suburban maryland quarterly market reportthe washington, dc metropolitan commercial real estate...

Quarterly Market Report

4th Quarter 2017

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, 3Q 2017:

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 .................................. 24

National Harbor-Oxon Hill .............................................. 25

Columbia South ................................................................. 26

Prince George’s County Industrial .................................27

Baltimore-Washington Corridor Industrial ................. 28

Frederick .............................................................................. 29

Frederick Flex .....................................................................30

Tysons Corner ..................................................................... 13

Paul Kern Senior Vice President

[email protected] | 202.513.6716

Brent Prossner Vice President


John Olson Senior Vice President


Jennifer Orr Associate


Maryland Leasing & Market Research

Overall Market Summary

Metropolitan D.C. Market Overview 4th Quarter 2017

The Washington, DC Metropolitan commercial real estate market is comprised of approximately 418.5 million square feet of rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland.

The total vacancy rate decreased to 15.0% in the fourth quarter, down from 15.3% at the end of the third quarter. The market recorded 665,123 square feet of net absorption in the fourth quarter, representing a 34% decrease from the 1,007,692 square feet absorbed in the third quarter.

Leasing activity totaled approximately 7.8 million square feet in transactions signed. The largest lease executed was a pre-lease by the GSA-TSA for 622,812 square feet at 6595 Springfield Center Drive, a proposed building in Springfield, Virginia.

Two buildings, totaling 419,000 square feet, broke ground; bringing the year-to-date 2017 construction pipeline total to 8,465,966 square feet

(59% pre-leased). Six buildings, totaling 1,630,231 square feet (75% leased), delivered this quarter including the 552,781-square-foot CEB Tower at 1201 Wilson Boulevard in Arlington, Virginia.

There were twenty-three sale transactions in the fourth quarter, totaling $2.14 billion. The largest sale was 1800 M Street, NW in Washington, DC trading for $421,000,000 ($725 psf).

Average asking rental rates decreased $0.06 to $36.81 per square foot, Full Service.

From November 2016 - November 2017 the DC Metropolitan area had a net increase of 48,900 jobs (50,300 private sector, -1,400 government) representing 1.5% growth, while the unemployment rate decreased to 3.6%.

DC VA MDMetro Area (YTD)

Direct Vacancy (4Q 2017) 10.0% 15.4% 14.2% 14.2%

Total Vacancy (4Q 2017) 10.8% 16.2% 14.9% 15.0%

Total Net Absorption(SF, YTD 2017) 1,026,926 1,079,887 423,098 2.5 M SF

Leasing Activity (SF, YTD 2017) 9,079,227 13,237,848 3,930,614

26.2 M SF

3 lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67001530 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.4600

Outlook

Metropolitan D.C. Market Overview 4th Quarter 2017


While market fundamentals strengthened in 2017, Metro Washington, DC is expected to remain a tenant’s market through 2018. Projects and trends to keep an eye on in 2018 include the upcoming deliveries of Midtown Center and Capitol Crossing and how they will impact their respective submarkets of the East End and Capitol Hill, respectively. Downtown Bethesda is heating up with proposed new developments and the future relocation of Marriott’s headquarters. While there’s a strong sense of optimism among defense contractors that the government’s emphasis on increased Department of Defense spending will be a boon for their industry in Northern Virginia, and the region in general.

The Washington, DC Metropolitan market had a strong finish to 2017. Vacancy decreased in DC and Suburban Maryland, while Northern Virginia remained flat. All three regions posted positive net absorption in the fourth quarter and the DC Metro absorbed approximately 2.5 million square feet in 2017. Sales volume totaled $7.33 billion in 2017 (a 12.1% increase from year-end 2016) and leasing activity totaled 26.2 million square feet (a 5.2% increase from year-end 2016). Regional employment experienced 1.5% of growth YOY ending November 2017, primarily driven by the private sector, specifically the Educational & Health Services industry. The DC Metro area’s unemployment rate decreased to 3.6%, out-pacing the 4.1% national average.

5lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67001530 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.4600

Market Summary

Suburban Maryland 4th Quarter 2017

The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 87.8 million square feet of rentable space in 888 office buildings of 25,000 square feet and greater.

The market recorded a decrease in net absorption in the fourth quarter with 31,359 square feet absorbed, down from the 145,756 square feet absorbed in the previous quarter.

Direct vacancy decreased to 14.2%, down from 15.0% and total vacancy decreased to 14.9% from 15.5%.

There were five sale transactions in Suburban Maryland this quarter. 4550 Montgomery Avenue in the Bethesda/Chevy Chase submarket, sold to AXA Equitable Financial Services for $132 million. 7101 Wisconsin Avenue in the Bethesda/Chevy Chase submarket, sold to the Donohoe Companies for $105 million. 7900 Harkins Road in the Lanham submarket, sold to Kawa Capital Management, LLC for $82 million. 8455 Colesville Road in the Silver Spring submarket sold to Goodstone, LLC for $38.7 million. A portfolio sale including 8201, 8401, and 8331 Corporate Drive in the Landover/Largo/Capitol Heights submarket to Morning Calm Management for $16.5 million.

The largest public sector lease executed this quarter was a new lease by the NIH for 89,708 square feet at 2115 East Jefferson Street in the North Bethesda submarket.

The largest private sector lease was a 52,000-square-foot pre-lease signed by University Research Company at 5404 Wisconsin Avenue in the Bethesda/Chevy Chase submarket.

The year-over-year unemployment rate in Suburban Maryland increased to 3.3% in November 2017, up from 3.1% in November 2016.

From November 2016 to November 2017 employment in Suburban Maryland had a net increase of 13,613 new jobs, representing 2.1% growth. Sectors with the greatest amount of job growth were the Education and Health Services with 4,000 jobs, Leisure and Hospitality with 1,700 and Professional and Business Services with 1,700 jobs. The Government increased by 1,100 jobs.

4Q 2017 3Q 2017 4Q 2016

Direct Vacancy 14.2% 15.0% 16.4%

Total Vacancy 14.9% 15.5% 17.0%

NetAbsorption (SF) 31,359 145,756 268,085

Leasing Activity (SF) 1.0 M 1.2 M 1.4 M

Under Construction (SF) 1.0 M 1.1 M 130,089

Deliveries (SF) 0 0 103,550

Rental Rates(PSF, FS) $26.81 $26.68 $26.36

U/C Percent Pre-Leased 43% 43% 68%


Deliveries vs. Under Construction

Deliveries | Net Absorption | Vacancy Rate

Absorption & Gross LeasingThe Suburban Maryland market recorded 31,359 square feet of net absorption in the fourth quarter, a decrease from the 145,756 square feet absorbed in the third quarter; totaling 423,098 square feet absorbed YTD 2017.

Eight of the Top Ten leases signed this quarter were in Montgomery County and ranged between 89,708 and 22,526 square feet.

Eight of the leases in the Top Ten this quarter were private sector transactions, while two were public sector.

In the fourth quarter, total leasing activity totaled 1,024,082 square feet, a 21% decrease from the 1,288,196 square feet leased in the third quarter.

The total average asking rental rate was $26.81 Full Service, up $0.13 from the previous quarter. The Class A asking rental rate was $28.68 Full Service in the fourth quarter, a $0.18 increase from the $28.50 asked in the third quarter.

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14.8%

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Vacancy Rate

The direct vacancy rate decreased to 14.2%, down from 15.0% in the fourth quarter, totaling approximately 12.4 million square feet. Total vacancy decreased to 14.9%, down from 15.5%, totaling approximately 13.0 million square feet.

The sublease vacancy rate decreased to 0.7% at the end of the fourth quarter, representing 581,547 square feet of vacant space.

The Class A vacancy rate decreased to 16.1% from 16.5% in the fourth quarter, totaling approximately 7.2 million square feet. The Class B vacancy rate decreased to 14.1% from 14.8% in the fourth quarter, totaling approximately 5.2 million square feet.


Construction


At the end of the fourth quarter 2017, there were five buildings under construction. 1000 Spring Street (Class A, 121,724 sf, 100% pre-leased) is set to deliver in May 2018. 4000 Garden City Drive (Class A, 176,000 sf, 100% pre-leased) is set to deliver in November 2018. 5801 University Research Court (Class A, 75,000 sf, 0% pre-leased) is set to deliver in December 2018. 4747 Bethesda Avenue (Class A, 300,000 sf, 49% pre-leased) and 7272 Wisconsin Avenue (Class A, 357,000 sf, 0% pre-leased) are set to deliver in late 2019.

Expect the private sector to continue to drive leasing activity and job growth, while the GSA (public sector) remains limited to short-term renewals and space consolidations.

Vacancy rates are expected to decline as a result of the private sector gaining confidence in an improving economy and is actively looking for longer lease terms.

Renovations to existing commodity buildings in mass transit oriented locations, should encourage tenant moves; as tenants seek more efficient, amenity rich, easily accessible space.

To be competitive landlords will continue to offer generous concession packages (TI Allowance and free rent).

Outlook



Top Ten LeasesIn the fourth quarter 2017, eight of the Top Ten leases were in Montgomery County and two were in Prince George’s County, with six of the top leas-es being new transactions. Eight of the leases in the Top Ten this quarter were private sector trans-actions, while two were public sector.

The largest lease executed in Montgomery County was a renewal for 89,708 square feet by the NIH at 2115 East Jefferson Street in the North Bethesda submarket.

There were four lease renewals this quarter in ad-dition to the NIH, which included Virginia College, LLC signing for 40,000 square feet, Van-Q renew-

ing 26,522 square feet, and the Technology Service Corporation signing for 22,526 square feet.

In Prince George’s County, the U.S. FEMA signed the largest lease of the quarter, by taking 54,000 square feet at 6511 America Boulevard in the Col-lege Park submarket.

The Suburban Maryland market totaled 1,024,082 square feet of leasing activity in the fourth quarter 2017, a decrease from the 1,288,196 square feet leased in the third quarter. This represents a 21% decrease in leasing activity. The market has totaled 3.9 million square feet leased YTD 2017.

2115 E. Jefferson St.

Tenant GSA-NIH

Size 89,708 SF

Type Renewal

2099 Gaither Rd.

Tenant Oil Price Information Service (OPIS)

Size 36,599 SF

Type New

6511 America Blvd.

Tenant U.S. FEMA

Size 54,000 SF

Type New

5425 Wisconsin Ave.

Tenant WTOP Radio

Size 30,612 SF

Type New

5404 Wisconsin Ave.

Tenant University Research Co.

Size 52,000 SF

Type New

2600 Tower Oaks Blvd.

Tenant Vari-Q

Size 26,522 SF

Type Renewal

4600 Powder Mill Rd.

Tenant Virginia College, LLC

Size 40,000 SF

Type Renewal

7501 Wisconsin Ave.

Tenant Bank of America - Merrill Lynch

Size 26,000 SF

Type New

962 Wayne Ave.

Tenant Technology Service Corporation

Size 22,526 SF

Type Renewal

6120 Executive Blvd.

Tenant APS

Size 40,000 SF

Type New


Suburban Maryland Sales

8455 Colesville Rd.

Submarket Silver Spring

Date Sold December 2017

Price $38,700,000 ($179 PSF)

Buyer Goodstone, LLC

Seller BlackRock

Class A

Occupancy 63.5%


8201, 8401 & 8331 Corporate Dr.

Submarket Landover/Largo/Capitol Heights

Date Sold December 2017

Price $16,500,000($54.36 PSF)

Buyer Morning Calm Management

Seller Redus Properties

Class B

Occupancy 66%

Comments 2 buildings and a plot of land

7900 Harkins Rd.

Submarket Lanham

Date Sold October 2017

Price $82,000,000 ($265 PSF)

Buyer Kawa Capital Management, LLC

Seller Cohen Equities

Class A

Occupancy 100%

4550 Montgomery Ave.

Submarket Bethesda/Chevy Chase


Price $132,810,000 ($381 PSF)

Buyer AXA Equitable Financial Services

Seller Rockpoint Group

Class A

Occupancy 97.0%

7101 Wisconsin Ave.

Submarket Bethesda/Chevy Chase


Price $105,725,000($457 PSF)

Buyer The Donohoe Companies

Seller Brandywine

Class A

Occupancy 97.2%


HighlightsThe direct vacancy rate decreased to 8.4% in the fourth quarter 2017, down from 9.3% in the third quarter. Total vacancy decreased in the fourth quarter to 10.7%, down from 10.8% in the third quarter. Class A total vacancy decreased to 8.1% in the fourth quarter, down from 8.2% in the third quarter, while the asking rental rate average decreased to $39.50 Full Service in the fourth quarter, down $0.40 from the previous quarter.

Total net absorption increased to -20,588 square feet in the fourth quarter, up from -56,488 square feet absorbed in the third quarter.

Total leasing activity decreased in the fourth quarter to 368,935 square feet, down from 872,992 square feet leased in the previous quarter. Contributing tenants included University Research Company signing a 52,000-square-foot lease at 5404 Wisconsin Avenue and WTOP Radio signing a 30,612-square-foot lease at 5425 Wisconsin Avenue.

There are currently two buildings under construction in the Bethesda/Chevy Chase submarket; 7272 Wisconsin Avenue, a 357,700-square-foot, Class A office building and 4747 Bethesda Avenue, a 300,000-square-foot, Class A Office building.

10 Year Averages (2007 - 2016)

Total Absorption 52,012 SF / Year

Deliveries (SF) 58,550 SF / Year

Leasing Activity 893,194 SF / Year

Market Stats

Inventory 10.8 M SF

Direct Vacancy 8.4 %

Total Vacancy 10.7 %

YTD 2017 Absorption -235,884 SF

Under Construction 657,700 SF

Percent Pre-Leased 0%

YTD 2017 Deliveries 0 SF

Asking Rental Rates (Full Service)

2007: $35.57

PSF

2016: $37.43

PSF

YTD 2017: $36.73

PSF

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Market Spotlight

4th Quarter 2017Bethesda-Chevy Chase


Market Spotlight

4th Quarter 2017Bethesda-Chevy Chase

Major Leases

Under Construction

Sales

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

7272 Wisconsin AveBethesda/Chevy Chase

357,000 SF 357,000 SF 0% N/A Carr Properties N/A

4747 Bethesda AveBethesda/Chevy Chase

300,000 SF 300,000 SF 49% N/A JBG Smith N/A

Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate

No sales this quarter.Bethesda/Chevy Chase

N/A N/A N/A N/A N/A N/a N/A

5404 Wisconsin Ave.

Tenant University Research Co.

Size 52,000 SF

Type New

5425 Wisconsin Ave.

Tenant WTOP Radio

Size 30,612 SF

Type New

7501 Wisconsin Ave.

Tenant Bank of America - Merrill Lynch

Size 26,000 SF

Type New

4350 East West Hwy.

Tenant Pharmerit

Size 17,979 SF

Type New


HighlightsThe direct vacancy rate decreased to 20.5% in the fourth quarter 2017, down from 20.8% in the third quarter. Total vacancy decreased to 20.7% in the fourth quarter, down from 21.0% in the previous quarter. Class A total vacancy decreased to 21.9% in the fourth quarter, down from 22.3% in the third quarter, while the asking rental rate average decreased to $29.37 Full Service in fourth quarter, down $0.02 from the previous quarter.

Total net absorption increased to 6,354 square feet in the fourth quarter, up from the 1,834 square feet absorbed in the third quarter.

Total leasing activity increased in the fourth quarter to 144,578 square feet, up from 45,790 square feet leased in the previous quarter. Contributing tenants included the NIH renewing a 89,708-square-foot lease at 2115 East Jefferson Street and APS signed a 40,000-square-foot lease at 6120 Executive Boulevard.


Total Absorption -43,739 SF / Year



Market Stats

Inventory 10.7 M SF



YTD 2017 Absorption 96,163 SF

Under Construction 0 SF




2007: $30.59

PSF

2016: $28.93

PSF

YTD 2017: $28.59

PSF

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Market Spotlight

4th Quarter 2017North Bethesda-Potomac


Market Spotlight

4th Quarter 2017North Bethesda-Potomac

Major Leases

Under Construction

Sales


No new construction during this quarter.

North Bethesda

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


No sales this quarter. North Bethesda

N/A N/A N/A N/A N/A N/a N/A

2115 E. Jefferson St.

Tenant GSA - NIH

Size 89,708 SF

Type Renewal

6120 Executive Blvd.

Tenant APS

Size 40,000 SF

Type New


HighlightsThe direct vacancy rate increased to 11.4% in the fourth quarter 2017, up from 11.3% in the third quarter. Total vacancy increased to 11.8% in the fourth quarter, up from 11.6% in the previous quarter. Class A total vacancy increased to 20.0% in the fourth quarter, up from 18.9% in the third quarter, while the asking rental rate average decreased to $32.61 Full Service in fourth quarter, down $0.02 from the previous quarter.

Total net absorption decreased to -21,898 square feet in the fourth quarter, down from 80,457 square feet absorbed in the third quarter.

Total leasing activity decreased in the fourth quarter to 69,086 square feet, down from 98,300 square feet leased in the previous quarter. Contributing tenants included Fitzgerald Management Group renewing a 12,895-square-foot lease at 600 Jefferson Plaza.





Market Stats

Inventory 9.8 M SF








2007: $32.51

PSF

2016: $30.65

PSF

YTD 2017: $31.06

PSF

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Market Spotlight

4th Quarter 2017Rockville


Market Spotlight

4th Quarter 2017Rockville

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

2600 Tower Oaks Blvd.

Tenant Vari-Q

Size 22,298 SF

Type Renewal

600 Jefferson Plz.

Tenant Fitzgerald Management Group

Size 12,895 SF

Type Renewal

111 Rockville Pke.

Tenant RBC Capital Markets

Size 11,963 SF

Type Renewal


HighlightsThe direct vacancy rate decreased to 16.6% in the fourth quarter 2017, down from 17.7% in the third quarter. Total vacancy decreased to 17.6% in the fourth quarter, down from 18.9% in the previous quarter. Class A total vacancy decreased to 18.3% in the fourth quarter, down from 19.2% in the third quarter, while the asking rental rate average decreased to $28.19 Full Service in fourth quarter, down $0.02 from the previous quarter.

Total net absorption increased to 105,429 square feet in the fourth quarter, up from the -5,551 square feet absorbed in the third quarter. Contributing to the positive absorption included Oil Price Information Service signing a 36,599-square-foot lease at 2099 Gaither Road and Skanksa renewing a 14,918-square-foot lease at 700 King Farm Boulevard.

Total leasing activity increased in the fourth quarter to 145,481 square feet, up from 95,754 square feet leased in the previous quarter. Contributing tenants included OPIS signing a 36,599-square-foot lease at 2099 Gaither Road.





Market Stats

Inventory 13.2 M SF








2007: $27.67

PSF

2016: $24.99

PSF

YTD 2017: $26.02

PSF

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Market Spotlight

4th Quarter 2017North Rockville


Market Spotlight

4th Quarter 2017North Rockville

Major Leases

Under Construction

Sales


No new construction during the quarter N. Rockville N/A N/A N/A N/A N/A N/A


No sales this quarter N. Rockville N/A N/A N/A N/A N/A N/A N/A

2099 Gaither Rd.

Tenant Oil Price Information Service

Size 36,599 SF

Type New

700 King Farm Blvd.

Tenant Skanska

Size 14,918 SF

Type Renewal


HighlightsThe direct vacancy rate decreased to 9.7% in the fourth quarter 2017, down from 10.5% in the third quarter. Total vacancy decreased to 10.0% in the fourth quarter, down from 10.5% in the third quarter. Class A total vacancy increased to 10.8% in the fourth quarter, up from 10.7% in the third quarter, while the asking rental rate average decreased to $24.45 Full Service in fourth quarter, down $0.02 from the previous quarter.

Total net absorption decreased to -50,116 square feet in the fourth quarter, down from 22,221 square feet absorbed in the third quarter.

Total leasing activity increased in the fourth quarter to 46,333 square feet, up from 12,140 square feet leased in the previous quarter. Contributing tenants included Antezana & Antezana signing a 2,366-square-foot lease at 18310 Montgomery Village Avenue and Homefix signing a 2,479-square-foot lease at 350 Christopher Avenue.





Market Stats

Inventory 9.0 M SF








2007: $22.32

PSF

2016: $23.94

PSF

YTD 2017: $23.63

PSF

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Market Spotlight

4th Quarter 2017Gaithersburg-Germantown


HighlightsThe direct vacancy rate increased to 10.4% in the fourth quarter 2017, up from 10.1% in the third quarter. Total vacancy increased to 11.2% in the fourth quarter, up from 10.8% in the third quarter. Class A total vacancy increased to 12.0% in the fourth quarter, up from 11.6% in the previous quarter. The Class A asking rental rate average increased to $30.47 Full Service in fourth quarter, up $0.27 from the previous quarter.

Total net absorption decreased to -22,508 square feet in the fourth quarter, down from -8,960 square feet absorbed in the third quarter.

Total leasing activity increased in the fourth quarter to 94,206 square feet, up from 55,529 square feet leased in the previous quarter. Contributing tenants included Technology Service Corporation renewing a 22,526-square-foot lease at 962 Wayne Avenue and Torti Gallas Partners renewing a 22,363-square-foot lease at 1300 Spring Street.

There is currently one building under construction. 1000 Spring Street is a Class A, 121,724-square-foot building, set to deliver in May 2018.





Market Stats

Inventory 6.3 M SF





Percent Pre-Leased 100 %



2007: $28.66

PSF

2016: $28.69

PSF

YTD 2017: $29.33

PSF

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Market Spotlight

4th Quarter 2017Silver Spring


Market Spotlight

4th Quarter 2017Silver Spring

Major Leases

Under Construction

Sales


1000 Spring St. Silver Spring 121,724 SF 0 SF 100% 5/2018United Therapeutics Corporation

United Therapeutics Corporation


8455 Colesville Rd. Silver Spring

12/2017$38,700,000($179 PSF)

Goodstone, LLC

BlackRock A 63.5% N/A

962 Wayne Ave.

Tenant Technology Service Corporation

Size 22,256 SF

Type Renewal

1300 Spring St.

Tenant Torti Gallas Partners

Size 22,363 SF

Type Renewal


HighlightsThe direct vacancy rate decreased to 32.2% in the fourth quarter 2017, down from 36.5% in the third quarter. Total vacancy decreased to 32.2% in the fourth quarter, down from 36.5% in the third quarter. Class A total vacancy decreased to 50.7% in the fourth quarter, down from 57.8% in the third quarter, while the asking rental rate average increased to $21.85 Full Service in fourth quarter, up $0.04 from the previous quarter.

Total net absorption increased to 85,097 square feet in the fourth quarter, up from 2,207 square feet absorbed in the third quarter.

Total leasing activity increased in the fourth quarter to 47,977 square feet, up from 13,398 square feet leased in the previous quarter. Contributing tenants included Virginia College, LLC renewing a 40,000-square-foot lease at 4600 Powder Mill Road.



Deliveries (SF) 0 SF / Year


Market Stats

Inventory 1.6 M SF








2007: $20.99

PSF

2016: $20.77

PSF

YTD 2017: $21.43

PSF

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Market Spotlight

4th Quarter 2017Beltsville-Calverton


HighlightsThe direct vacancy rate decreased to 19.2% in the fourth quarter, down from 20.3% in the third quarter. The total vacancy rate decreased to 19.3% in the fourth quarter, down from 20.5% in the third quarter. Class A total vacancy decreased to 17.7% in the fourth quarter, down from 18.8% in the previous quarter. The Class A asking rental rate average decreased to $23.55 Full Service in fourth quarter, down $0.01 from the previous quarter.

Total net absorption decreased to 47,849 square feet in the fourth quarter, down from 81,138 square feet absorbed in the third quarter.

Total leasing activity increased in the fourth quarter to 101,485 square feet, up from 85,389 square feet leased in the previous quarter. Contributing tenants included FEMA signing a 54,000-square-foot lease at 6511 America Boulevard and The National Center for Children signing a 12,616-square-foot lease at 6404 Ivy Lane.

5801 University Research Court (Class A, 75,000 sf, 0% pre-leased) is currently under construction and set to deliver in December 2018.





Market Stats

Inventory 7.3 M SF








2007: $22.97

PSF

2016: $21.15

PSF

YTD 2017: $22.24

PSF

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Market Spotlight

4th Quarter 2017Greenbelt-College Park


Market Spotlight

4th Quarter 2017Greenbelt-College Park

Major Leases

Under Construction

Sales


5801 University Research Court

Greenbelt/College Park

75,000 SF 75,000 SF 0%December 2018

Corporate Office Properties Trust

N/A


No sales this quarterGreenbelt/College Park

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

6511 America Blvd.

Tenant U.S. FEMA

Size 54,000 SF

Type New

6404 Ivy Ln.

Tenant The National Center for Children

Size 12,616 SF

Type New


HighlightsThe direct vacancy rate decreased to 19.1% in the fourth quarter 2017, down from 21.1% in the third quarter. Total vacancy decreased to 19.3% in the fourth quarter, down from 21.3% in the third quarter. Class A total vacancy increased to 22.6% in the fourth quarter, up from 22.2% in the previous quarter. The Class A asking rental rate average increased to $25.21 Full Service in the fourth quarter, up $0.26from the previous quarter.


Total leasing activity decreased in the fourth quarter to 3,496 square feet, down from 7,112 square feet leased in the previous quarter.





Market Stats

Inventory 2.8 M SF








2007: $23.90

PSF

2016: $21.71

PSF

YTD 2017: $22.65

PSF

-0.3

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Market Spotlight

4th Quarter 2017Landover-Largo-Capitol Heights


HighlightsBoth the direct and total vacancy decreased to 13.5% in the fourth quarter 2017, down from 13.8% in the third quarter. Class A total vacancy decreased to 11.8% in the fourth quarter, down from 12.1% in the third quarter, while the asking rental rate average increased to $30.06 Full Service in fourth quarter, up $2.64 from the previous quarter.


Total leasing activity increased in the fourth quarter to 2,505 square feet, up from 1,792 square feet leased in the previous quarter.





Market Stats

Inventory 1.0 M SF








2007: $29.39

PSF

2016: $25.12

PSF

YTD 2017: $29.21

PSF

-0.05

0.05

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Market Spotlight

4th Quarter 2017National Harbor-Oxon Hill


HighlightsThe direct vacancy rate increased to 7.7% in the fourth quarter 2017, up from 5.8% in the third quarter. Total vacancy increased to 7.9% in the fourth quarter, up from 6.0% in the third quarter. Class A total vacancy increased to 6.3% in the fourth quarter,up from 4.7% in the third quarter. Class A asking rental rate average increased to $27.08 Full Service in the fourth quarter, up $0.02 from the previous quarter.


Total leasing activity increased in the fourth quarter to 177,557 square feet, up from 166,070 square feet leased in the previous quarter.

8110 Maple Lawn Boulevard, a 104,412-square-foot Class A building, delivered 30% leased in December 2017.





Market Stats

Inventory 9.2 M SF


Total Vacancy 7.9 %




YTD 2017 Deliveries 104,412 SF


2007: $23.79

PSF

2016: $24.75

PSF

YTD 2017: $25.12

PSF

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Market Spotlight

4th Quarter 2017Columbia South


HighlightsThe direct vacancy rate increased to 11.4% in the fourth quarter 2017, up from 11.2% in the third quarter. Total vacancy decreased to 12.4% in the fourth quarter, down from 12.8% in the previous quarter.

Total net absorption significantly decreased to 52,074 square feet in the fourth quarter, down from 288,610 square feet absorbed in the third quarter.

Total leasing activity increased in the fourth quarter to 321,766 square feet, up from 33,055 square feet leased in the previous quarter. Contributing tenants included Upper Crust Bakery signing a 129,988-square-foot lease at 7100 Holladay Tyler Road in the Bowie industrial submarket.

There are currently two buildings under construction in Prince George’s County. 9300 Alaking Court is a Class A building containing 46,168 square feet and is set to deliver in January 2018. 7501 Andrews Federal Campus Drive is a 167,033-square-foot, Class A building set to deliver in September 2018.

6240 Columbia Park Road, a Class A building containing 95,000 square feet delivered in November 2017. The building is currently vacant.




Leasing Activity 1.0 SF / Year

Market Stats

Inventory 21.4 M SF







Asking Rental Rates (Triple Net)

2007: $6.64

PSF

2016: $7.09

PSF

YTD 2017: $6.54

PSF

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Market Spotlight

4th Quarter 2017Prince George’s County Industrial


HighlightsThe direct vacancy rate increased to 10.1% in the fourth quarter 2017, up from 9.5% in the third quarter. Total vacancy increased to 10.5% in the fourth quarter, up from 9.9% in the third quarter.

Total net absorption increased to 489,076 square feet in the fourth quarter, up from the 42,883 square feet absorbed in the third quarter.

Total leasing activity decreased in the fourth quarter to 449,942 square feet, down from 622,597 square feet leased in the previous quarter. Contributing tenants included U.S. Recycle Group signing a 48,013-square-foot lease at 8205 Patuxent Range Road in the Route 1 Industrial submarket.

There are currently six building under construction. 5350 Holabird Avenue (140,400 sf, 0% pre-leased) is set to deliver in January 2018. 8260 Lokus Road (35,000 sf, 0% pre-leased) is set to deliver in April 2018. 7149 Ridge Road (220,000 sf, 100% pre-leased) is set to deliver in June 2018. 7171 Dorsey Run Road (93,500 sf, 0% pre-leased) is set to deliver in June 2018. 7200 Dorsey Run Road (126,000 sf, 0% pre-leased) is set to deliver in June 2018. 7600 Perryman Court (500,400 sf, 0% pre-leased) is set to deliver in June 2018.

One building delivered in the fourth quarter 2017. 5300 Holabird Avenue (413,100 sf, 0% pre-leased) is set to deliver in December 2017.




Leasing Activity 4.0 M SF / Year

Market Stats

Inventory 50.3 M SF



YTD 2017 Absorption 1,735,820 SF

Under Construction 1,115,300 SF




2007: $5.02

PSF

2016: $5.51 PSF

YTD 2017: $5.15PSF

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Market Spotlight

4th Quarter 2017

Baltimore-Washington Corridor Industrial


HighlightsThe direct vacancy rate decreased to 11.1% in the fourth quarter 2017, down from 11.5% in the third quarter. Total vacancy decreased to 11.9% in the fourth quarter, down from 12.4% in the third quarter.


Total leasing activity decreased in the fourth quarter to 23,052 square feet, down from 44,978 square feet leased in the previous quarter. Contributing tenants included Center for Advanced Orthopedics signing a 5,247-square-foot lease at 165 Thomas Jefferson Drive.





Market Stats

Inventory 4.3 M SF








2007: $16.71

PSF

2016: $18.31

PSF

YTD 2017: $20.08

PSF

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Market Spotlight

4th Quarter 2017Frederick Office


HighlightsThe direct vacancy rate decreased to 8.9% in the fourth quarter 2017, down from 9.1% in the third quarter. Total vacancy decreased to 9.0% in the fourth quarter, down from 9.5% in the third quarter.

Total net absorption increased to 15,373 square feet in the fourth quarter, up from -26,865 square feet absorbed in the third quarter.

Total leasing activity decreased in the fourth quarter to 27,120 square feet, down from 85,704 square feet leased in the previous quarter. Contributing tenants included Sierra Construction signing a 3,084-square-foot lease at 5340 Spectrum Drive.





Market Stats

Inventory 3.8 M SF


Total Vacancy 9.0 %

YTD 2017 Absorption 60,132SF





2007: $14.50

PSF

2016: $13.11

PSF

YTD 2017: $10.38

PSF

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Market Spotlight

4th Quarter 2017Frederick Flex

suburban maryland quarterly market reportthe washington, dc metropolitan commercial real estate...

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