Pity Prince George’s County. While its neighbors, Anne Arundel and Howard counties, have made great leaps forward in leasing prime office space, Prince George’s actually went backwards.
Of course, that pity might soon turn to envy, as Prince George’s has two of the three sites under consideration for the next home of the FBI headquarters, a bonanza of a development if ever there were one.
But for now, a report from NAI KLNB showed that Prince George’s County office market didn’t have a great second quarter.
While nearby Anne Arundel and Howard counties along the Interstate 95 corridor experienced vacancy rates for Class A office space going down, Prince George’s posted a negative 560, 587 square feet of absorption in the second quarter. That’s compared to Anne Arundel County having a positive absorption rate of 122,834 square feet and Howard County reporting a positive absorption rate of 321,862 square feet in the same time period.
“If there were a more positive business climate in the state of Maryland, that might help. The whole rising tide raises all ships … right now we’re cannibalizing each other for deals one county to another,” Alan M. Coppola, an associate at NAI KLNB said. ”We need to see some growth from within the state, but growth from outside the state [coming] to Maryland. There doesn’t appear to be enough positive incentives that attract that many outside companies.”
Coppola, who works in the submarket, said there are a couple of factors that are hurting the office market in Prince George’s County. He said the office market was slowed by recent cutbacks in federal government spending. Another factor is that some agencies are also just working smarter and not taking up as much office space as they have in the past.
Also, because the existing office space in Prince George’s tends to be older, it could be putting the area at a disadvantage to jurisdictions such as Howard and Anne Arundel counties. He said because the vacancy rates have been stubbornly high it has removed a lot of incentive to build newer space in the submarket.
An indicator that the Class A office space is hurt by its age is that Prince George’s County’s Class B office market actually posted a positive absorption rate in the second quarter. Because the Class B market has generally been sluggish everywhere, Coppola said, that could be an indicator there’s not much difference in the quality of the two categories of office space in the county.
“The Class A product is not as new as in Howard and Anne Arundel. So the Class B product may not be too much different than the Class A,” Coppola said.
Calls to the Prince George’s County Economic Development Corp. for comment were not returned.
But the poor numbers don’t mean the future for the Class A office market in Prince George’s County is bleak. Although it has not performed as well as some of it’s neighbors along the Interstate 95 corridor, Prince George’s has one major advantage. If it lands the the FBI deal, the new headquarters could mean 11,000 new jobs and about $2 billion in economic impact.
The federal government is considering Greenbelt and Landover, Maryland, as well as Springfield, Virginia, to be the home of the next headquarters. Currently the bureau’s headquarters are at the J. Edgar Hoover Building in downtown Washington.
“If they get the FBI headquarters that would be a tremendous uptick in activity with contractors that associate with the FBI. That would … have a dramatic impact on the office market ,” Coppola said.