Pandemic doesn’t slow Baltimore region’s demand for industrial space

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The demand for industrial space in the greater Baltimore region remains strong, with nearly 4.3 million square feet of industrial/warehouse space leased in the third quarter of 2020, according to a new report.

Lee & Associates, a Columbia-based commercial real estate brokerage and management firm, also reported a net absorption of more than 1.6 million square feet of space in the past quarter, resulting in a current vacancy rate of 6.8%.

To meet the continuing demand of industrial/warehouse space, more than 3.3 million square feet of space is under construction locally, Lee said.

The continued surge in online shopping, which has been intensified by the coronavirus pandemic, is behind the demand.

“The ongoing pandemic has acerbated demand among end-users for warehouse, logistics and last-mile delivery operations as consumers continue to bypass retail stores in lieu of online buying,” said Tom Whelan, Principal for Lee & Associates. “This national trend, which has been steadily growing for the past decade, significantly accelerated in 2020 and the densely populated Baltimore-Washington metropolitan remains an attractive location for this real estate product.

“We see no letup in the immediate future for this category as evidenced by the continued speculative development activity that is occurring.”

Among the significant leasing transactions in the third quarter were:

• the more than 1-million-square-foot lease at 630 Hanover Road in Hampstead by Penguin Random House;
• Amazon’s more than 1-million-square-foot lease at Wesel Boulevard Building 1 in Hagerstown;
• and the more than 110,000-square-foot lease signed by Imperfect Foods at 7481 Crossroads Drive in Hanover.

Major deliveries included the 1-million-square-foot building completed by MRP Industrial in Aberdeen and Trammell Crow’s 700,000-square-foot warehouse/industrial project completed in Northeast.

The largest construction projects underway in the greater Baltimore metropolitan region include:

• a building of 1 million square feet in Hagerstown by Northpoint Development that will deliver in May 2021;
• Merritt Properties’ nearly 900,000-square-foot facility in Perryman that will be completed shortly;
• and a 400,000- square-foot industrial/warehouse project in Baltimore that will deliver in March 2021 by Tradepoint Atlantic.

Notable building sales included:

• the nearly 190,000-square-foot industrial/warehouse building acquired by Atapco Properties for $15 million in Hyattsville;
• the 93,000-square-foot structure purchased in Jessup by Fortified Property Group and Grander Capital for $15.8 million;
• and the 76,000 square foot building acquired by Hop Brothers, LLC for $2.4 million in Baltimore City.

“Significant tenant demand has been offset by Pier One’s decision to depart from a 600,000 square foot building in Aberdeen, a project that we expect to backfill quickly,” Whelan added. “As supply continues to tighten throughout the region, we are seeing some companies leasing space in advance of specific requirements to assure its availability and avoid being shut out.”