Research &

Forecast Report

BALTIMORE REGION
Q2 2015 | Industrial

Spec Development
On The Rise
Nadia Kahler Research Director | Baltimore

Market Indicators
Relative to prior period

Q3 2014

Q4 2014

Q1 2015

Q2 2015

VACANCY
NET ABSORPTION
CONSTRUCTION

Regional Overview

RENTAL RATE

The Baltimore industrial/flex market continued to fare well as it has done for the past several years. Industrial/Flex vacancy ended
at 9.5%, where it has hovered most of the year despite the approximately 1.8 million square feet of space delivered during the first
half of 2015. Industrial average rental rates were around $4.50/sf NNN, and have not fluctuated much in the past 3 years, while flex
asking rates were slightly lower at $10.15/sf NNN.
The Baltimore Metropolitan market continued to show strong
leasing and sales activity throughout the first half of 2015, as has
been the trend for the past several years. Of the metropolitan
industrial markets tracked by Colliers International nationally,
during the 1st quarter of 2015 the Baltimore market ranked in
the top ten for greatest amount of new supply as well as most
absorption. On a national level, more manufacturing jobs are being
re-shored to the United States for reasons such as rising cost of
labor overseas, cost in shipping goods, and lower oil prices in the
U.S. As a result, industrial markets have been scrambling to build
updated infrastructure and facilities, including bulk and distribution
warehousing. In the Baltimore market, the trend has generally been
build-to-suit development for specific users, but the tide has now
turned to mostly speculative development.
Industrial/flex development has not slowed down with 8 buildings
currently under construction. Speculative construction in the
Baltimore/Washington Corridor includes 7010 Brookdale Drive in
Elkridge, which is currently under construction for 59,400 sf, and
4803 Hollins Ferry Road in Arbutus for 300,000 sf. North of the
Baltimore Harbor Tunnel spec development includes 610 Chelsea
Road in Aberdeen for 571,500 sf and 11503 Pocomoke Court for
144,000 sf which will be American Tire Distributors new facility in
White Marsh. Adjacent to Pocomoke Court, Chesapeake Real Estate
Group is finishing up construction at 1411 Tangier Drive for 435,494
sf industrial building. New development on the horizon would include
7600 Assateague Drive in Jessup, the 730,000 sf former Giant

Food distribution center purchased by Manekin and AEW. Manekin

Development plans to expand the existing building and develop an
additional 160,000 sf spec building to the site.
Vacancy rate for bulk distribution space ended the first quarter
at 11.7%, slightly higher than it has been in over a year due
to several new deliveries. Even with an influx of speculative
development planned, demand is expected to remain strong as
new national tenants infiltrate the Baltimore marketplace.
Vacancy rates for flex space dropped to 9.4%.
Developers continue to develop speculative space, confident
that demand will continue to rise.
Colliers International | Baltimore is currently tracking 43 active
buyers searching for more than half a million square feet
of space, and 54 tenants searching for more than 4 million
square feet.
Over 1,800,000 sf of industrial/flex space was delivered in the
first half of 2015, with currently 1,231,176 sf under construction.
Almost 900,000 sf of space was absorbed in the first half
of 2015.
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 229 existing buildings
and approximately 22,600,000 square feet of space. At the end of
the 2nd quarter of 2015, more than 3,000,000 square feet of that
space was vacant, equivalent to a vacancy rate of 13.3%.

Market Area
Howard County
The industrial market in Howard County straddles I-95 and Route 1. Major
employers include Verizon and Sysco. The industrial market represents
more than 30,400,000 square feet of space. Vacancy rates ended the
quarter dropped to 11.7%, lower than it has been in over 3 years. Among
significant transactions was MXD Group which took 78,871 sf at 6930 San
Tomas Road. Additionally, Aerolab leased 19,155 sf at 8291 Patuxent Range
Road, while Best Buy renewed their 220,800 sf lease at 6680 Business
Parkway. As for investment sales, Manekin, LLC and AEW joint ventured
to buy the former Giant Food warehouse facility at 7600 Assateague Drive
for $45.25 million with plans to expand by approximately 300,000 sf.
6625 Dobbin Road also sold for $11.35 million after Bowles Fluidics signed
a 15 year lease.
Anne Arundel County
The industrial and flex market in Anne Arundel County is adjacent to
Howard County and consists of more than 24,250,000 square feet
of space. Major employers include Fort George G. Meade, Northrop
Grumman and the BWI Thurgood Marshall Airport. Vacancy rates have
steadily risen over the past 2 years, ending the first quarter at 11.5%.
The largest transaction in this market was Micros Systems which
renewed their 87,600 sf lease at 1025 Airport 100 Way. Additionally,
Zust Bachmeier expanded into an additional 99,500 sf at 1349 Charwood
Road. Sale transactions included 8271 Anderson Court which sold for
$11.3 million, and C-Care acquired two buildings (7527 Perryman Court &
981 Corporate Boulevard) for $6.7 million. Candlewood Commerce Center
totaling 357,700 sf was purchased by Westmount Realty for $26,600,000.
Harford/Cecil
The Harford and Cecil County submarket spans the I-95 & the Rt. 40
corridor up to the Delaware line and represents more than 28,000,000
square feet of space. Major employers in this market include Rite Aid,
Kohls, IKEA, McCormick and Sephora. Unlike office vacancy in Harford

DEFINITIONS
Catalogued Inventory Class A & B flex buildings over
10,000 sf and distribution warehouse buildings over
100,000 sf. This inventory includes a total of 1,343
buildings consisting of more than 141,200,000 square feet
of space.
Absorption (Net) The difference in physically occupied
space within a given time period, calculated by summing
all the positive changes in occupancy and subtracting all
the negative changes in occupancy.
Vacancy Rate Total vacant space divided by the total
inventory.
Vacant Space Space that is not currently occupied by a
tenant, regardless of any lease obligation on the space.
Sublease Space Space that has been leased by a tenant
and is being offered for lease back to the market by the
tenant with the lease obligation.
Deliveries Buildings that complete construction during
a specific period of time. A certificate of occupancy
must have been issued for the property to be
considered delivered.
Leasing Activity The volume of square footage that is
committed to and signed for under a lease obligation for
a specific building or market in a given period of time. It
includes direct leases, subleases and renewals of existing
leases. It also includes any pre-leasing activity for
buildings under construction or planned.
Average Asking Rent Weighted average rent per square
foot, triple net.

Baltimore Region Research & Forecast | Q2 2015 | Industrial Market Report | Colliers International

Baltimore East
This submarket encompasses the northeast and southeast portions of
Baltimore City, as well as the eastern portion of Baltimore County, and
contains more than 26,500,000 square feet of industrial/flex space.
Major industrial users for this area include Middle River Aircraft Systems,
General Motors, Allison Transmission, DAP Products, and Amazon.
Vacancy rates continued to rise to 16.6% as several new deliveries came
online in the past 3 quarters. Lease transactions this quarter included
SH Bell Company which signed an 80,000 sf lease at 1200 E. Patapsco
Avenue. Additionally, Vac Pac purchased 917 Middle River Road, a 38,000
sf building which they plan on renovating.
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 7,600,000 square feet of
space, and at the end of the Q2 2015 showed a vacancy rate of 10.4%.
Leasing activity included Site Link Wireless signing a 22,371 sf lease at
3600 Commerce Drive, and Curtis Bay Energy which leased 18,000 sf at
1325 Western Avenue. Several lease transactions occurred within Desoto
Business Park including Essilor Laboratories of America which renewed
in 10,800 sf, and DL Plastics, LLC which took another 10,800 sf suite
within the park. Chesapeake Real Estate Group acquired the former Sun
Products facility at 5300 Holabird Road, including 47 acres of developable
land. Also sold was the former Globe Brewing site on Key Highway to an
unknown buyer for $3.75 million.
Carroll County
The Carroll County submarket includes the cities of Westminster and
Hampstead and contains approximately 6,190,000 sf of flex and industrial
space. Major employers include Jos. A. Banks, Solo Cup and Random
House. At the end of the 2nd quarter, vacancy in this submarket was the
same as last quarter at 4.0%. While there were few significant leases or
sales in the last quarter, space in this market continues to hold attraction,
particularly because of how little there is. Questions have loomed over the
future of Jos. A. Banks by Mens Warehouse and how the consolidation
could affect the market if the facility closes, which currently employs over
750 workers. Recently layoffs of 120 employees for this location were
announced. Athens Health Club recently signed a 12,500 sf lease at 5965
Exchange Drive.

Net Absorption
Absorption
Net
(all product types)

Thousands

County, industrial/flex space is in high demand with vacancy rates ending

the 2nd quarter at just 5.9%. Significant transactions included Pier 1
Imports which renewed their lease for 644,000 sf at 500 Old Post Road.
Additionally, 10 Hays Street, a 44,000 sf flex building in Bel Air, sold for
$1.975 million.

1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2012

2013

2014

2015

VacancyRate
Rate
Vacancy

(all product types)

13.0%
12.0%
11.0%
10.0%
9.0%
8.0%
Q2 2012

Q2 2013

Q2 2014

Q2 2015

DistributionWarehouse
WarehouseAsking
AskingRental
RentalRates
Rates(NNN)
(NNN)
Distribution
$5.40
$5.20
$5.00
$4.80
$4.60
$4.40
$4.20
$4.00
Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Flex
(NNN)
Flex Space
Space Asking
Asking Rental
Rental Rates
Rates (NNN)
$12.00
$11.50
$11.00
$10.50
$10.00
$9.50
Q2 2014

Q3 2014

Q4 2014

Baltimore Region Research & Forecast | Q2 2015 | Industrial Market Report | Colliers International

Q1 2015

Q2 2015

Update - Recent Transactions in the Market

Select Sales Activity
PROPERTY ADDRESS

BUYER

SALE PRICE

SF

PRICE/SF

SALES DATE

SUBMARKET

7600 Assateague Drive

AEW/Manekin

$45,250,000

743,796 sf

$60.84

5/2015

Route 1 Corridor

8271 Anderson Court

Four Springs Capital Trust

$11,300,000

70,000 sf

$161.43

4/2015

BWI/Anne Arundel

10200 Old Columbia Road

Humphrey Rich Construction Company

$3,916,000

35,600 sf

$110.00

4/2015

Columbia South

5300 Holabird Avenue

Chesapeake Real Estate Group

$20,550,000

865,000 sf

$23.76

4/2015

Baltimore Southeast

Select Lease Signings

TENANT

LEASED SF

C. Steinwag

LEASE DATE

TYPE

ADDRESS

SUBMARKET

287,602 sf

5/2015

Industrial

5107 North Point Boulevard

Baltimore County East

SH Bell Company

80,000 sf

5/2015

Industrial

1200 E. Patapsco Avenue

Baltimore Southeast

MXD Group

78,871 sf

5/2015

Industrial

6930 San Tomas Road

BWI Howard County

United Foods International

40,600 sf

5/2015

Industrial

4610 Mercedes Drive

Harford County

Servpro

36,841 sf

5/2015

Industrial

Brittan & Cook

11,010 sf

5/2015

Flex

1-208 Azar Court

Arbutus

9176 Red Branch Road

Columbia North

Essilor Laboratories of America

10,800 sf

4/2015

Industrial

1107 Wilso Drive

Baltimore Southwest

Tate Flooring

23,574 sf

4/2015

Industrial

7587 Montevideo Road

Route 1 Corridor

Baltimore Industrial Market Update

Market Comparisons
SUBMARKET/COUNTY

TOTAL SF

REGION NAME
Baltimore Southwest

AVERAGE ASKING RATES

VACANT SF

VACANCY %

CURRENT
QUARTER

856,323 sf

11.2%

-31,779 sf

-66,379 sf

WH/Dist (NNN) R&D/Flex (NNN)

7,617,505 sf

$5.50

$7.60

YTD

CURRENT

Net Absorption

COMPLETED

New Construction

Baltimore East

27,102,086 sf

$3.70

$7.55

4,930,278 sf

18.2%

-693,591 sf

599,165 sf

184,080 sf

587,295 sf

Harford/Cecil County

28,090,472 sf

$4.35

$9.05

1,659,466 sf

5.9%

29,328 sf

176,690 sf

571,500 sf

Anne Arundel County

24,250,619 sf

$5.75

$20.25

2,781,541 sf

11.5%

-40,612

-179,742

Howard County

30,446,046 sf

$5.15

$11.20

3,322,396 sf

10.9%

420,976 sf

649,544 sf

116,196 sf

Carroll County

6,192,816 sf

$7.10

$7.90

243,931 sf

3.9%

1,782 sf

-9,598 sf

22,726,699 sf

$6.50

$9.30

3,032,201 sf

13.3%

674,042 sf

841,607 sf

497,050 sf

300,933 sf

Prince Georges County

Quarterly Comparisons and Totals

QUARTER

TOTAL RBA

VACANT SF

VACANCY %

CURRENT Q
ABSORPTION

CURRENT
CONSTRUCTION

COMPLETED
DELIVERIES

AVERAGE RENTAL
RATES

REGION NAME
Q2 2015

141,526,508 sf

15,378,422 sf

10.9%

-369,800 sf

1,309,221 sf

587,295 sf

$5.33

Q1 2015

140,805,883 sf

14,672,997 sf

10.4%

875,779 sf

1,418,991 sf

1,173,690 sf

$5.50

Q4 2014

139,632,193 sf

14,375,086 sf

10.3%

694,495 sf

2,448,681 sf

538,408 sf

$5.38

Q3 2014

139,093,785 sf

14,531,173 sf

10.4%

1,624,699 sf

2,987,089 sf

2,535,250 sf

$5.56

Q2 2014

136,558,535 sf

13,620,622 sf

10.0%

491,777 sf

4,015,404 sf

30,120 sf

$5.62

Baltimore Region Research & Forecast | Q2 2015 | Industrial Market Report | Colliers International

ADAMS

DELAWARE

CHESTER

LANCASTER

30

YORK

95

83

PENNSYLVANIA
1

MARYLAND

CECIL

40

95

HARFORD

SALE

40

NEW
JERSEY

40

1
83

REDERICK

BALTIMORE
COUNTY

95

NEW
CASTLE

695

CARROLL

BALTIMORE CITY
70

Baltimore
40

301

KENT

395

HOWARD
Columbia

695

95

270

QUEEN
ANNE'S

BWI Thurgood
Marshall Airport
295
97

Fort
Meade

MONTGOMERY

ANNE
ARUNDEL
KENT

301

Annapolis

495

FAIRFAX
495

DISTRICT
OF COLUMBIA

PRINCE
GEORGES

DELAWARE

50

50

CAROLINE

ARLINGTON Washington
TALBOT
REAGAN
NATIONAL
AIRPORT
50

95

SUSSEX

CALVERT

The Baltimore Regional industrial market consists of Baltimore City and the surrounding counties of Anne Arundel, Howard,
CHARLESand Carroll.
Baltimore, Cecil, Harford

DORCHESTER

FOR MORE INFORMATION

Nadia Kahler
Vice President | Baltimore
+1 443 543 1222
Nadia.Kahler@colliers.com

CONTRIBUTORS
Tyler Boykin
Vice President | Baltimore

Copyright 2015 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.

Colliers International | Baltimore

100 North Charles Street, Suite 1710
Baltimore, Maryland 21201
+1 443 297 9000
colliers.com/greaterbaltimore

North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International

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MARKET CONTACT:
Nadia Kahler
Vice President | Baltimore
+1 443 543 1222
nadia.kahler@colliers.com
Colliers International | Baltimore
100 North Charles Street, Suite 1710
Baltimore, MD 21201 | USA
+1 443 297 9000

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billion in
annual revenue

1.7

billion square feet

under management

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professionals
and staff

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Copyright 2015 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report.