The amount of empty office space is climbing in Montgomery and Prince George’s counties, as it drops in Northern Virginia, reflecting where the region’s job growth is concentrated.
At the end of June, 14.3 percent of suburban Maryland’s office space was vacant, the same portion of the market that was empty at the end of June last year, according to Alexandria commercial real estate firm Delta Associates. That number is expected to rise to 14.8 percent by the end of June 2014.
But in Northern Virginia, the market looks a little brighter, Delta Associates’ report shows. Though more office space is vacant than in other parts of the region — 14.4 percent — that number is predicted to fall to 13.9 percent by June 2014.
| For rent | |||
| Area | Inventory (square feet) | Space available (square feet) | Percentage vacant |
| Bethesda/Chevy Chase | 10.9 million | 1.1 million | 10.5 percent |
| North Bethesda | 9.6 million | 1.4 million | 14.6 percent |
| Rockville | 8.4 million | 1.2 million | 14.1 percent |
| North Rockville | 10.6 million | 1.5 million | 14.4 percent |
| Gaithersburg/Germantown | 6.4 million | 1 million | 15.8 percent |
| Silver Spring | 7.8 million | 955,000 | 12.2 percent |
| Montgomery County | 53.8 million | 7.2 million | 13.5 percent |
| Northern Prince George’s County | 9.9 million | 2.2 million | 22 percent |
| Central Prince George’s County | 5.2 million | 1.1 million | 21.2 percent |
| Southern Prince George’s County | 2.6 million | 581,000 | 22.1 percent |
| Prince George’s County | 17.7 million | 3.9 million | 21.8 percent |
The difference between the space in Northern Virginia and Washington’s Maryland suburbs is linked to the jobs created in each area. Between April 2011 and April 2012, 80 percent of all jobs created in the Washington area were in Northern Virginia, said Stephen Fuller, director of George Mason University’s Center for Regional Analysis. Though suburban Maryland created some jobs, they were mostly not office-based jobs.
“Those jobs that fill that office space generate about three times the contribution to the economy than a retail job does or a restaurant job does,” Fuller said.
Without filling existing office space, new buildings are hard to finance, which means less property tax revenue, said Montgomery County Department of Economic Development director Steve Silverman.
No construction has other downsides, too, Fuller said. “This economy really benefits when the construction sector is healthy.”
The growth that suburban Maryland does see is likely to be concentrated around Metro’s Red Line, a departure from a recent desire to locate along Montgomery County’s I-270 corridor, said real estate firm Cassidy Turley Vice President Matthew Sullivan. But growth in Prince George’s County — where the vacancy rate is 21.8 percent — is likely to continue to be slow.
“A lot of tenants right now are just hesitant to lease office space because they just don’t know what the future holds,” said Elizabeth Norton, Delta Associates’ Mid-Atlantic research director. Many businesses are also doing more with less — digitizing files so they take up less space and allowing employees to telecommute.
