The health of commercial real estate in Maryland is vibrant and only getting stronger.
“The investment market remains strong even after several quarters of strong buyer competition for relatively limited, attractive properties,” said a study of commercial real estate in the Baltimore metro area conducted by MacKenzie Commercial Real Estate Services LLC, an independently owned member of Cushman & Wakefield.
“Parking lots are prime real estate in downtown Baltimore as two prominent locations sold to developers,” the study stated.
A hotel and condominium development is planned for 300 E. Pratt St., and a mixed use development is proposed for 414 Light St.
Occupancy rates in the downtown climbed during the third quarter of 2006, with direct vacancy falling to 11.56 percent from 11.92 during the previous quarter, MacKenzie reported.
And there is movement afoot, converting former office space into residential units.
“Of the [third] quarter sales of office buildings in Baltimore City, the majority of properties were purchased for potential rehabilitation into non-office uses or for demolition as part of a larger development,” the study reported.
Jody Landers, executive vice president of the Greater Baltimore Board of Realtors, said developers of the former commercial buildings that are becoming as residential may have to adjust prices to sell units as condos.
“There actually is room for new inventory to come online, but they may have to re-examine their price points,” Landers said. “New developments coming online seem to be in the higher end, but I expect demand to remain fairly strong because [the Baltimore region] is relatively affordable” when compared to other metro areas along the eastern seaboard.
In Harford County, almost 200,000 square feet of office space were under construction during 2006 in anticipation of an influx of workers and residents who will move into military-related and spin-off jobs as military installations in the state are beefed up as part of the Base Realignment and Closure plans by the Department of Defense.
Another real estate study, conducted by Colliers Pinkard, shows a squeeze on commercial availability in the Annapolis area even after a 82,000-square-foot structure came online during the year. The vacancy rate for the best space in Annapolis is 3.9 percent. Second-tier office space is equally tight, with a 5.6 percent vacancy rate.
In Howard County, about 39 percent of new second-tier office space under construction has been pre-leased, which should help stabilize the commercial vacancy rate that currently is around 15 percent, Colliers Pinkard said.
