Suburban Maryland’s 35.9-million-square-foot warehouse/distribution space market posted a second quarter vacancy rate of 11.6%, down 10 basis points over the quarter and down 30 over 12 months. July data show an increase of 10 basis points. For the Flex/R&D sector, Reis reports second quarter vacancy at 12.2%, down 30 basis points over the quarter and over 12 months as well. Construction has been light for both property types. No warehouse/distribution space has completed here so far in 2012. Reis does report that 93,788 square feet of Flex/R&D space completed in July at Steeplechase 95 Building A4. The Qiagen Headquarters Flex/R&D facility expansion, at 117,000 square feet, remains under construction for completion in 2013.
Rental growth is finally beginning to pick up after some poor performances in 2011. Reis reports second quarter 2012 asking and effective rents for warehouse/distribution space at $7.53 psf and $6.91 psf, up 0.4% and 0.7% for the quarter, but up more substantially over 12 months, at 1.2% and 1.5%. For Flex/R&D space, Reis reports average asking and effective rents of $11.12 psf and $10.05 psf, up 0.2% and 0.6% for the quarter, and up 1.2% and 1.4%, respectively, over 12 months. Rent growth has not been strong, but Reis had revised its projections upward. Warehouse/distribution rents are forecast to finish 2012 up 2.7% and 2.5%, asking and effective, while Flex/R&D rents will finish the year with respective gains of 2.7% and 3.0%.
Cushman & Wakefield reports an overall vacancy rate of 12.2% for industrial space in Suburban Maryland. The direct weighted average rent was $7.33 psf for warehouse/distribution. This source reports an office/service rent of $10.00 psf. “With leasing activity volumes down from last year and limited number of large tenant occupancies expected in the second half of 2012, vacancy rates are expected to slightly uptick by year-end 2012,” this source reports. “Direct asking rental rates, at $8.71 psf, are expected to remain constant in the second half of 2012.”