Comparing year-over-year data as reported by Lee & Associates | Maryland, the occupancy rate for commercial office space in the greater Columbia submarket declined a percentage point to 12.5% at the end of 2022.
The decrease can be attributed to the more than 275,000 square feet of space leased in the fourth quarter, combined with the lack of new commercial office space delivered.
The Columbia-based commercial real estate brokerage and management firm also published data that indicates net absorption of slightly more than 43,000 square feet of space, an average asking rent of $25.44 per square foot and 18 building sales comprising nearly $9.6 million executed last quarter. The average asking rent at year-end 2021 was $26.10 per square foot, which continued a recent rising trend.
Bill Harrison, senior vice president at Lee & Associates | Maryland, said leasing activity and average asking rents continue to rise, although the overall commercial market in Howard County experienced many ups and downs. He added the firm sees the positive momentum achieved throughout the second half of the year will carry over into 2023.
The report shows an increasing number of companies are choosing the suburbs over urban locations as attracted by shorter commutes, free parking, access to open outdoor spaces and the availability of walkable amenities. Workers are returning to traditional office spaces with more frequency, although the work-from-home model seems here to stay as many employers offer full flexibility to employees in the competition for talent.
Significant lease transactions included CMP Medical’s 42,703-square-foot lease at 6220 Dobbin Road; CyberPoint International’s 25,104-square-foot lease at 7142 Columbia Gateway Drive; and the 19,963-square-foot lease executed by an undisclosed company at 7055 Samuel Morse Drive.
Investment sales activity was highlighted by the 2.25 million acquisition of 14235 Park Center Drive by DCW Enterprises; the $530,000 purchase of 305 Compton Ave. by Local 1 MD VA & DC; and Super 12 Real Estate’s acquisition of 7226 Lee Deforest Drive for $676,500.
Over the past 12 months, about 115,000 square feet of space was net absorbed in Columbia South, but more than 120,000 square feet of space was negatively net absorbed in the downtown Columbia submarket. For the entire year, nearly 25,000 square feet of space was net absorbed.
Three commercial office buildings are currently under construction in Howard County, which will add further pressure to leasing efforts. A 60,000-square-foot building at 7140 Contee Road is expected to be delivered in first quarter and a 30,000-square-foot project will be completed at 8155 Westside Blvd. in the third quarter.