Baltimore Apartment Demand Rises As Region's Job Growth Sees 'Massive Improvement'

The Baltimore metro area's Class-A apartment demand “increased significantly” in recent months, just as government data shows the local job market in much better shape than it previously appeared, according to Delta Associates' third-quarter market report.

The report, citing Bureau of Labor Statistics figures, found total employment in the region increased by 16,800 jobs during the 12-month period that ended in May. The report's authors called that increase a "massive improvement over the figures reported last quarter."

The Baltimore Class-A apartment market recorded positive net absorption of 1,263 units during the 12-month period that ended in September, Delta Associates reports, up from 232 units during the prior 12 months. 

At the same time, the number of Class-A apartments delivered by developers increased by more than 28% year-over-year, according to the report. 

"The increase in absorption is due to more deliveries of apartments as there was a dearth of new product in the prior 12-month period compared to the past 12 months," Delta Associates President Will Rich said in an emailed response to Bisnow. "While absorption is up significantly from the prior year, it is still below the 10-year average."

While the number of new units increased, so did rents, which climbed by 1.6% overall in the Baltimore metro area. Rent growth was most robust in the southern suburbs, where rents increased nearly 4%, followed by a rise of almost 1.5% in Baltimore city. 

Apartment developers have reported strong interest in Class-A units throughout the year. 

After Delta Associates' first-quarter report in April raised concerns about job losses in the area driving down absorption, Civic Group Managing Partner Chris Mfume said leasing at his firm’s apartment projects — particularly one of its newest buildings, the Hohm Highlandtown — surged this spring.   

"[Hohm Higlandtown] is leasing up really well," Mfume said in May. "That's actually going quicker than we anticipated. It's really started picking up. Baltimore is a super, super seasonal leasing town, and so as soon as April started rolling around, we saw leasing pick up a ton. ... I have not seen the softening in terms of leasing." 

The team behind Baltimore Peninsula said residential leasing at the massive waterfront development remained strong. During an event on Oct. 26, officials with the development team estimated the three multifamily buildings — Rye House, 250 Mission and 2460 Terrapin — are about 50% leased.

Developers also continue to pursue adding units to the region’s inventory through a mix of new construction and retrofitting older buildings.

Urban Investment Partners principal Steve Schwat staved off a potential auction for the 37-story Embassy Suites tower in downtown Baltimore and said his firm still plans to build 285 apartments in the former hotel at 222 St. Paul St. 

A development team including Workshop Development, Civic Group and MCB Real Estate is pursuing the development of a 143-unit apartment building at 3115 St. Paul St. and is working its way through Baltimore’s design review process. 

Last week, MCB Real Estate revealed plans to overhaul Baltimore’s Inner Harbor by replacing the Harborplace Pavilions with public space and mixed-use buildings with roughly 900 apartments. 

Despite the positive signs in Delta Associates' report, researchers also found challenges in the market.

In particular, the more robust hiring numbers could portend a problem for the local economy in the coming months. Even with the Baltimore area’s comparatively sluggish job growth — its 1.2% annual growth rate is among the nation’s lowest — researchers said there is little room for growth. 

"However, given the exceptionally low level of unemployment, we expect a slowdown in job growth towards the end of the year leading into next, simply because the local labor market is so unusually thin amidst already fierce competition between employers for skilled labor nationally," the report says. 

Additionally, stabilized vacancy in the Baltimore metro area's Class-A apartment market has ticked up from 2.5% last year to 3% this year. Delta Associates predicts the trend will continue, with vacancy surging by 90 basis points to nearly 4% in the third quarter of 2026.

Sales of apartment buildings have also cooled dramatically this year. Last year, Delta Associates recorded four low-rise building sales valued at $238.2M and three mid- and high-rise building sales valued at $223.4M. Through the first three quarters of 2023, researchers tallied one sale: a 335-unit property that sold for $105M.