CBRE Group, Inc. announced its first quarter of 2017 market overview for the Baltimore office and industrial sectors. Market fundamentals remained healthy in the Baltimore metro region, with modest increases in asking rents and vacancy rates declining 30 and 60 basis points over the quarter in the office and industrial markets, respectively. 

The market posted a strong quarter of development activity, as 817,000 sq. ft. of office space and 1.5 million sq. ft. of industrial space delivered during Q1 2017. This compares to the average quarterly volume of 148,000 sq. ft. (office) and 450,000 sq. ft. (industrial) over the previous five years.

“Overall fundamentals are holding steady in the Baltimore metro region,” said Wei Xie, Research Manager, CBRE Washington, D.C.-Baltimore. “The strong development activity and ongoing pipeline demonstrates continued growth in demand within the market.” 

Q1 2017 Market Highlights: 

Office

Consistent with trends in 2016, the Baltimore suburban office market continued to outperform the downtown core. The suburban markets recorded 395,000 sq. ft. of occupancy gain with a 12.6% vacancy rate, while the downtown markets experienced 180,000 sq. ft. of positive absorption and an vacancy rate of 16.9%. The healthcare, business services, and technology industries remained the key drivers for demand growth in the market.

The Baltimore market saw a rise in co-working leasing activity during the quarter, a trend that has permeated the D.C. metro region as well over the past two years. Multiple co-working operators leased an additional 34,000 sq. ft. in Q1 2017. Responding to strengthening demand in this sector, New York-based Carlyle Development Group announced plans to dedicate a full 30,000-sq.-ft. floor as a co-working space at its newest property, 100 S. Charles Street.

Investment sales activity was robust with a total trading volume of $453 million in Q1 2017, up from $230 million in Q1 2016. Activity was dominated by institutional and private capital. For the first time since 2007, there was an increase in capital entering the suburban markets. In response, over $266 million worth of product has gone on the market. In total, more than $370 million worth of office product is actively on the market across the Baltimore metro region.

Industrial

The Baltimore industrial market continued to see strong demand growth, with 2.4 million sq. ft. of positive absorption posted in Q1 2017. Since 2014,12 million sq. ft. of industrial space has been absorbed by the market. Demand continued to outpace supply leading to further decline in vacancy rates, which ended the first quarter at 7.2%.

Much of the leasing activity in the market was driven by organic growth, with new leases and expansions accounting for 66% of total activity during the quarter. In terms of industry sectors, e-commerce, third-party logistics providers (3PLs) and food and beverage users contributed 63% of total market activity in Q1 2017.

Construction activity increased for the third consecutive quarter with a healthy combination of build-to-suit and speculative projects. Four warehouses totaling 1.5 million sq. ft. delivered in Q1 2017, while 3.7 million sq. ft. in six buildings broke ground. In total, 5.2 million sq. ft. of industrial product is currently under construction, of which 2.7 million sq. ft. was build-to-suit and 2.5 million sq. ft. started on a speculative basis, currently with no preleasing activity.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue).  The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide.  CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.  Please visit our website at www.cbre.com.