Suburban Maryland Quarterly Market Report€¦ · Suburban Maryland. The total vacancy rate ticked...

Quarterly Market Report

2nd Quarter 2020

Suburban Maryland

lpcwashingtondc.com

2

Table of Contents

Metropolitan D.C. Market Overview .....................................3

Suburban Maryland Quarterly Overview ............................5

Suburban Maryland Top Leases ........................................... 8

Suburban Maryland Top Sales .............................................. 9

Market Spotlight, 2Q 2020

Bethesda-Chevy Chase ....................................................10

North Bethesda-Potomac ................................................ 12

Rockville ................................................................................ 14

North Rockville .................................................................... 16

Gaithersburg-Germantown ............................................. 18

Silver Spring .......................................................................... 19

Beltsville-Calverton ........................................................... 21

Greenbelt-College Park ................................................... 22

Landover-Largo-Capitol Heights .................................. 23

National Harbor-Oxon Hill .............................................. 24

Columbia South ................................................................. 25

Prince George’s County Industrial ................................ 26

Baltimore-Washington Corridor Industrial ..................27

Frederick .............................................................................. 28

Frederick Flex ..................................................................... 29

Broker Biographies......................................................................30

Paul Kern Senior Vice President

[email protected] | 301.304.8399

Brent Prossner Senior Vice President


Kyle Bell Vice President


Tim Weitzel Associate


Richard Coppola Associate


Maryland Leasing & Market Research

Overall Market Summary

Metropolitan D.C. Market Overview 2nd Quarter 2020

The Washington, DC Metropolitan commercial real estate market is comprised of approximately 429.6 million square feet of rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland.

The total vacancy rate ticked up to 14.0% at the end of the second quarter, while the market recorded 364,843 square feet of net absorption. Northern Virginia and Suburban Maryland both posted positive net absorption for the quarter with a combined 396,089 square feet absorbed.

Leasing activity for the quarter totaled 3,447,954 square feet. The largest lease executed was a 396,740-square-foot relet by Microsoft at 11955 Freedom Drive - Two Freedom Square @ RTC, in Northern Virginia.

At the end of the quarter, there was 6,876,206square feet under construction, with 69% of the space pre-leased. No buildings broke ground

this quarter; while five buildings, totaling 928,957 square feet, delivered. The largest addition was 1750 Presidents Street - 17Fifty delivering 276,000 square feet (100% leased to LEIDOS) to the Reston submarket in VA.

There were six sale transactions in the second quarter, totaling $328.75 million. The largest sale was 1530 Wilson Boulevard trading for $71,400,000 ($427 psf) in the RB Corridor of VA.

Average asking rental rates increased $0.34 to $39.50 per square foot, Full Service.

From May 2019-May 2020 the DC Metropolitan Statistical Area (MSA) lost 67,200 jobs, representing a contraction of 8.5%% YOY, while the unemployment rate increased to 9.0%.

3 lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67004300 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.46008120 Woodmont Ave., Suite 560 | Bethesda, MD | 301.304.8300

DC VA MDMetro Area (YTD)

Direct Vacancy (2Q 2020) 12.0% 13.8% 13.1% 13.0%

Total Vacancy (2Q 2020) 13.2% 14.5% 14.0% 14.0%

Total Net Absorption(YTD 2020) -792 -352,443 -121,021

-474,256 SF

Leasing Activity (YTD 2020) 3,452,820 3,396,769 1,441,094 8.3 M SF

Market Outlook / COVID-19

Metropolitan D.C. Market Overview 2nd Quarter 2020


The impact of the COVID-19 pandemic on our daily lives, and commercial real estate, is extremely fluid. The DC region is currently in Phase 2 of re-opening, including the re-opening of non-essential retail and the voluntary return for office workers. While office buildings have re-opened, the vast majority of DC area employees, including the government, continue to telework (less than 20% have returned to the office). Upticks in vacancy and decreased net absorption are expected for the next two quarters, as tenants and the CRE industry continue to whether the pandemic. The DC area has seemed to ‘flatten the curve” while most of the South and West of the country have seen a recent spike in cases and have re-imposed some business closures. While industry experts remain hopeful that the economy will improve by late 2020 or early 2021, locally, the next few weeks will decide if the DC area is ready to move into Phase 3, plateau on Phase 2, or possibly regress due to an influx in COVID-19 cases.

Market fundamentals for the Metropolitan Washington, DC office market continued to soften in the second quarter 2020 due to the COVID-19 pandemic. Even though close to 365,000 square feet was absorbed in the second quarter, total vacancy ticked up to 14.0% for the metro area (absorption is still negative for the region YTD 2020). Despite the pandemic, leasing activity was only down 29% quarter-over-quarter, as velocity was driven by an increase of sizable tenant renewals across the metro. Investment sales, as expected, were few, as most negotiations have stalled. A very limited amount of new buildings, if any, are expected to come to market near term. The region lost 67,200 jobs YOY ending May 2020 with the Leisure & Hospitality sector suffering the majority of these losses (49,600 jobs). The current unemployment rate increased to 9.0% in the DC Metro, but it is still lower than the 11.1% national average. Incredibly, the Washington, DC MSA ranks 4th nationally in unemployment (in MSAs over 1 million in population).

San Francisco 1,400,000New York 1,300,000Boston 1,200,000Los Angeles 905,000Atlanta 800,000Chicago 425,000DC Metro 334,000

Sublease Added 2Q 2020 (SF)

1,400,000

1,300,000

1,200,000

905,000

800,000

425,000

334,000

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000

San Francisco

New York

Boston

Los Angeles

Atlanta

Chicago

DC Metro

Sublease Space Added 2Q 2020 (SF)

The COVID-19 pandemic has caused a substantial increase of sublease space available on the market nationally. The DC Metro area added 334,000 square feet of available sublease space to the market in the second quarter 2020. However, DC has added the least amount of available sublease space compared to other major markets (see chart below).

5lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67004300 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.46008120 Woodmont Ave., Suite 560 | Bethesda, MD | 301.304.8300

Suburban Maryland 2nd Quarter 2020

Market Summary

The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 89.3 million square feet of rentable space in 896 office buildings of 25,000 square feet and greater.

The market recorded an increase in net absorption in the second quarter of 2020 with 35,852 square feet absorbed, up from the -156,873 square feet absorbed in the previous quarter.

Direct vacancy remained flat at 13.1% in the second quarter 2020, and total vacancy increased slightly to 14.0%.

There were no significant office building sales in Suburban Maryland during the second quarter 2020.

The largest lease signed this quarter was the FDA signing a 93,014-square-foot renewal at 12420 Parklawn Drive in the Rockville submarket.

The year-over-year unemployment rate in Suburban Maryland increased to 9.0% in May 2020, up significantly from 2.9% in May 2019. Unemployment in Suburban Maryland remains well below the national unemployment rate of 11.1%.

From May 2019 to May 2020 employment in Suburban Maryland had a net decrease of 63,471 jobs. Sectors with the greatest amount of job loss were Leisure and Hospitality with 25,000 jobs lost, Education and Health Services with 11,300 jobs lost, Trade, Transportation and Utilities with 9,500 jobs lost, and Professional and Business Services with 8,300 jobs lost. Government jobs decreased by 600 jobs year-over-year.

YTD 2020 2Q 2020 1Q 2020 2Q 2019

Direct Vacancy 13.1% 13.1% 13.1% 13.2%

Total Vacancy 14.0% 14.0% 13.9% 13.8%

NetAbsorption (SF) -121,021 35,852 -156,873 132,717

Leasing Activity (SF) 1.4 M 439,412 1,001,682 1.1 M

Under Construction (SF) 2.0 M 2.0 M 2.0 M 2.2 M

Deliveries (SF) 0 0 0 0

Rental Rates(PSF, FS) $27.83 $27.83 $27.95 $27.93

U/C Percent Pre-Leased 73% 73% 73% 68%


Deliveries vs. Under Construction

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'20'19'18'17'16'15'14'13'12'11'10

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Deliveries Under Construction


Vacancy RateThe direct vacancy rate remained flat at 13.1% in the second quarter 2020, totaling approximately 11.5 million square feet. Total vacancy increased slightly to 14.0%, up from 13.9% in the first quarter 2020, totaling approximately 12.5 million square feet.

The sublease vacancy rate decreased slightly to 0.8%, representing 725,478 square feet of vacant space, up from 747,375 square feet in the first quarter 2020.

The Class A total vacancy rate decreased to 14.1% in the second quarter, down from 14.3%, totaling approximately 6.5 million square feet. The Class B total vacancy rate increased to 14.2% in the second quarter, up from 13.7%, totaling approximately 5.3 million square feet.

Class Vacancy Rates

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CBASF

(Mill

ions

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(%) of Building Class Vacant

14.1% 14.2%

10.5%

Construction & DeliveriesAt the end of the second quarter 2020, there were six buildings under construction, totaling 2,001,377 square feet.

909 Rose Avenue (Class A, 212,000 sf, 31% pre-leased) is set to deliver in August 2020. 9800 Medical Center Drive - Building F (Class A, 175,840 sf, 100% pre-leased) is set to deliver in October 2020. 9950 Medical Center Drive (Class A, 84,264 sf, 100% pre-leased) is set to deliver in September 2020.

7272 Wisconsin Avenue (Class A, 361,609 sf, 68% pre-leased) is set to deliver in August 2020. 7373 Wisconsin Avenue (Class A, 382,664 sf, 0% pre-leased) is set to deliver in July 2021.

The Marriott Headquarters at 7750 Wisconsin Avenue (Class A, 785,000 sf, 100% pre-leased) is scheduled to deliver in January 2022.

No buildings delivered this quarter.



Montgomery CountyAbsorption & Gross LeasingThe Suburban Maryland market recorded 35,852 square feet of net absorption in the second quarter 2020, an increase from the -156,873 square feet absorbed in the first quarter 2020.

In the second quarter 2020, leasing activity totaled 439,412 square feet, a 56.1% decrease from the 1,001,682 square feet leased in the previous quarter.

Eight of the Top Ten leases signed this quarter were in Montgomery County and ranged between 93,014 and 8,195 square feet.

Nine of the leases in the Top Ten this quarter were private sector transactions.

The total average asking rental rate was $27.83 Full Service in the second quarter 2020, down $0.12 from the previous quarter. The Class A asking rental rate was $31.06 Full Service, a $0.10 increase from the previous quarter.

YTD 2020 2Q 2020 1Q 2020 2Q 2019

Inventory (SF) 66.4 M 66.4 M 66.4 M 65.6 M

Direct Vacancy 12.3% 12.3% 12.4% 12.6%

Total Vacancy 13.4% 13.4% 13.5% 13.4%

Net Absorption (SF) -250,508 54,969 -305,477 70,089

Leasing Activity (SF) 1,173,183 364,588 808,595 879,590

Under Construction (SF) 2.0 M 2.0 M 2.0 M 2.2M


Rental Rates (PSF, FS) $29.65 $29.65 $29.87 $30.01

Prince George’s County

YTD 2020 2Q 2020 1Q 2020 2Q 2019

Inventory (SF) 22.9 M 22.9 M 22.9 M 22.9 M

Direct Vacancy 15.4% 15.4% 15.3% 14.6%

Total Vacancy 15.6% 15.6% 15.5% 14.7%

Net Absorption (SF) 129,487 -19,117 148,604 62,628

Leasing Activity (SF) 268,419 74,824 193,595 136,431

Under Construction (SF) 0 0 0 0


Rental Rates (PSF, FS) $22.25 $22.45 $22.24 $21.98



Top Ten LeasesIn the second quarter 2020, eight of the Top Ten leases were in Montgomery County and private sector transactions again dominated leasing activity. Five of the top ten leases were new leases, with New York Life’s 37,237-square-foot lease marking the largest new lease of the quarter.

The largest lease executed in Montgomery County was a renewal totaling 93,014 square feet signed by the FDA at 12420 Parklawn Drive in the Rockville submarket. In the second quarter 2020, no single sector or industry dominated leasing activity in Sub-urban Maryland. Medical tenants were well-repre-sented in the top ten leases with Suburban Hos-pital’s 11,563-square-foot lease at 6001 Montrose

Road, and IT services were also well-represented as OpenText renewed for 50,375 square feet at 9711 Washingtonian Boulevard, and Cybrary signed a 35,599-square-foot lease at 4600 River Road. GSA tenants accounted for one of Subur-ban Maryland’s top ten leases, as the FDA signed a 93,014-square-foot renewal at 12420 Parklawn Drive.

The Suburban Maryland market totaled 439,412 square feet of leasing activity in the second quarter 2020, a decrease from the 1,001,682 square feet leased in the first quarter 2020.

4600 River Rd

Tenant Cybrary

Size 35,599 SF

Type New

14995 Shady Grove Rd

Tenant Unknown

Size 13,195 SF

Type New

12420 Parklawn Dr

Tenant GSA - FDA

Size 93,014 SF

Type Renewal

20410 Observation Dr

Tenant Unknown

Size 13,193 SF

Type New

6001 Montrose Rd

Tenant Suburban Hospital

Size 11,563 SF

Type Renewal

6905 Rockledge Dr

Tenant New York Life

Size 37,237 SF

Type New

7700 Wisconsin Ave

Tenant Comcast SportsNet

Size 28,477 SF

Type Renewal

7474 Greenway Center Dr

Tenant Peraton

Size 8,195 SF

Type Renewal

909 Rose Ave

Tenant One Digital

Size 15,865 SF

Type New

9711 Washingtonian Blvd

Tenant OpenText

Size 50,375 SF

Type Renewal


Top Sales


Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate

No Significant Sales This Quarter

Suburban MD

N/A N/A N/A N/A N/A N/A N/A


HighlightsThe direct vacancy rate increased to 12.0% in the second quarter 2020, up from 11.8% in the first quarter 2020. The total vacancy rate, however, decreased to 14.0% in the second quarter of 2020, down from 14.1% in the first quarter 2020. Class A total vacancy increased to 15.8% in the second quarter 2020, up from 14.8% in the first quarter, while the asking rental rate average decreased to $42.49 Full Service in the second quarter 2020, down $0.22 from the previous quarter.

Total net absorption was -18,499 square feet in the second quarter 2020, up from the -196,076 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the second quarter to 62,876 square feet, down from 118,777 square feet leased in the previous quarter. A contributing tenant was Comcast SportsNet signing a 28,477-square-foot renewal at 7700 Wisconsin Avenue.

There are currently three buildings under construction in the Bethesda/Chevy Chase submarket: 7272 Wisconsin Avenue, a 361,609-square-foot, Class A building, 7750 Wisconsin Avenue, Marriott’s 785,000-square-foot headquarters, and 7373 Wisconsin Avenue, a 382,664-square-foot, Class A building.

10 Year Averages (2010 - 2019)

Total Absorption 10,567 SF / Year

Deliveries (SF) 57,779 SF / Year

Leasing Activity 859,849 SF / Year

Market Stats

Inventory 11.3 M SF

Direct Vacancy 12.0 %

Total Vacancy 14.0 %

1Q 2020 Absorption -18,499 SF

YTD 2020 Absorption -214,575 SF

Under Construction 1.5 M SF

Percent Pre-Leased 67.3 %

YTD 2020 Deliveries 0 SF

Asking Rental Rates (Full Service)

2010: $34.98

PSF

2019: $37.64

PSF

YTD 2020: $39.09

PSF

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Market Spotlight

2nd Quarter 2020Bethesda-Chevy Chase


Market Spotlight

2nd Quarter 2020Bethesda-Chevy Chase

Major Leases

Under Construction

Sales

Property Submarket Building Size Available Pre-leased Delivery Date Developer Major Tenants

7272 Wisconsin AveBethesda/Chevy Chase

361,609 SF 117,260 SF 79% 8/2020 Carr PropertiesFox 5; Enviva Partners; ProShares; WeWork

Marriott Headquarters 7750 Wisconsin Ave

Bethesda/Chevy Chase

785,000 SF 0 SF 100% 1/2022Bernstein Co. / Boston Properties

Marriott International


No Sales This QuarterBethesda/Chevy Chase


7700 Wisconsin Ave

Tenant Comcast SportsNet

Size 28,477 SF

Type Renewal

5530 Wisconsin Ave

Tenant Internal Cardiology Medicine

Size 3,871 SF

Type New

7373 Wisconsin AveBethesda/Chevy Chase

382,664 SF 382,664 SF 0% 7/2021 Stonebridge N/A


HighlightsThe direct vacancy rate increased to 14.9% in the second quarter 2020, up from 14.4% in the first quarter. Total vacancy increased to 16.0% in the second quarter 2020, up from 15.5% in the previous quarter. Class A total vacancy remained steady to 12.5% in the second quarter 2020, while the average asking rental rate increased to $30.58 Full Service in the second quarter, down $0.77 from the previous quarter.

Total net absorption was -58,472 square feet in the second quarter 2020, down from the 70,214 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the second quarter 2020 to 36,171 square feet, up from 178,644 square feet leased in the previous quarter. A contributing tenant was New York Life signing a 37,237-square-foot lease at 6905 Rockledge Drive.

One building is currently under construction in the North Bethesda submarket. 909 Rose Avenue (Class A, 212,000 sf, 30.7% pre-leased) is set to deliver in August 2020.





Market Stats

Inventory 10.7 M SF




YTD 2020 Absorption 11,742 SF

Under Construction 212,000 SF




2010: $29.18

PSF

2019: $28.76

PSF

YTD 2020: $28.99

PSF

-0.75

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Market Spotlight

2nd Quarter 2020North Bethesda-Potomac


Market Spotlight

2nd Quarter 2020North Bethesda-Potomac

Major Leases

Under Construction

Sales


909 Rose Ave North Bethesda - Potomac

212,000 146,874 30.7% 8/2020 Federal Realty One Digital, Federal Realty


No Sales This Quarter North Bethesda - Potomac


6905 Rockledge Dr

Tenant New York Life

Size 37,237 SF

Type New

6710 Rockledge Dr

Tenant Centers for Advanced Orthopaedics

Size 6,775 SF

Type New

909 Rose Ave

Tenant One Digital

Size 15,865 SF

Type New


HighlightsThe direct vacancy rate held steady at 10.1% in the second quarter 2020. The total vacancy rate also held steady at 10.4% in the second quarter 2020. Class A total vacancy decreased to 11.2% in the ssecond quarter, down from 11.4% in the first quarter 2020, while the asking rental rate average increased to $32.51 Full Service in second quarter, up $0.10 from the previous quarter.

Total net absorption was 2,878 square feet in the second quarter 2020, up from 10,103 square feet absorbed in the first quarter 2020. Contributing to the positive net absorption was FCN moving in to their 5,866-square-foot space at 12501 Ardennes Ave.

Total leasing activity increased in the second quarter 2020 to 127,831 square feet, up from the 72,672 square feet leased in the previous quarter. A contributing tenant was the GSA - FDA signing a 93,014-square-foot renewal at 12420 Parklawn Drive.





Market Stats

Inventory 9.7 M SF



2Q 2020 Absorption 2,878 SF


Under Construction 0 SF

Percent Pre-Leased 0 %



2010: $29.15

PSF

2019: $30.32

PSF

YTD 2020: $30.20

PSF

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Market Spotlight

2nd Quarter 2020Rockville


Market Spotlight

2nd Quarter 2020Rockville

Major Leases

Under Construction

Sales


No new construction during this quarter Rockville N/A N/A N/A N/A N/A N/A


No Sales This Quarter Rockville N/A N/A N/A N/A N/A N/A N/A

12420 Parklawn Dr

Tenant GSA - FDA

Size 93,014

Type Renewal

3206 Tower Oaks Blvd

Tenant I.M. Systems Group

Size 5,866 SF

Type Renewal

6001 Montrose Rd

Tenant Suburban Hospital

Size 11,563

Type Renewal


HighlightsThe direct vacancy rate decreased to 13.6% in the second quarter 2020, down from 14.2% in the first quarter 2020. Total vacancy decreased to 14.3% in the second quarter 2020, down from 14.9% in the previous quarter. Class A total vacancy decreased to 15.6% in the second quarter, down from 16.1% in the first quarter 2020, while the asking rental rate average increased to $30.00 Full Service in second quarter, down $0.28 from the previous quarter.

Total net absorption was 79,702 square feet in the second quarter 2020, a significant increase from the -171,853 square feet absorbed in the first quarter 2020. A contributing tenant was Otsuka America Pharmaceuticals expanding into an additional 25,522 square feet at 2440 Research Blvd.

Total leasing activity decreased in the second quarter to 81,954 square feet, down from 302,486 square feet leased in the previous quarter. A contributing tenant was Open Text signing a 50,379-square-foot renewal at 9711 Washingtonian Blvd.

Two buildings are currently under construction in the North Rockville submarket. 9950 Medical Center Drive (Class A, 84,264 sf, 100% pre-leased) is set to deliver in September 2020. 9800 Medical Center Drive- Building F (Class A, 175,840 sf, 100% pre-leased) is set to deliver in October 2020.





Market Stats

Inventory 13.2 M SF


Total Vacancy 14.3%







2010: $27.73

PSF

2019: $27.71

PSF

YTD 2020: $28.55

PSF

-0.35

-0.10

0.15

0.40

0.65

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Market Spotlight

2nd Quarter 2020North Rockville


Market Spotlight

2nd Quarter 2020North Rockville

Major Leases

Under Construction

Sales


9800 Medical Center Dr Building F N. Rockville 175,840 SF 0 SF 100% 10/2020

Alexandria Real Estate Equities

RegenXBio

9950 Medical Center Dr N. Rockville 84,264 SF 0 SF 100% 9/2020Alexandria Real Estate Equities

Autolus Therapeutics


No Sales This Quarter N. Rockville N/A N/A N/A N/A N/A N/A N/A

N. Rockville

N. Rockville

N. Rockville

9711 Washingtonian Blvd

Tenant Open Text

Size 50,375 SF

Type Renewal

9430 Key West Ave

Tenant United Urology

Size 7,237 SF

Type Renewal

15825 Shady Grove Rd

Tenant L3 Technologies

Size 8,112 SF

Type Renewal

9901 Belward Campus Dr

Tenant CirrusDx

Size 4,721 SF

Type New


HighlightsThe direct vacancy rate decreased to 11.8% in the second quarter 2020, down from 12.0% in the first quarter. Total vacancy decreased to 12.0% in the second quarter, down from 12.1% in the first quarter 2020. Class A total vacancy increased to 13.5% in the second quarter 2020, up from 14.1% in the first quarter 2020, while the asking rental rate average increased to $29.19 Full Service in first quarter, up $0.09 from the previous quarter.

Total net absorption was 11,327 square feet in the first quarter 2020, up from the -79,097 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the second quarter to 30,981 square feet, down from 37,479 square feet leased in the previous quarter. A contributing tenant was Wood IP LLC signing a 3,142-square-foot renewal at 555 Quince Orchard Road.





Market Stats

Inventory 9.0 M SF









2010: $22.20

PSF

2019: $25.72

PSF

YTD 2020: $25.79

PSF

-0.3

-0.2

-0.1

0.0

0.1

0.2

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Deliveries Under Construction Total Net Absorption0

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Vaca

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Market Spotlight

2nd Quarter 2020Gaithersburg-Germantown


HighlightsThe direct vacancy rate decreased to 13.7% in the second quarter 2020, down from 14.3% in the first quarter. Total vacancy decreased to 16.3% in the second quarter, down from 16.9% in the first quarter 2020. Class A total vacancy decreased to 19.8% in the second quarter, down from 20.7% in the first quarter 2020. The Class A asking rental rate average decreased to $32.40 Full Service in second quarter, down $0.17 from the previous quarter.

Total net absorption was 38,033 square feet in the second quarter 2020, down from 90,465 square feet absorbed in the first quarter 2020. A contributing tenant was Tuberous Sclerosis Alliance occupying their 5,448-square-foot space at 8701 Georgia Avenue.

Total leasing activity decreased in the second quarter 2020 to 25,277 square feet, down from 44,357 square feet leased in the previous quarter. A contributing tenant was Aegis signing a 7,571-square-foot lease at 8455 Colesville Road.


Total Absorption -40,328 SF / Year



Market Stats

Inventory 6.4 M SF









2010: $27.63

PSF

2019: $30.21

PSF

YTD 2020: $30.69

PSF

-0.5

-0.4

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Market Spotlight

2nd Quarter 2020Silver Spring


Market Spotlight

2nd Quarter 2020Silver Spring

Major Leases

Under Construction

Sales


No new construction Silver Spring

N/A N/A N/A N/A N/A N/A


No Sales This Quarter Silver Spring


8455 Colesville Rd

Tenant Aegis

Size 7,571 SF

Type New

8403 Colesville Rd

Tenant Discovery Learning Alliance

Size 3,079 SF

Type New

962 Wayne Ave

Tenant Taliored Solutions and Consulting, Inc.

Size 3,072 SF

Type New


HighlightsThe direct vacancy rate increased to 17.8% in the second quarter 2020, up from 17.7% in the first quarter 2020. The total vacancy rate increased to 18.7%, up from 18.6% in the previous quarter. Class A total vacancy increased to 20.4% in the second quarter 2020, up from 20.3% in the first quarter 2020. The asking rental rate average increased to $23.14 Full Service in the second quarter, up $0.01 from the previous quarter.

Total net absorption was -1,917 square feet in the second quarter, down from 15,652 square feet absorbed in the previous quarter.

Total leasing activity decreased in the first quarter to 1,000 square feet, down from 15,150 square feet leased in the previous quarter. Contributing to leasing activity was Griffin Firm, Pllc signing a 1,000-square-foot lease at 4041 Powder Mill Road.



Deliveries (SF) 0 SF / Year


Market Stats

Inventory 1.6 M SF









2010: $20.11

PSF

2019: $20.93

PSF

YTD 2020: $20.70

PSF

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Market Spotlight

2nd Quarter 2020Beltsville-Calverton


HighlightsThe direct vacancy rate increased to 15.6% in the second quarter 2020, up from 15.5% in the first quarter. The total vacancy rate increased to 15.9% in the second quarter, up from 15.7% in the previous quarter. Class A total vacancy increased to 15.7% in the second quarter, up from 15.6% in the previous quarter. The Class A asking rental rate average decreased to $25.10 Full Service in the second quarter, down $0.05 from the previous quarter.

Total net absorption was -15,566 square feet in the second quarter, down from 96,119 square feet absorbed in the first quarter 2020. Contributing to the negative net absorption was ASRC Federal Space & Defense vacating 13,621 square feet at 7515 Mission Drive.

Total leasing activity increased in the second quarter to 51,688 square feet, up from 15,706 square feet leased in the previous quarter. A contributing tenant was Cybrary signing a 27,819-square-foot lease at 4600 River Road.





Market Stats

Inventory 7.4 M SF









2010: $21.07

PSF

2019: $21.72

PSF

YTD 2020: $23.11

PSF

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

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Market Spotlight

2nd Quarter 2020Greenbelt-College Park


HighlightsThe direct vacancy rate decreased to 15.4% in the second quarter 2020, down from 15.5% in the first quarter 2020. Total vacancy decreased to 15.6% in the second quarter, down from 15.7% in the previous quarter. Class A total vacancy decreased to 15.8% in the second quarter, down from 16.0% in the previous quarter. The Class A asking rental rate average increased to $27.53 Full Service in the second quarter, up $0.39 from the previous quarter.

Total net absorption was 4,752 square feet in the second quarter, down from the 6,246 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the second quarter to 12,628 square feet, down from 27,457 square feet leased in the previous quarter. A contributing tenant was WMATA signing a 5,494-square-foot lease at 8100 Professional Place.





Market Stats

Inventory 3.4 M SF









2010: $20.11

PSF

2019: $22.77

PSF

YTD 2020: $23.05

PSF

-0.3

-0.2

-0.1

0.0

0.1

0.2

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Market Spotlight

2nd Quarter 2020Landover-Largo-Capitol Heights


HighlightsThe direct vacancy rate increased to 14.0% in the second quarter 2020, down from 13.4% in the first quarter. The total vacancy rate increased to 14.0%, up from 13.4%. Class A total vacancy increased to 15.1% in the second quarter, up from 14.7% in the first quarter 2020, while the average asking rental rate increased to $33.41 Full Service in second quarter, up $0.33 from the previous quarter.

Total net absorption was -6,386 square feet in the second quarter 2020, up slightly from the -7,624 square feet absorbed in the first quarter.

Total leasing activity increased in the second quarter 2020 to 9,508 square feet, up from 4,144 square feet leased in the previous quarter. A contributing tenant was Alexander & Cleaver signing a 2,524-square-foot lease at 6710 Oxon Hill Rd.





Market Stats

Inventory 1.1 M SF









2010: $23.21

PSF

2019: $27.58

PSF

YTD 2020: $26.69

PSF

-0.10

-0.05

0.00

0.05

0.10

0.15

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Market Spotlight

2nd Quarter 2020National Harbor-Oxon Hill


HighlightsThe direct vacancy rate increased to 10.7% in the second quarter 2020, up from 10.4% in the first quarter. Total vacancy increased to 11.1% in the second quarter, up from 10.8% in the first quarter 2020. Class A total vacancy increased to 11.1% in the second quarter, up from 10.6% in the first quarter 2020. Class A asking rental rate average increased to $26.75 Full Service in the second quarter, up $0.01 from the previous quarter.

Total net absorption was -29,207 square feet in the second quarter, up from the -128,889 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the first quarter to 96,564 square feet, down from 149,039 square feet leased in the previous quarter. A contributing tenant was Office Depot signing an 8,000-square-foot lease at 6304 Woodside Court.

There is currently one property under construction: 11100 Johns Hopkins Road (Class A, 263,000 SF, 100% pre-leased) is set to deliver October 2020.





Market Stats

Inventory 9.5 M SF









2010: $21.43

PSF

2019: $24.83

PSF

YTD 2020: $24.37

PSF

-0.30

-0.05

0.20

0.45

0.70

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Market Spotlight

2nd Quarter 2020Columbia South


HighlightsThe direct vacancy rate increased to 7.7% in the second quarter 2020, up from 7.6% in the first quarter 2020. The total vacancy rate increased to 8.0%, up from 7.9% in the previous quarter.

Total net absorption was -26,006 square feet in the second quarter 2020, down from the 184,013 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the second quarter 2020 to 146,400 square feet, down from 258,846 square feet leased in the previous quarter. A contributing tenant was Amazon signing a 139,200-square-foot lease at 7100 Holladay Tyler Road.

There are currently two buildings under construction: 5801 Columbia Park Rd (Class A, 206,000 sf, 100% pre-leased) is set to deliver in July 2020. 716 Ritchie Road (Class A, 160,000 sf, 0% pre-leased) is set to deliver in December 2020.

Three properties delivered in the second quarter 2020: 4600 Hargrove Dr (Class A, 192,718 square feet, 0% pre-leased) delivered in June 2020. 4450 Hargrove Dr (Class A, 101,194 square feet, 0% pre-leased) delivered in June 2020. 4500 Hargrove Dr (Class A, 106,543 square feet, 0% pre-leased) delivered in June 2020.




Leasing Activity 1.2M SF / Year

Market Stats

Inventory 21.7 M SF


Total Vacancy 8.0 %





YTD 2020 Deliveries 400,455 SF

Asking Rental Rates (Triple Net)

2010: $6.22

PSF

2019: $6.92

PSF

YTD 2020: $7.17 PSF

-0.5

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Market Spotlight

2nd Quarter 2020Prince George’s County Industrial


HighlightsThe direct vacancy rate increased to 6.9% in the second quarter 2020, up from 6.5% in the first quarter 2020. The total vacancy rate increased to 8.0%, up from 7.6% in the previous quarter.

Total net absorption was -196,395 square feet in the second quarter 2020, a decrease from the 596,892 square feet absorbed in the previous quarter. Contributing to the negative net absorption was Best Buy vacating their 220,800-square-foot space at 6680 Business Parkway.

Total leasing activity increased in the second quarter 2020 to 1,026,291 square feet, up from 406,235 square feet leased in the previous quarter. A contributing tenant included Simpson Strong-Tie signing a 87,600-square-foot lease at 7951 Oceano Avenue.

There are currently three buildings under construction. 1841 62nd St (80,100 sf, 0% pre-leased) is set to deliver April 2021. 1865 62nd St (66,690 sf, 0% pre-leased) is set to deliver April 2021. 6730 Dover Rd (66,600 sf, 0% pre-leased) is set to deliver December 2020.




Leasing Activity 4.3 M SF / Year

Market Stats

Inventory 52.7 M SF


Total Vacancy 8.0 %





YTD 2020 Deliveries 623,000 SF


2010: $4.77

PSF

2019: $6.07

PSF

YTD 2020: $6.19

PSF

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Market Spotlight

2nd Quarter 2020

Baltimore-Washington Corridor Industrial


HighlightsThe direct vacancy rate decreased to 10.9% in the second quarter 2020, down from 18.4% in the first quarter 2020. Total vacancy decreased to 10.9% in the second quarter 2020, down from 18.4% in the previous quarter.

Total net absorption was 327,826 square feet in the second quarter, up from 36,552 square feet absorbed in the previous quarter. Contributing to the positive net absorption was Frederick Health occupying all 387,008 square feet in their owner occupied property at 12 State Farm Drive.

Total leasing activity increased in the second quarter to 55,669 square feet, up from the 27,556 square feet leased in the previous quarter. A contributing tenant was United Health Group signing a 41,032-square-foot lease at 5275 Westview Drive.


Total Absorption -12,176 SF / Year


Leasing Activity 220.025 SF / Year

Market Stats

Inventory 4.4 M SF






Percent Pre-Leased 0%



2010: $24.21

PSF

2019: $21.97

PSF

YTD 2020: $22.29

PSF

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Market Spotlight

2nd Quarter 2020Frederick Office


HighlightsThe direct vacancy rate decreased to 6.3% in the second quarter 2020, down from 6.6% in the first quarter 2020. The total vacancy rate decreased to 7.4% in the second quarter, down from 7.7% in the first quarter 2020.

Total net absorption was 12,999 square feet in the second quarter, down from 37,977 square feet absorbed in the first quarter 2020.

Total leasing activity decreased in the second quarter 2020 to 14,655 square feet, down from the 47,280 square feet leased in the previous quarter. A contributing tenant was CIAN expanding in to an additional 12,460 square feet across 5330 and 5340 Spectrum Drive.





Market Stats

Inventory 3.8 M SF


Total Vacancy 7.4 %







2010: $10.81

PSF

2019: $12.02

PSF

YTD 2020: $11.14 PSF

-0.25

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Market Spotlight

2nd Quarter 2020Frederick Flex


Broker Biographies 2nd Quarter 2020

Experience 27 years experience

Professional Affiliations National Association of Office and Industrial Properties (Maryland and Washington, D.C.) Commercial Real Estate Brokerage Association

Education Denison University, Bachelors Degree

Paul (Rocky) Kern Managing Director & Senior Vice President Brokerage Services Group

About Paul (Rocky) Rocky joined Lincoln Property Company in 2017 and specializes in leasing and selling commercial properties in the Maryland suburbs of Washington, D.C. Over the last five years, Rocky has generated approximately $500 million in lease value with over 2 million SF leased. As Managing Director and Senior Vice President on Lincoln’s Maryland brokerage team, Rocky’s responsibilities include managing proposal and lease negotiations, prospecting, touring, presentations, reporting, and financial analysis. Rocky is consistently recognized as a Top Ten Broker and was named by the Commercial Real Estate Brokerage Association (CREBA) as a Multimillion Dollar Producer for the past 15 years. Prior to joining Lincoln Property Company, Rocky was a Managing Director and Team Leader at Cushman & Wakefield for 18 years.


Broker Biographies 2nd Quarter 2020

Experience 14 Years, including 8 years with Lincoln Property Company

Education Lehigh University Bachelor of Arts, International Business

Brent Prossner

Senior Vice President

Maryland Brokerage Services

About Brent

Brent joined Lincoln in 2011 as the Leasing Senior Vice President for the Baltimore and the Suburban Maryland Region. His focus will be leasing for both Landlords and Tenants, in office, industrial and flex product in Baltimore City, Baltimore, Hartford, Howard, Anne Arundel, Prince Georges County, and Montgomery Counties.

Prior to joining Lincoln, Brent was a Vice President for EDGE Commercial, LLC where he started at the inception to help transition, maintain, and grow Edge’s Landlord Representation. Prior to EDGE Commercial, he was an Associate at Scheer Partners where he assisted in the leasing of over 3.5 million square feet of office, industrial, and flex product throughout Prince George’s County.

Brent represents industrial users, technology firms, government contractors, medical practices, and non-profit agencies, as well as some of Maryland’s largest landlords. He and his partner, Kyle Bell have a current landlord portfolio over 3.2 million square feet stretching from North of Baltimore to the suburbs of DC with some of the representative landlord’s including Morgan Stanley, Invesco, JP Morgan, Meritage Properties, Ruppert Properties, Guardian Realty, etc.

A resident of Annapolis, outside of Real Estate he enjoys spending time on the Chesapeake Bay fishing and hunting.

Suburban Maryland Quarterly Market Report€¦ · Suburban Maryland. The total vacancy rate ticked...

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