Consistent year-after-year demand spurs construction activity of nearly 15 million square feet
More than 2.7 million square feet of industrial/warehouse space was leased in the greater Baltimore metropolitan region, nearly replicating the nearly 2.6 million square feet of space leased in first quarter 2022, according to a report recently released by Lee & Associates | Maryland. These figures add to the approximately 15 million square feet of industrial/warehouse space leased in the region during last year, according to the fully-integrated commercial real estate brokerage and management firm headquartered in Columbia. Net absorption rose to 1.7 million square feet of space, after registering approximately 930,000 square feet of space in Q1 and the overall vacancy rate rose to 3.95% – from 3.7% for the first quarter. Nearly 15 million square feet of space is now under construction, a volume that is substantially above the 12.2 million square feet of space reported last quarter.
“While there has been a partial slowdown in demand for larger industrial spaces, the need for infill locations has increased and has been partially responsible for the vacancy constriction,” stated Tom Whelan, Principal, Lee & Associates | Maryland. “The greater Baltimore industrial market continues to follow the growth pattern of the industrial sector nationally and expect leasing to remain consistent for the balance of the year. Possibly as a direct result of inflation, rental rates also continue to rise.”
Approximately 1.6 million square feet of space was delivered in Q2, bringing the total volume of space delivered in 2022 to approximately 3.6 million square feet of space. Average asking rents rose to$7.66 from $7.28 per square foot. Sixty-six sales transactions were completed at a cumulative value of nearly $517 million. Approximately 10.3 million square feet of industrial/warehouse space is available for lease locally, down from 10.9 million last quarter.
Significant industrial sales included the $104.8 million acquisition of 10900 Hopewell Road in Hagerstown by Fundrise; the $80.5 million purchase of 1900 Clark Road in Havre De Grace by Apollo Net Lease Capital Corp. and B.J. Wholesale Club’s $47.5 million acquisition of 451 Fletchwood Street in Elkridge.
The area’s largest leases were the 598,000 square foot lease signed by Baltimore International Warehouse & Transportation at 2800 Eastern Boulevard in Middle River; the 186,000 square foot lease at 8700 Robert Fulton Drive in Columbia by Infarm and Alcon’s 142,000 square foot lease at 6740 Business Parkway in Elkridge.
The largest construction projects underway in the greater Baltimore metropolitan region include a 1.8 million square foot building at Tradepoint Atlantic that will be delivered in Q3; a 1.2 million square foot building at 55 W Oak Ridge in Hagerstown scheduled for a Q4 delivery; and another 1.2 million square foot building at 10440 Downsville Pike that is scheduled to be completed in Q2 2023.
“Most of the buildings available for purchase in the Baltimore area are investment grade, so there is tremendous competition which, in turn, is driving pricing,” Whelan added. “Unit pricing continues to break new levels.”
Lee & Associates is a commercial real estate brokerage, management and appraisal services firm. Established in 1979, Lee & Associates has grown its service platform to include offices in the United States and Canada. Lee & Associates provides superior market intelligence in office, industrial, retail, investment and appraisal to meet the specialized needs of our clients. Visit https://www.lee-associates.com/offices/office/?id=1591
