Q2 2012 Suburban Maryland, Maryland Office Market Trends

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Q2 2012 Suburban Maryland, Maryland Office Market Trends

The Suburban Maryland general purpose, multi-tenant office space market had a second quarter 2012 vacancy rate of 14.9%, unchanged over the quarter and down 30 over 12 months. Double-digit vacancy has been a persistent problem here since 2008. The rate was up 20 basis points in July. The vacancy rate for Class A space was 13.5%, up 30 basis points for the quarter but down 30 basis points over 12 months, while vacancy for Class B/C space was 16.2%, down 20 basis points over the quarter and down 30 over 12 months. Colliers reports that “overall” vacancy “inched up” in the second quarter to 14.6%. Transwestern reports the Suburban Maryland office market has “stalled” at mid-year, with an “overall” vacancy rate of 14.3%, unchanged from one year earlier. Cassidy Turley reports the vacancy rate “unchanged” from the first quarter at 15.5%. According to this source, there were no deliveries in the second quarter and net absorption was negative at 15,000 square feet. For its part, Reis reports that net absorption was also negative, at 13,000 square feet, quite a change from first quarter’s positive 231,000. The 162,000-square-foot Milestone Business Park IV is the sole completion thus far in 2012.

Reis reports average asking and effective rents of $28.01 psf and $22.97 psf, both up 0.1% for the quarter, up 0.4% and 0.5% over 12 months. July data show no change. Class A asking rents are reported at $32.26 psf, up only slightly for the quarter, and Class B/C rents finished the quarter at $24.19 psf, up 0.5% over 12 months. No major improvements are forecast in 2012.

According to Cushman & Wakefield, the Suburban Maryland overall office vacancy rate is 17.1%, down 60 basis points over 12 months, and the direct asking rent is $26.99 psf, down 0.1%.