Net absorption in the 141-million-square-foot Baltimore warehouse/ distribution space market was near 200,000 square feet for the second consecutive quarter in the second quarter of 2012 according to Reis. The vacancy rate fell 20 basis points to 11.7%, which was up 10 basis points from the second quarter of 2011. Net absorption surged to 714,000 square feet in July alone, and Reis predicts a 2012 total of 1.74 million square feet. The firm, however, expects 1.4 million square feet of new space will be added, including the 692,000-square-foot Mid Atlantic Distribution Center building B in Perryman, which completed construction in August, and the 400,000-square-foot Kohl’s distribution center in Edgewood. Year-end 2012 vacancy is forecast at 11.7%
The warehouse/distribution average asking rent and average effective rent each rose 0.6% during the second quarter, to $5.05 psf and $4.69 psf. A gain of 0.2% by both measures followed in July, and Reis predicts gains of 0.6% asking and 1.3% effective for all of 2012.
The 33-million-square-foot Flex/R&D space market was weak during the second quarter, as 60,000 square feet of negative net absorption drove the vacancy rate up 20 basis points to 16.3%. The average asking slipped a penny to $8.92 psf, while the average effective rent was unchanged at $8.05 psf. July saw the vacancy and effective rent changes reversed, and Reis predicts a 16.0% vacancy rate for year-end 2012. Rents are expected to rise about 1.0% over the year. While no Flex/R&D properties were under construction as of the date of this report, Reis predicts extensive new supply starting in 2014. Demand is forecast to pick up that year as well, as rent gains move up to the 3.0% to 3.5% per year range.
Cushman & Wakefield reports a vacancy rate of 9.6%, down 110 basis points from a year earlier, and a direct weighted average net rental rate of $4.41 psf, down 0.8%, for the Baltimore market.