
jobs in 2014. One notable area of growth is the government sector,
which added approximately 9,500 jobs in 2014. This growth is
especially encouraging considering the turmoil and uncertainty
surrounding the federal government in 2013 that briefly resulted in a
reduction in government jobs throughout the region.

Q4 13

Q4 14

Baltimore Employment

1.36M

1.37M

Baltimore Unemployment

6.9%

5.6%

U.S. Unemployment

7.2%

5.8%

Q4 13

Q4 14

Overall Vacancy

16.6%

15.7%

Market Overview

Net Absorption

251K

157K

Under Construction

1.4M

1.7M

Average Asking Rent

$22.72

$22.41

The Baltimore metropolitan office market ended 2014 with a

15.65% vacancy rate. The vacancy rate decreased as the result of
156,843 square feet of positive absorption throughout the market
in the fourth quarter. Baltimore experienced almost 1.1 million
square feet of positive absorption in 2014 and a reduction of 95
basis points in vacancy. The average full service asking rent in the
market is currently $22.41 per square foot, up slightly from
$22.23 per square foot at the end of the third quarter.

Market Indicators

12-Month
Forecast

Net Absorption/Asking Rent

4Q TRAILING AVERAGE
500,000

$23

300,000
$23
100,000
-100,000

$22

-300,000
$22
-500,000
$21

-700,000
2010

2011

2012

Net Absorption

2013

2014

Asking Rent, $ PSF

Overall Vacancy
21%
20%
19%
Historical Average = 18.1%
18%
17%
16%
15%
2010

2011

2012

2013

2014

The Downtown Baltimore office market continues to experience

decreasing vacancy. Overall, the Downtown Baltimore office
submarket experienced 92,014 square feet of positive absorption
in 2014 and finished the year with an 18.08% vacancy rate.
The Class A sector experienced more than 111,172 square feet of
positive absorption in 2014 and now has a vacancy rate of
12.94%. The announcement of OneMain Financials move to 100
International Drive will generate approximately 110,000 square
feet of Class A positive absorption and remove from the market
one of the largest available blocks of Class A office space in the
entire region. After OneMain Financial takes occupancy at 100
International Drive and Pandora Jewelry occupies its new
100,000 square foot headquarters space at 250 West Pratt
Street, the Class A vacancy rate will approach 11%. These deals
will significantly decrease the vacancy rates of Harbor East and
the Pratt Street Corridor considerably. The Harbor East vacancy
rate is projected to decrease to approximately 7.0% by the end of
2015 while the Pratt Street Corridor should see vacancy decrease
to approximately 8.0%.

BALTIMORE

Office Market Snapshot

Fourth Quarter 2014

The Suburban North office market experienced a nice finish to a

strong 2014. Almost 60,000 square feet of positive absorption
brought the annual total to more than 220,000 square feet of
positive absorption. The overall vacancy rate has decreased to
13.38% and the Class A vacancy rate has decreased to 11.67%.

Baltimore experienced almost 1.1 million

square feet of positive absorption in 2014
and a reduction of 95 basis points in
vacancy.

The Pratt Street Corridor

CLASS A OFFICES ALONG THE PRATT STREET CORRIDOR IN THE CBD CONTINUES
TO ATTRACT TENANTS

25%
20%
15%
10%
7.50%

5%
0%

The Northern Baltimore-Washington (NBW) Corridor office

market, comprised of the Howard County, BWI Airport and
Greater Annapolis submarkets, continues to command a great
deal of attention from office tenants throughout the region. Almost
100,000 square feet of positive net absorption in the fourth
quarter of 2014 brought the annual net absorption total to
approximately 620,000 square feet. As a result, the vacancy rate
in the NBW Corridor decreased below 13%.
The Class A sector of the NBW Corridor office market saw its
vacancy rate decrease to 10.69% after more than 200,000
square feet of net positive absorption; the Class B office vacancy
rate decreased to 14.78% after almost 420,000 square feet of net
positive absorption in 2014. Overall, the NBW Corridor office
market continues to command approximately 60% to 75% of the
total positive absorption in the Baltimore metropolitan region.

NBW Corridor: Vacancy vs. Rent

THE NBW CORRIDOR HAS SEEN LIMITED RENT GROWTH WITH DECREASING
VACANCY
$26.00

25.00%
20.00%

$24.28

$24.00

15.00%

12.96%

10.00%

$21.00

2007

2008

2009

2010

Vacancy %

Outlook
R
 ent growth has lagged behind consistent absorption;
the next few years should see rent begin to catch up.
T
 he construction pipeline should see a greater number
of projects reach groundbreaking.
V
 acancy rates have become extremely low in several
submarkets; expect absorption to begin spilling into
neighboring areas where gluts of space still remain.
Several large deals signed in 2014 will result in an
increased amount of net positive absorption in 2015.

$23.00
$22.00

5.00%
0.00%

$25.00

2011

2012

2013

2014

$20.00

Average Rent

Class A Asking Rent

CLASS A RENT HAS NOT YET GROWN TO KEEP PACE WITH ABSORPTION

Four Quarter Trailing Average

$30.00
$28.00
$26.00
$24.00
$22.00
$20.00
2010

2011
Baltimore Metro

2012

2013

2014

Downtown

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BALTIMORE

Office Market Snapshot

Fourth Quarter 2014

TOTAL
BLDGS

INVENTORY

SUBLET
VACANT

DIRECT
VACANT

VACANCY
RATE

AVERAGE
AVERAGE
CURRENT NET
YTD NET
UNDER
ASKING RENT ASKING RENT
ABSORPTION ABSORPTION CONSTRUCTION
(ALL CLASSES)

(CLASS A)

SUBMARKET
BWI Airport

162

11,400,739

16,899

1,597,555

14.16%

15,175

134,733

245,000

$25.70

$29.41

Baltimore City

166

20,875,455

281,670

3,493,599

18.08%

-8,720

92,014

729,006

$20.62

$26.42

94

3,888,168

2,580

462,474

11.96%

28,430

76,673

125,000

$25.82

$28.72

Greater Annapolis Area

Harford County

36

2,076,667

35,066

664,851

33.70%

-6,857

71,543

$29.92

$29.92

Howard County

317

17,701,928

108,680

2,089,064

12.42%

51,826

409,312

360,000

$23.38

$26.76

Suburban North

230

13,647,995

22,251

1,804,410

13.38%

59,828

220,886

43,568

$22.25

$23.03

Suburban West

151

7,993,058

10,937

1,549,624

19.52%

17,161

89,679

232,000

$19.72

$21.77

BALTIMORE MARKET TOTALS

Class A

328

34,688,169

200,038

4,466,725

13.45%

41,130

542,675

1,274,336

$26.36

Class B

828

42,895,841

278,045

7,194,852

17.42%

115,713

552,165

335,238

$20.05

1,156

77,584,010

478,083 11,661,577

15.65%

156,843

1,094,840

1,734,574

$22.72

PRICE

SUBMARKET

Total
Office asking rents converted to Full Service

Key Lease Transactions 4Q 14

PROPERTY

SF

TENANT

TRANSACTION TYPE

SUBMARKET

100 International Drive

109,156

OneMain Financial

Lease

Baltimore City

8135 Maple Lawn Drive

111,583

Sourcefire

Lease

Howard County

1966 Greenspring Drive

21,808

Riverside Health

Lease

Suburban North

Key Sales Transactions 4Q 14

PROPERTY

SF

SELLER/BUYER

Columbia Town Center Portfolio

699,231

General Growth Properties / The Howard Hughes Corporation

300 West Lexington Street

202,838

Bernstein Management / AiNet, LLC

$18,500,000

Baltimore City

Owings Mills Portfolio

180,475

First Potomac Realty Trust / CSG Partners & Blue Vista

$13,000,000

Suburban West

301 International Circle

29,274

Kelley & Associates / JAI Medical Systems`

$130,000,000

$6,200,000

Howard County

Suburban North

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BALTIMORE

Office Market Snapshot

Fourth Quarter 2014

PENNSYLVANIA
MARYLAND

Office Submarkets

BALTIMORE
COUNTY

CECIL
COUNTY

us
que

CARROLL
COUNTY

Baltimore

han

DE

aR

iv
er

HARFORD
COUNTY

Harford
County

Suburban
West

Suburban
North

El

kR

iv

er

Downtown
KENT
COUNTY

Baltimore

Howard
County
Patapsco
River

MONTGOMERY
COUNTY

BWI
Airport

PRINCE
GEORGE'S
COUNTY

Washington D.C.

VA

Greater
Annapolis
Area

Chesapeake
Bay

Kent
Island

QUEEN
ANNE'S
COUNTY

CAROLINE
COUNTY

ANNE ARUNDEL
COUNTY

About DTZ
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Matthew Myers
Senior Research Analyst
100 Light Street
Suite 1400
Baltimore, MD 21202
Tel: 410 347 4808
Fax: 410 576 9031
Email: matthew.myers@dtz.com

50 countries and proudly represent DTZs culture of excellence, client advocacy, integrity and collaboration.
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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 2014 DTZ.
All rights reserved.

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