Ground Up

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Report: Baltimore office market sluggish, but shows potential

Demand for office space in Baltimore is expected to surpass new supply and keep pace with the suburbs in the next two years, according to a recent report.

In the next 24 months, vacancy in the city is projected to drop 120 basis points and vacancy in the suburbs to fall 10 basis points, according to Newmark Knight Frank’s 2018 fourth-quarter market report.

1 N. Charles St. in Baltimore has enjoyed leasing success because the building owner has invested in upgrades, says MacKenzie Commercial Real Estate Services. (Adam Bednar)

1 N. Charles St. in Baltimore lured new tenants in 2018 attributable to property upgrades, MacKenzie Commercial Real Estate reported in 2018. (Adam Bednar)

“The Baltimore metro area’s leadership in the healthcare and cybersecurity industries will generate office-using jobs throughout the balance of this economic cycle. The market is well positioned for methodical growth in the period ahead,” according to the report.

Newmark Knight Frank’s optimistic outlook follows a 2018 the firm described as “particularly sluggish.” At the end of 2018 the Baltimore metro area’s office market posted a 12.6 percent vacancy rate, which represented a 20 basis-point increase year over year.

At year-end three office properties delivered in the metro market provided more than 444,000 square feet of space.

Through 2018 Baltimore’s metro office market produced an annual net absorption of 588,287 square feet. In 2017, however, the market’s positive absorption topped 1 million square feet.

Asking rents elevated, according to the report, to $23.68 per square foot, which is a 1.5 percent year-over-year increase. Over the previous two-year period asking rents increased 4.4 percent.

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