For new and expanding businesses, there?s now plenty of office space to occupy and operate out of in the Baltimore metro area.
The region?s office market sagged in 2007 from a combination of too much construction and too little absorption, according to an end-of-the-year report from Colliers Pinkard, a commercial real estate firm with offices in Baltimore.
The Baltimore metro area?s office market absorbed 781,000 square feet in 2007, a 67 percent decrease from the year before. From 2004 to 2006, the region?s office market absorbed more than 2 million square feet each year.
“Basically, it reflected a slowdown after three very strong years on both the supply and demand markets,” said Jeff Samet, senior vice president of Colliers Pinkard. “The real estate market runs in cycles.”
Samet said “real estate lenders, developers, landlords and brokers will be on edge throughout much of 2008” because the Baltimore metro area added 1.8 million square feet of office space, of which 830,000 square feet is still available.
Another 2.6 million square feet of office space is under construction in the region, of which 2.1 million square feet remains to be leased, according to the report.
Leasing activity should remain stable in the market, but potential buyers will likely be cautious with their spending because of the current credit situation, said Tony Casalena, managing director of commercial real estate firm Sperry Van Ness? Baltimore office.
“There?s definitely going to be more office product out there,” Casalena said. “We haven?t seen the brunt of it because rental rates have continued to edge slightly upward. I don?t think the rental rates will come down, but there are going to be more choices.”
Despite the slowdown in 2007, Samet said the Baltimore metro region still has a low unemployment rate and growth in the professional business services sector, a key source of the office tenant base.
Legg Mason and Morgan Stanley in 2007 said they would lease 400,000 square feet and 130,000 square feet of office space in Harbor East, respectively, while T. Rowe Price announced plans to add two new office buildings to its Financial Center Campus in Owings Mills.
“The financial services sector will have a substantial effect that will be fully felt over the next few years,” Samet said.
Construction costs
A square foot of office space costs about $34.83, including materials costs, plumbing and electrical costs, and architect, engineer and contractor costs.
Source: Colliers Pinkard
