MARKETBEAT

Office Snapshot Q4 2015

Baltimore

Economy

BALTIMORE OFFICE

The Baltimore metropolitan region finished 2015 with

approximately 31,600 more jobs than at the close of 2014.
The Construction sector is leading the charge with a 5.5%
year-over-year growth rate. The Financial Services and Education & Health Services sectors also experienced annual
growth in excess of 3% in 2015. Baltimore continues to
follow the overall U.S. economy with employment growth
contributing to a solid office market.

Economic Indicators
2014

2015

Baltimore Employment

1.37M

1.40M

Baltimore Unemployment

5.6%

5.3%

U.S. Unemployment

5.8%

5.0%

12-Month
Forecast

Market Indicators (Overall, All Classes)

Vacancy

2014

2015

15.7%

14.7%

1.1M

1.1M

Net Absorption (sf)

Under Construction (sf)
Average Asking Rent*

1.7M

1.9M

$22.41

$22.47

Market Overview

12-Month
Forecast

*Rental rates reflect gross asking $psf/year

Overall Net Absorption/Overall 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

2015

Asking Rent, $ PSF

21%
20%
19%

Historical Average = 17.6%

17%
16%
15%
14%
2010

2011

Once again, the vast majority of the positive absorption

was focused in Class A office buildings. The Class A sector
totaled 378,474 square feet of net positive absorption in
the 4th quarter alone and effectively all of the 1.1 million
square feet of annual absorption experienced in the market
in 2015. The Class A sector of the Baltimore Metropolitan
office market now has a vacancy rate of 11.0% and has contributed to the need for the 1.9 million square feet of new
office space currently under construction.

Outlook

Overall Vacancy

18%

The Baltimore Metropolitan office market experienced

approximately 286,000 square feet of net positive absorption in the 4th quarter, raising the annual total to almost 1.1
million square feet of net positive absorption. This marks
two consecutive years that Baltimore has exceeded 1
million square feet of annual net positive absorption. The
Baltimore Metropolitan office vacancy rate decreased to
14.67% as a result of this activity. Overall, the metropolitan
office vacancy rate has decreased 386 basis points since
the end of 2012.

2012

2013

2014

2015

Post-recession average rental rates have grown slowly, a

trend that should continue in 2016. The delivery of new
office product could provide a slight boost, but the reaction of lower quality buildings attempting to retain tenants
will continue to restrain rent growth. Absorption in 2016 is
expected to reach 1 million square feet, again with a focus
on Class A product as tenants demonstrate a flight-to
quality approach to real estate. Large blocks of available
Class A space continue to disappear from the market, creating strong competition for the very best product on the
market.

cushmanwakefield.com

MARKETBEAT

Office Snapshot Q4 2015

Baltimore

YTD
OVERALL CURRENT NET
OVERALL
VACANCY
ABSORPTION
NET
RATE
(SF) ABSORPTION
(SF)

INVENTORY
(SF)

SUBLET
VACANT
(SF)

DIRECT
VACANT
(SF)

163 11,550,619

17,127

1,552,942

Baltimore City

172 21,209,478

276,723

3,383,547

Greater Annapolis Area

103

4,155,606

2,580

647,118

40

2,210,499

9,199

745,815

34.16%

TOTAL
BLDGS

SUBMARKET

BWI Airport

Harford County

13.59%

UNDER
CNSTR
(SF)

OVERALL
AVERAGE
ASKING RENT
(ALL CLASSES)*

OVERALL
AVERAGE
ASKING RENT
(CLASS A)*

$22.13

$28.39

131,524

238,898

193,300

17.26%

-4,032

69,980

672,336

$21.55

$26.11

15.63%

13,455

27,747

95,000

$25.90

$27.87

-36,766

-36,532

100,000

$28.59

$28.59

Howard County

318

17,765,407

100,895

1,838,351

10.92%

96,005

311,987

360,000

$24.10

$26.73

Suburban North

233 14,149,602

21,916

1,482,191

10.63%

121,270

405,300

187,320

$21.18

$23.45

Suburban West

152

1,524,341

18.98%

-34,833

81,858

290,600

$19.47

$21.38

428,440 11,174,305

14.67%

286,623

1,099,238 1,888,556

$22.47

$25.98

BALTIMORE TOTALS

8,031,243

1,181

*Rental rates reflect gross asking $psf/year

*Rental rates reflect gross asking $psf/year

TOTAL
BLDGS

SUBMARKET

INVENTORY
(SF)

SUBLET
VACANT
(SF)

DIRECT
VACANT
(SF)

OVERALL
VACANCY
RATE

CURRENT NET
ABSORPTION
(SF)

Class A

337

35,528,575

141,537

3,770,942

11.01%

378,474

Class B

844

43,543,879

286,903

7,403,363

17.66%

-91,851

YTD
OVERALL NET
ABSORPTION
(SF)

UNDER
CNSTR
(SF)

DIRECT
AVERAGE
ASKING RENT*

1,109,605 1,422,336
-10,367

466,220

$25.98
$19.88

*Rental rates reflect gross asking $psf/year

Key Lease Transactions Q4 2015

PROPERTY

TENANT

TRANSACTION TYPE

SUBMARKET

300 East Joppa Road

37,000

SF

Whitney Bailey

Lease

Suburban North

801 East Pratt Street

19,000

Kaiser Permanente

Lease

Baltimore City

180 Admiral Cochrane Drive

16,738

Cyber Reliant

Relocation

Greater Annapolis

7250 Parkway Drive

11,534

MDICS

Lease

BWI Airport

Key Sales Transactions Q4 2015

PROPERTY

SF

SELLER/BUYER

PRICE / $PSF

SUBMARKET

9690 Deereco & 375 West Padonia

246,046

COPT / Atapco Properties

$44,500,000 / $181

Suburban North

9900-9920 Franklin Square Drive

133,869

COPT / FD Stonewater

$24,000,000 / $179

Suburban North

100 South Charles Street

Cornerstone Real Estate Advisors / Carlyle

479,219
Development Group

$45,000,000 / $91

Baltimore City

Columbia Medical Campus

155,314

$35,500,000 / $229

Howard County

Cushman & Wakefield

100 Light Street
Suite 1400
Baltimore, MD 21202
cushmanwakefield.com

Montecito Medical / Health Care REIT

For more information, contact:

Matthew Myers
Senior Research Analyst
Tel: +1 410 347 7808
matthew.myers@cushwake.com

About Cushman & Wakefield

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Copyright 2015 Cushman & Wakefield. All rights reserved. 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.