Please ensure Javascript is enabled for purposes of website accessibility

Top-tier Baltimore office space benefits from slowing development

Earlier this month Lieber Institute for Brain Development, Maltz Research Laboratories renewed its lease at 855 N. Wolfe St. in east Baltimore.

The renewed lease, negotiated by JLL, allowed Lieber Institute to stay in its 50,000-square-foot space near Johns Hopkins Medical Campus. Daniel Weinberg, the firm’s CEO, said the location facilitates the company’s research of brain disorders, such as schizophrenia.

“We are proud to continue our research efforts toward ground-breaking discoveries and remain committed to East Baltimore and the Science & Technology Park at Johns Hopkins,” Weinberg said.

That decision to stay, according to a recent market report on the Baltimore office market, reflects rising rents in specific submarkets, particularly around Johns Hopkins East Baltimore campus.

Relocations stemming from expiring leases and tenants taking smaller spaces resulted in 50,000 more square feet of office space on the market than what was leased in the past three months, according to JLL’s research.

That follows the years long trend of “flight to quality” among office renters in Baltimore. Tenants, such as Duane Morris, have left older office properties in downtown for newer office space in locations along the waterfront.

At the same time the record pace of new office development dating back to 2016 has slowed dramatically. Currently, roughly 656,000 square feet of space are in the pipeline, down from 1.1 million square feet in 2018 and more than 2 million square feet in 2016.

Pricing for office space in the remaining new development, as a result of the diminished supply, is hitting what JLL calls “peak pricing,” with properties such as 1812 Ashland near the Johns Hopkins Medical Campus leasing at more than $40 per square foot.

The slowdown in the development pipeline has also benefited Class A office properties in the Pratt Street corridor. Vacancy has stabilized at about 12.2 percent in that corridor, and rents are now in excess of $30 per square foot.

Overall vacancy has ticked up to 15.6 percent, pushed by a 450 basis point increase in Class A vacancy. With recent sales and conversions, supply is down 1.6 percent from nearly a decade ago as conversions have outpaced new building, resulting in a slowing of Class B vacancy.

Suburban markets attract investors

Investors in the area are showing strong interest in suburban office properties, according to commercial real estate services firm Newmark Knight Frank.

Their researchers found suburban office sales in the suburbs around Charm City are up 24% year over year through the first half of 2018.

The company, which says its capital market team is responsible for 69% of those transactions in the region, found suburban office sales totaled $26 million at the start of the year. Last year at the same time last year those sales totaled $187 million.

“Investors are looking for opportunities in stable locations with attractive yields, which the suburban Baltimore market provides,” NKF Executive Managing Director Cris Abramson said in a statement on Tuesday.

To purchase a reprint of this article, contact