Metropolitan DC Market Overview 4Q 2014...4th Quarter 2014 At the conclusion of the fourth quarter...
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Overall Market Summary The Washington, DC Metropolitan commercial real estate market is comprised of approximately 410.9 million square feet of rent- able office space located in the District of Columbia, Northern Virginia, and Suburban Maryland. The total vacancy rate increased to 15.8% in the fourth quarter, up from 15.4% at the end of the previous quarter. The market recorded approximately 903,584 square feet of net absorption in the fourth quarter, a notable improvement from the -47,000 square feet absorbed in the third quarter. Leasing activity decreased with 4.8 million square feet in transactions signed during the fourth quarter. The largest lease executed was a renewal signed by law firm Finnegan for 252,000 square feet in Washington, DC. Three buildings completed construction in the fourth quarter (0 DC, 1 VA, 2 MD), totaling 718,317 square feet and 47% leased. There were twenty sale transactions in the fourth quarter, comprising of 4.9 million rentable square feet and totaling $2.2 billion. The market totaled 15 million square feet in sales transactions worth $6.2 billion in 2014. Average asking rental rates ticked down $0.14 to $35.45 per square foot, Full Service. From November 2013 to November 2014 employment in the DC Metropolitan area had a net increase of 18,900 jobs representing 0.6% growth, while the unemployment rate decreased to 4.5%. Metropolitan DC Market Overview 4Q 2014 101 Constitution Avenue | Suite 325 East | Washington, DC | 20001 | 202.513.6700 1530 Wilson Boulevard | Suite 200 | Arlington, VA | 22209 | 703.522.4600 National Presence. Local Focus Direct Vacancy Total Vacancy Total Net Absorption Leasing Activity DC 10.0% 10.6% 343,999 SF 9.1 M SF VA 16.2% 17.1% -164,076 SF 9.7 M SF MD 16.2% 16.9% -199,559 SF 4.1 M SF Metro Area 14.9% 15.8% -19,636 SF 22.9 M SF Outlook As slow economic and employment growth continues to impact the Washington, DC region, the commercial real estate market is expected to remain relatively flat entering 2015. The private sector should continue to drive employment; while the federal government continues to downsize its workforce. Early renewals are expected to dominate the larger lease transactions, as pri- vate sector tenants leverage the current market conditions. The GSA should continue to execute renewals as well, however, their primary focus will be on consolidating and downsizing federal office space requirements when possible. To maintain or increase competitiveness in this “tenant’s market”, aggressive landlords will continue to renovate and upgrade amenities to their build- ings. As the GSA and the private sector (as seen with the larger DC law firms) continue to reduce space requirements, vacancy is expected to tick upward, while net absorption is expected to decrease. While the construction pipeline remains limited, there will be a modest uptick in inventory with six new buildings, totaling 687,000 square feet, scheduled to deliver during the first half of 2015. Sales velocity is expected to decline as there are approximately nine buildings currently under contract. With the recent success of CityCenter, look for other developments including; The Wharf, Reston Town Center, and Pike & Rose attempt to capi- talize on tenants seeking higher-end space and millennials (25% of the workforce) who desire a “Live, Work, Play” environment. Arrows reflect differences from YTD 4Q 2013 totals Arrows reflect differences from 3Q 2014
Transcript of Metropolitan DC Market Overview 4Q 2014...4th Quarter 2014 At the conclusion of the fourth quarter...
Overall Market Summary
The Washington, DC Metropolitan commercial real estate market is comprised of approximately 410.9 million square feet of rent-
able office space located in the District of Columbia, Northern Virginia, and Suburban Maryland. The total vacancy rate increased
to 15.8% in the fourth quarter, up from 15.4% at the end of the previous quarter. The market recorded approximately 903,584
square feet of net absorption in the fourth quarter, a notable improvement from the -47,000 square feet absorbed in the third
quarter. Leasing activity decreased with 4.8 million square feet in transactions signed during the fourth quarter. The largest lease
executed was a renewal signed by law firm Finnegan for 252,000 square feet in Washington, DC. Three buildings completed
construction in the fourth quarter (0 DC, 1 VA, 2 MD), totaling 718,317 square feet and 47% leased. There were twenty sale
transactions in the fourth quarter, comprising of 4.9 million rentable square feet and totaling $2.2 billion. The market totaled 15
million square feet in sales transactions worth $6.2 billion in 2014. Average asking rental rates ticked down $0.14 to $35.45 per
square foot, Full Service. From November 2013 to November 2014 employment in the DC Metropolitan area had a net increase
of 18,900 jobs representing 0.6% growth, while the unemployment rate decreased to 4.5%.
Metropolitan DC Market Overview 4Q 2014
101 Constitution Avenue | Suite 325 East | Washington, DC | 20001 | 202.513.6700
1530 Wilson Boulevard | Suite 200 | Arlington, VA | 22209 | 703.522.4600
National Presence. Local Focus
Direct Vacancy Total Vacancy Total Net Absorption Leasing Activity
DC 10.0% 10.6% 343,999 SF 9.1 M SF
VA 16.2% 17.1% -164,076 SF 9.7 M SF
MD 16.2% 16.9% -199,559 SF 4.1 M SF
Metro Area 14.9% 15.8% -19,636 SF 22.9 M SF
Outlook
As slow economic and employment growth continues to impact the Washington, DC region, the commercial real estate market
is expected to remain relatively flat entering 2015. The private sector should continue to drive employment; while the federal
government continues to downsize its workforce. Early renewals are expected to dominate the larger lease transactions, as pri-
vate sector tenants leverage the current market conditions. The GSA should continue to execute renewals as well, however, their
primary focus will be on consolidating and downsizing federal office space requirements when possible. To maintain or increase
competitiveness in this “tenant’s market”, aggressive landlords will continue to renovate and upgrade amenities to their build-
ings. As the GSA and the private sector (as seen with the larger DC law firms) continue to reduce space requirements, vacancy
is expected to tick upward, while net absorption is expected to decrease. While the construction pipeline remains limited, there
will be a modest uptick in inventory with six new buildings, totaling 687,000 square feet, scheduled to deliver during the first half
of 2015. Sales velocity is expected to decline as there are approximately nine buildings currently under contract. With the recent
success of CityCenter, look for other developments including; The Wharf, Reston Town Center, and Pike & Rose attempt to capi-
talize on tenants seeking higher-end space and millennials (25% of the workforce) who desire a “Live, Work, Play” environment.
Arrows reflect differences from YTD 4Q 2013 totals Arrows reflect differences from 3Q 2014
Market Summary
The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approxi-mately 86.9 million square feet of office space in 889 office buildings 25,000 square feet and greater.
On the heels of the third quarter’s relatively disappointing -27,021 square feet net absorption, the Suburban Mary-land office market bounced back into positive absorption in the fourth quarter 2014 with 621,847 square feet ab-sorbed. This is the highest quarterly net absorption figure in Suburban Maryland since fourth quarter 2012 when it was 900,533 square feet. However, paired with the nega-tive absorption in the previous quarters, that brings the year to date total to -199,559 square feet.
There were two deliveries during the fourth quarter 2014, one being Carr Properties’ speculative project at 4500 East West Highway which delivered approximately 226,352 square feet of Class A space to the Bethesda/Chevy Chase market. The nine story property delivered with nearly 28,000 square feet of space pre-leased to RapidAdvance, which was the top lease of the fourth quarter.
Total vacancy fell this quarter to 16.9%, despite the vacan-cy provided by new deliveries. Direct vacancy was record-ed at 16.2%, which is also an improvement from the third quarter when it was 16.6%. However, by comparison this is an increase from the fourth quarter 2013 when the direct vacancy rate was 15.0% and total vacancy was 15.7%.
The total average rental rates fell $0.10 from $25.59 Full Service in the third quarter to $25.49 Full Service in the fourth quarter.
Prince George’s County received even less attention this quarter than usual, with just one of the top leases falling in its jurisdiction. The tenth largest lease of the quarter was signed in Lanham as State Farm Insurance leased 12,390 square feet of space in 4601 Forbes Boulevard.
Suburban Maryland 4Q 2014
101 Constitution Avenue | Suite 325 East | Washington, DC | 20001 | 202.513.6700
1530 Wilson Boulevard | Suite 200 | Arlington, VA | 22209 | 703.522.4600
National Presence. Local Focus
4Q ‘14 3Q ‘14 4Q ‘13
Direct
Vacancy16.2% 16.6% 15.0%
Total
Vacancy16.9% 17.3% 15.7%
Net
Absorption621,847 SF -27,021 SF 137,041 SF
Leasing
Activity698,318 sf 672,605 sf 2.1 m sf
Under
Construc-
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655,694 sf 841,446 sf 1.2 m SF
Deliveries 396,352 SF 0 SF 0 SF
Rental Rates $25.49 FS $25.59 FS $25.83 FS
Percent
Pre-Leased 5% 28% 58%
www.lpcwashingtondc.com
Absorption and Gross Leasing
Suburban Maryland Quarterly overview
4th Quarter 2014
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The direct vacancy rate in the fourth quarter decreased to 16.2%, down from 16.6% in the previous quarter. Total vacancy also de-creased in the fourth quarter to 16.9%, down from 17.3% in the third quarter. This is the lowest the total vacancy rate has been since fourth quarter 2013 when it was recorded at 15.7%.
With a number of tenants vacating space in an effort to consoli-date in the Suburban Maryland office market, the slight fluctua-tion in vacancy rates has been expected. Existing tenants contin-ued to maintain their space and renew at their current location, or reduce their footprint and move up in quality.
Total net absorption for office space in Suburban Maryland was recorded at 621,847 square feet in the fourth quarter, a sub-stantial improvement from the -1,432 square feet absorbed in the third quarter. This is also an improvement from the 452,661 square feet recorded earlier in the second quarter. This brings the year to date absorption total to -199,559 square feet.
Contributing to the majority of net absorption this quarter was the 392,784-square-foot move in by the National Institute of Al-lergy & Infectious Diseases (NIAID) at 5601 Fishers Lane, in the Rockville submarket.
In the fourth quarter 2014, total leasing activity was 698,318 square feet, a modest rise from the third quarter when the total leasing activity was 672,605 square feet. However, this is a sub-stantial decrease from the fourth quarter 2013 when the total leasing activity was 2,165,111 square feet.
The total average asking rental rate was recorded at $25.49 Full Service for the Suburban Maryland office market, down $0.10 from the previous quarter. However, this is a $0.34 drop from fourth quarter 2013 when it was $25.83 Full Service.
Montgomery County accounted for nine of the top ten leases while Prince George’s County brought in the tenth largest lease of the quarter.
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Construction
Suburban Maryland Quarterly Overview
4th Quarter 2014
At the conclusion of the fourth quarter 2014, six office buildings, totaling 556,694 square feet, were under construction in the Suburban Maryland office market. These buildings were collectively 5% pre-leased.
Carr Properties’ speculative project at 4500 East West Highway delivered 226,352 square feet of Class A space in the Bethesda/Chevy Chase submarket during the fourth quarter, while 11800 Grand Park Avenue, the Pike & Rose project delivered 170,000 square feet of space in the North Bethesda/Potomac submarket.
4009 Sandy Spring Road, the Starpoint Plaza, a 25,239 square foot Class B building is currently under construction set to deliver in first quarter 2015 in North Silver Spring. 7800 Harkins Road, the Department of Housing and Community Development building, is set to deliver 110,000 square feet of office space in first quarter 2015.
12358 Parklawn Drive will be delivering 100,000 square feet of office space in Rockville second quarter 2015. 19851 Ob-servation Drive in Germantown will be delivering 80,000 square feet of Class B office medical space in third quarter 2015.
8645 Colesville Road, Ellsworth Place Office Tower, is currently under construction in Silver Spring. 210,600 square feet of Class A office space will be delivering in fourth quarter 2015. 12435 Park Potomac Avenue, Building D, will be deliver-ing 129,855 square feet of Class A space to the Rockville submarket in first quarter 2016.
We expect that the trend of consolidation will continue in the near future, however long term we believe tenants will slowly gain more confidence in the market through 2016 and begin to lease more office space. We expect renovations of existing Class B and C space to encourage tenant moves, as adding amenities to buildings will better cater to the modern tenant’s needs.
Vacancy rates are expected to rise through the next 24 months as more deliveries are made with much less pre-leasing than we are used to in the market.
Building owners are likely to continue meeting the pressure of the market as tenants will continue to seek quality space in transit-oriented locations and look to landlords for tenant improvement packages they deem appropriate.
Outlook
For More Information, Please Contact:
Merrill Turnbull | [email protected]
Brent Prossner | [email protected]
John Olson | [email protected]
Adriana Biberaj | [email protected]
202.513.6700
National Presence. Local Focus
In the fourth quarter 2014, nine of the top ten leases were executed in Montgomery County, with six of the top leases being renewals. The largest lease of the fourth quarter was signed by RapidAdvance for 27,564 square feet of new space at the recently delivered 4500 East West Highway, in the Bethesda/Chevy Chase submarket.
While the government has participated largely in recent quarters with top leases, it was the private sector in the fourth quarter that made up the majority of the top leases, with the exception of the National Institutes of Health Federal Credit Union (NIHFCU). The NIHFCU signed the third largest lease of the quarter, renewing 22,575 square feet of space at 111 Rockville Pike, the in Rockville submarket. Shady Grove Fertility had the second largest lease of the quarter, signing for 23,358 square feet of new space at 9600 Blackwell, in the North Rockville submarket.
Prince George’s County had the smallest of the top leases this quarter as State Farm Insurance leased 12,390 square feet of space at 4601 Forbes Boulevard, in the Lanham Submarket.
The Suburban Maryland market totaled 4.1 million square feet of leasing activity in 2014.
SUBURBAN MARYLAND TOP LEASES 4Q 2014
9600 BLACKWELL
Tenant: Shady Grove FertilitySize: 23,358 SF New North Rockville
111 ROCKVILLE PKE.
Tenant: NIH Federal Credit UnionSize: 22,575 SF Renewal Rockville
4500 EAST WEST HWY.
Tenant: RapidAdvanceSize: 27,564 SF New Bethesda/Chevy Chase
5454 WISCONSIN AVE.
Tenant: MedStar Washington Hospital CenterSize: 22,500 SF Renewal Bethesda/Chevy Chase
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962 WAYNE AVE.
Tenant: Technology Service Co.Size: 22,526 SF Renewal Silver Spring
7361 CALHOUN PL.
Tenant: MotorlaSize: 15,000 SF Renewal North Rockville
4601 FORBES BLVD.
Tenant: State Farm InsuranceSize: 12,390 SF Relet Lanham
1375 PICCARD DR.
Tenant: ZeniMax MediaSize: 20,226 SF Relet North Rockville
1355 PICCARD DR.
Tenant: Montgomery HospiceSize: 13,683 SF Renewal North Rockville
9737 WASHINGTONIAN BLVD.
Tenant: United Communications GroupSize: 13,893 SF Renewal North Rockville
National Presence. Local Focus
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Total leasing activity was 92,390 square feet, a slight decrease from third quarter when total leasing activity was recorded at 124,706 square feet.
The Class A total vacancy rate is 11.1%, up from 8.2% in the third quarter. The Class A average rental rate decreased slightly from $39.43 Full Service in the third quarter to $39.37 Full Service.
The Class B total vacancy rate rose to 11.4% from third quarter’s 11.3%, with a decrease in the average rental rate from $33.49 Full Service to $33.13 Full Service.
Carr Properties’ speculative project at 4500 East West Highway delivered 226,352 square feet of Class A space to the market this quarter, with 198,788 square feet vacant and available.
Highlights
Market Stats
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
Bethesda/Chevy Chase Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $29.11 PSF2014: $35.69 PSF
INVENTORY: 11.1 MILLION SFDIRECT VACANCY: 9.8 %TOTAL VACANCY: 11.0 %
YTD 2014 ABSORPTION: 4,315 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 226,352 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 82,320 SF/YRDELIVERIES: 81,749 SF/YR
Leases At A Glance
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Bethesda/Chevy Chase 4th Quarter 2014
Tenant:Size:Rate:Term: Esc:TI:Comments:
Food Partners1,803 SF Relet$36.00 FS64.8 Months2.50% Turnkey5 Months Free Rent
7200 WISCONSIN AVE.
Tenant:Size:Rate:Term: Esc:TI:Comments:
Space Partnership International 3,365 SF Relet$38.00 FS60 Months3.00% $40.00/SF6 Months Free Rent
7315 WISCONSIN AVE.
National Presence. Local Focus
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Total leasing activity was slightly lower than the 99,553 square feet in the third quarter, as it recorded 84,860 square feet in the fourth quarter.
The Class A total vacancy rate dropped to 21.4% from third quarter’s 22.7%, with a slight rental rate decrease from $31.49 Full Service to $31.11 Full Service.
The Class B total vacancy rate rose to 19.6% this quarter from 18.1% in the third quarter, as rental rates decreased by $0.40 from $25.89 Full Service to $25.49 Full Service.
11800 Grand Park Avenue, the Pike and Rose project, delivered 170,000 square feet of Class A space to the North Bethesda/Potomac submarket in the fourth quarter, with 39,822 square feet vacant and available for lease.
Highlights
Market Stats
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
North Bethesda/Potomac Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $28.18 PSF2014: $29.05 PSF
INVENTORY: 10.8 MILLION SFDIRECT VACANCY: 19.7 %TOTAL VACANCY: 20.1 %
YTD 2014 ABSORPTION: -199,107 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 170,000 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: -10,216 SF/YRDELIVERIES: 98,256 SF/YR
Tenant:Size:Rate:Term: Esc:TI:Comments:
American Institute of Research29,249 SF Relet$28.00 FS132 Months2.25% $65.00/SF12 Months Free Rent
6003 EXECUTIVE BLVD.
Tenant:Size:Rate:Term: Esc:TI:
Executive Information Systems8,995 SF Renewal$34.00 FS36 Months2.50% As-Is
6901 ROCKLEDGE DR.
Leases At A Glance
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North Bethesda/Potomac4th Quarter 2014
National Presence. Local Focus
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Total leasing activity decreased slightly from 75,716 square feet in the third quarter to a 21,716 square feet in the fourth quarter.
Total net absorption made a significant jump from -131,666 square feet in the third quarter to 424,425 square feet in the fourth quarter.
Total vacancy in the Class A office market fell to 18.7% in the fourth quarter from 28.0% and also experienced a slight decrease in total average asking rental rate from $31.85 Full Service to $31.78 Full Service.
Total vacancy in the Class B office market dropped to 10.1% in the fourth quarter from 10.7% while total average ask-ing rental rates rose from $27.73 Full Service to $28.12 Full Service.
Highlights
Market Stats
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
Rockville Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $26.41 PSF2014: $30.08 PSF
INVENTORY: 9.3 MILLION SFDIRECT VACANCY: 13.4 %TOTAL VACANCY: 13.5 %
YTD 2014 ABSORPTION: 365,932 SFUNDER CONSTRUCTION: 229,855 SF
YTD DELIVERIES: 515,717 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 108,366 SF/YRDELIVERIES: 161,594 SF/YR
Tenant:Size:Rate:Term: Esc:TI:Comments:
Advanced Weight Loss Surgery3,752 SF Renewal$29.00 NNN120 Months2.25% $65.00/PSF8 Months Free Rent
9707 MEDICAL CENTER DR.
Tenant:Size:Rate:Term: Esc:TI:Comments:
Patient Pharmacy1,050 SF New$32.50 Net of Char126 Months3.00% Turnkey6 Months Free Rent
15200 SHADY GROVE RD.
Leases At A Glance
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Rockville 4th Quarter 2014
National Presence. Local Focus
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Total leasing activity rose to 153,287 square feet in the fourth quarter from 148,461 square feet in the third quarter.
The total vacancy remained flat at 17.7%, while direct vacancy experienced a slight increase moving from 15.7% in the third quarter to 15.8%.
The Class A average asking rental rates experienced a decrease as prices dropped from $28.87 Full Service in the third quarter to $28.29 Full Service in the fourth quarter.
The Class B average asking rental rates experienced a slight decrease from $23.56 Full Service in the third quarter to $23.43 Full Service in the fourth quarter.
Highlights
Market Stats
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
North Rockville Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $25.98 PSF2014: $25.99 PSF
INVENTORY: 13.2 MILLION SFDIRECT VACANCY: 15.8 %TOTAL VACANCY: 17.7 %
YTD 2014 ABSORPTION: -152,710 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 111,476 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 79,408 SF/YRDELIVERIES: 181,139 SF/YR
Tenant:Size:Rate:Term: Esc:TI:Comments:
NeoImmune Tech1,638 SF New$29.50 FS37 Months3.00% As-Is1 Month Free Rent
2200 RESEARCH BLVD.
Leases At A Glance
North Rockville4th Quarter 2014
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National Presence. Local Focus
Total leasing activity fell from third quarter’s 60,865 square feet to 34,882 square feet in the fourth quarter. This is a major decrease from the 201,159 square feet leased in the fourth quarter 2013.
Total vacancy dropped from 12.7% in the third quarter to 12.5% in the fourth quarter, while direct vacancy fell slightly from 12.1% to 11.9%.
The Class A total vacancy rate fell to 15.8% in the fourth quarter from 16.4% in the third quarter. Total average asking rental rates saw a slight increase from $25.54 Full Service in the third quarter to $25.56 Full Service.
The Class B total vacancy rate increased from 10.5% in the third quarter to 10.9% and experienced a rise in total average asking rental rate to $22.21 Full Service from $22.07 Full Service.
Highlights
Market Stats
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Gaithersburg/Germantown Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $21.74 PSF2014: $23.67 PSF
INVENTORY: 9.5 MILLION SFDIRECT VACANCY: 11.9 %TOTAL VACANCY: 12.5 %
YTD 2014 ABSORPTION: 30,651 SFUNDER CONSTRUCTION: 80,000 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 37,117 SF/YRDELIVERIES: 57,692 SF/YR
Leases At A Glance
www.lpcwashingtondc.com
Gaithersburg/Germantown4th Quarter 2014
Tenant:Size:Rate:Term: Esc:TI:Comments:
Germantown Pharmacy1,480 SF New$25.00 FS111 Months3.00%Turnkey3 Months Free Rent
19735 GERMANTOWN RD.
National Presence. Local Focus
Total leasing activity for the fourth quarter was 118,145 square feet, a relative increase from the 49,929 square feet leased in the third quarter.
The total vacancy rate showed a slight decrease as it went from 10.5% in the third quarter to 9.5% in the fourth quarter, with 8.9% attributed to direct space.
The Class A total vacancy rate fell to 9.7% from 9.9% in the third quarter, with a forty four cent decrease in average asking rental rate from $29.87 Full Service to $29.43 Full Service.
The Class B total vacancy rate dropped from the third quarter’s 8.9% to 6.5%, as the average asking rental rate also decreased from $23.70 Full Service to $23.63 Full Service.
Highlights
Market Stats
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MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
Silver Spring Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $23.21 PSF2014: $27.55 PSF
INVENTORY: 6.4 MILLION SFDIRECT VACANCY: 8.9 %TOTAL VACANCY: 9.5 %
YTD 2014 ABSORPTION: 99,478 SFUNDER CONSTRUCTION: 210,600 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: -19,570 SF/YRDELIVERIES: 5,000 SF/YR
Year to Date Leases
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Silver Spring4th Quarter 2014
Tenant:Size:Rate:Term: Esc:TI:
Potomac Massage Training Institute9,865 Relet$26.50 FS120 Months2.50% $12.00/PSF
8380 COLESVILLE RD.
Tenant:Size:Rate:Term: Esc:TI:Comments:
Farmers Insurance944 SF New$24.00 FS120 Months5.00% As-Is4 Months Free Rent
11510 GEORGIA AVE.
National Presence. Local Focus
Total leasing activity experienced a dramatic increase in the fourth quarter at 439,300 square feet in comparison to third quarter when it was 90,434 square feet.
Total net absorption saw an improvement in the fourth quarter as it rose to 149,850 square feet from -158,049 square feet in the third quarter.
The total average asking rental rates decreased from the third quarter’s $6.07 Triple Net to $5.98 Triple Net.
The Class A total vacancy rate dropped to 18.9% in the fourth quarter from 20.0% in the third quarter. Total average ask-ing rental rates increased from $6.36 Triple Net in the third quarter to $6.68 Triple Net in the fourth quarter.
Highlights
Market Stats
-0.5
0.0
0.5
1.0
1.5
2.0
'14'13'12'11'10'09'08'07'06'05
SF (M
illion
s)
Deliveries Under Construction Total Net Absorption
0
4
8
12
16
20
'14'13'12'11'10'09'08'07'06'05
Vacan
cy Ra
te (%
)
Direct Vacancy Rate Total Vacancy Rate
National Presence. Local Focus
Prince George’s County Industrial Spotlight 4Q 2014
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
ASKING RENTAL RATES (TRIPLE NET)
2005: $6.10 PSF2014: $5.98 PSF
INVENTORY: 19.5 MILLION SFDIRECT VACANCY: 12.0 %TOTAL VACANCY: 12.7 %
YTD 2014 ABSORPTION: -244,245 SFUNDER CONSTRUCTION: 968,237 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 91,035 SF/YR DELIVERIES: 194,425 SF/YR
National Presence. Local Focus
-0.5
0.0
0.5
1.0
1.5
'14'13'12'11'10'09'08'07'06'05
SF (M
illion
s)
Deliveries Under Construction Total Net Absorption0
5
10
15
20
25
'14'13'12'11'10'09'08'07'06'05
Vaca
ncy R
ate (%
)
Direct Vacancy Rate Total Vacancy Rate
Total leasing activity was recorded at 50,137 square feet this quarter, an impressive increase from 28,110 square feet in the third quarter.
The total vacancy rate dropped slightly from 24.4% in the third quarter to 24.1%, with 23.8% being attributed to direct space.
Average rental rates fell seven cents from the third quarter to $20.93 Full Service.
The total vacancy in the Class A market fell from 20.1% in the third quarter to 19.5%, as the total average rental rates saw $0.14 decrease from $21.90 Full Service to $21.76 Full Service.
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
Highlights
Market Stats
Greenbelt/College Park Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $20.07 PSF2014: $20.93 PSF
INVENTORY: 7.4 MILLION SFDIRECT VACANCY: 23.8 %TOTAL VACANCY: 24.1 %
YTD 2014 ABSORPTION: 26,051 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: -2,033 SF/YRDELIVERIES: 77,187 SF/YR
National Presence. Local Focus
Total vacancy increased notably from 23.9% in the third quarter to 24.6% in the fourth quarter.
Total net absorption was -22,204 square feet in the fourth quarter, a decrease from this time last year when it was recorded at -15,621 square feet.
The total average asking rental rates decreased from third quarter’s $19.19 Full Service to $19.06 Full Service, twenty eight cents lower than fourth quarter 2013 when it was $19.34 Full Service.
The total average rental rate in the Class A market witnessed a $0.05 increase from the previous quarter as it went from $17.71 Full Service to $17.76 Full Service.
Highlights
Market Stats
-0.5
-0.3
-0.1
0.1
0.3
0.5
'14'13'12'11'10'09'08'07'06'05
SF (M
illion
s)
Deliveries Under Construction Total Net Absorption
0
6
12
18
24
30
'14'13'12'11'10'09'08'07'06'05
Vacan
cy Ra
te (%
)
Direct Vacancy Rate Total Vacancy Rate
National Presence. Local Focus
Landover/Largo/Capit0l Heights Market Spotlight 4Q 2014
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
ASKING RENTAL RATES (FULL SERVICE)
2005: $21.08 PSF2014: $19.06 PSF
INVENTORY: 3.1 MILLION SFDIRECT VACANCY: 24.1 %TOTAL VACANCY: 24.6 %
YTD 2014 ABSORPTION: -48,030 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: -24,218 SF/YR DELIVERIES: 11,293 SF/YR
National Presence. Local Focus
-0.15
-0.05
0.05
0.15
0.25
'14'13'12'11'10'09'08'07'06'05
SF (M
illion
s)
Deliveries Under Construction Total Net Absorption
0
7
14
21
28
35
'14'13'12'11'10'09'08'07'06'05Va
cancy
Rate
(%)
Direct Vacancy Rate Total Vacancy Rate
Highlights
Market Stats
Total leasing activity fell from 7,527 square feet in the third quarter to 7,200 square feet in the fourth quarter. This is also a slight decrease from this time last year when total leasing activity was 7,935 square feet.
Total net absorption decreased dramatically from 1,800 square feet in the third quarter to -8,004 square feet.
The Class A total vacancy rate rose from the third quarter’s 18.6% to 21.9%, with a slight rental rate decrease from $23.79 Full Service to $23.78 Full Service.
The Class B total vacancy rate dropped from 19.4% in the third quarter to 17.7%, as rental rates decreased from $22.71 Full Service to $22.70 Full Service.
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
National Harbor/Oxon Hill Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $18.91 PSF2014: $22.85 PSF
INVENTORY: 999,355 SFDIRECT VACANCY: 17.2%TOTAL VACANCY: 18.9%
YTD 2014 ABSORPTION: 7,790 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 11,459 SF/YRDELIVERIES: 21,209 SF/YR
National Presence. Local Focus
-0.50
-0.25
0.00
0.25
0.50
0.75
1.00
'14'13'12'11'10'09'08'07'06'05
SF (M
illion
s)
Deliveries Under Construction Total Net Absorption0
7
14
21
28
35
'14'13'12'11'10'09'08'07'06'05
Vaca
ncy R
ate (%
)
Direct Vacancy Rate Total Vacancy Rate
Total leasing activity fell drastically from the third quarter’s 17,446 square feet to 1,661 square feet in the fourth quar-ter. This is also a large decrease from this time last year when leasing activity was recorded at 25,632 square feet.
The Class A market average asking rental rate rose from $21.56 Full Service in the third quarter to $21.61 Full Service.
Total vacancy in the Class B market fell from 22.1% in the third quarter to 21.9% in the fourth quarter, and also experi-enced a slight increase in total average asking rental rate from $17.70 Full Service to $17.99 Full Service.
Total net absorption for the fourth quarter was -30,496 square feet, a major difference from this time last year when net absorption was recorded at 37,780 square feet.
Highlights
Market Stats
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
Beltsville/Calverton Market Spotlight 4Q 2014
ASKING RENTAL RATES (FULL SERVICE)
2005: $18.45 PSF2014: $20.86 PSF
INVENTORY: 1.5 MILLION SFDIRECT VACANCY: 34.6 %TOTAL VACANCY: 35.5 %
YTD 2014 ABSORPTION: -203,659 SFUNDER CONSTRUCTION: 0 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: -23,757 SF/YRDELIVERIES: 0 SF/YR
National Presence. Local Focus
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
'14'13'12'11'10'09'08'07'06'05
SF
(M
illi
ons)
Deliveries Under Construction Total Net Absorption
0
3
6
9
12
15
'14'13'12'11'10'09'08'07'06'05V
acan
cy R
ate
(%)
Direct Vacancy Rate Total Vacancy Rate
Total vacancy experienced a decline from 11.7% in the third quarter to 10.5% in the fourth quarter.
Total leasing activity saw a dramatic decrease from the third quarter’s 672,626 square feet as it fell to 299,642 square feet in the fourth quarter. This is also a significant decrease from fourth quarter 2013 when net absorption was recorded at 2,271,490 square feet.
The Class A total vacancy rate rose slightly from 14.5% in the third quarter to 14.6% in the fourth quarter, and witnessed a $0.01 increase in asking rental rate from $5.52 Triple Net to $5.53 Triple Net.
The Class B total vacancy rate rose to 10.2% from 10.0% in the third quarter, while the average asking rental rate rose from $5.01 Triple Net to $5.10 Triple Net.
Highlights
Market Stats
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
Baltimore/Washington Corridor Industrial Spotlight 4Q 2014
ASKING RENTAL RATES (TRIPLE NET)
2005: $4.82 PSF2014: $5.09 PSF
INVENTORY: 46.7 MILLION SFDIRECT VACANCY: 10.5%TOTAL VACANCY: 10.5%
YTD 2014 ABSORPTION: 756,499 SFUNDER CONSTRUCTION: 1,173,690 SF
YTD DELIVERIES: 831,617 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 484,022 SF/YRDELIVERIES: 492,870 SF/YR
National Presence. Local Focus
Total vacancy rate fell from 14.3% in the third quarter to 13.0% in the fourth quarter, with 11.5% attributed to direct vacant space.
Total net absorption rose significantly from -57,726 square feet in the third quarter to 123,828 square feet in the fourth quarter. This was also a major improvement from this time last year when net absorption was recorded at -42,970 square feet.
The total average asking rental rate decreased seventy cents from the third quarter, going from $23.95 Full Service to $23.25 Full Service in the fourth quarter.
Highlights
Market Stats
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0.0
0.5
1.0
1.5
'14'13'12'11'10'09'08'07'06'05
SF (M
illion
s)
Deliveries Under Construction Total Net Absorption
0
5
10
15
20
'14'13'12'11'10'09'08'07'06'05
Vacan
cy Ra
te (%
)
Direct Vacancy Rate Total Vacancy Rate
National Presence. Local Focus
Columbia South Market Spotlight 4Q 2014
MERRILL TURNBULL BRENT PROSSNER JOHN OLSON ADRIANA BIBERAJ
ASKING RENTAL RATES (FULL SERVICE)
2005: $21.28 PSF2014: $23.25 PSF
INVENTORY: 8.9 MILLION SFDIRECT VACANCY: 11.5 %TOTAL VACANCY: 13.0 %
YTD 2014 ABSORPTION: 351,975 SFUNDER CONSTRUCTION: 150,000 SF
YTD DELIVERIES: 0 SF
10 YEAR AVERAGES (2005-2014)
TOTAL ABSORPTION: 262,799 SF/YR DELIVERIES: 314,977 SF/YR
