News
3 Big Demand Drivers for Baltimore Office
April 3, 2012
| A pause at the end of 2011 meant flat absorption (144k SF) for the year. Eds, meds, and feds (if we opened a mattress and toboggan company, we could add beds and sleds to that list), plus a surprising 19,000 jobs added last year, will speed 2012 absorption back up, even with the new construction. |
| 1 & 2) EDS & MEDS |
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| With Johns Hopkins and the University of Maryland leading the charge in both categories, eds and meds are inextricably interwined here. JLL's Stuart Rienhoff tells us Hopkins seems to be in outright expansion mode and likely to pay more for the prime, close-to-the-harbor office locations because of their proximity to campus. And U of M Physicians expanded by 25k SF and renewed for a total of 62k SF at 250 W Pratt. That's a big jump from its very first lease of 11k SF there, and Stuart believes the university could be a West Side demand driver. He adds that residential growth Downtown could also draw more healthcare services tenants. |
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| The flight to quality (amassing itself in Harbor East and along the Pratt Street corridor) and the State Center question mark—will-it-or-won't-it take tenants from the CBD—does make some nervous about the older Midtown office buildings. But leases like Williams Scotsman's move into 30k SF in Fells Point offer hope. That may not be Midtown, but it's a return to Baltimore City from suburban White Marsh, which may signal that Baltimore is becoming more like its coastal counterpart markets with companies and residents who want to live and work Downtown. Once the cream of the crop stuff is absorbed, developers just might have the steam to work on the Class-B stock around Charles Street and stabilize Baltimore City's 14.5% vacancy before Constellation leaves 111 Market Place and 750 E Pratt (above) for Harbor Place. Only a few large users have the luxury of waiting for that to become available in 2015 or '16, Stuart says. |
| 3) FEDS |
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| Stuart believes the GSA's Q3 lease of the 43k SF Verizon building at 3701 Koppers St (above) in the Southwest was a boon mostly because it had been vacant for years. Otherwise, there's a lot of government contractor absorption that has yet to play out in Howard and Anne Arundel counties. |
