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News release


Jones Lang LaSalle Releases Third Quarter Industrial Outlook for Baltimore/Washington

Occupancy gains, improved market strength point to landlord-friendly market

WASHINGTON, Dec. 10, 2013 -- The greater Baltimore/Washington, DC industrial market showed great strength during the third quarter, with submarkets north of the Port of Baltimore and the northern Route 28/Dulles submarket of Washington, DC driving the bulk of tenant activity, according to the Q3 Industrial Outlook report from Jones Lang LaSalle.

Rates for warehouse and distribution space in the overall region have climbed 2.8 percent as improving market fundamentals continue to shift leverage to landlords. Cutbacks from the GSA and the life sciences industry have been offset by food-related users and e-commerce retailers, both of which are emerging as important tenants given the central regional distribution locations.

"We expect the economy will continue to improve, driving positive rental growth that will make this even more of a landlord-friendly market," said Mark Levy, Mid-Atlantic Industrial and Baltimore Market Leader for Jones Lang LaSalle. "Asking rental rates are expected to continue to grow as a flight to quality takes hold and tenants continue consolidating operations."

In the Baltimore region, industrial net absorption has already topped 1.5 million square feet for the year after falling short of one million square feet for the entire year last year, and new construction has broken ground. Several build-to-suit projects totaling nearly 2.2 million square feet were under construction in Baltimore in the third quarter, with additional projects in the pipeline.

While new construction in Baltimore was primarily north of the Port, the Baltimore/Washington Corridor is seeing the area's strongest rental rate growth, with asking rates rising four percent year-over-year as concessions fall. Industrial vacancy rates in Harford and Cecil Counties have also dropped, falling well below seven percent at the end of the quarter.

The greater Washington, D.C. industrial market showed similarly strong results. Availability of Class A space in the northern Route 28/Dulles corridor has fallen to just seven percent, and Southeast Fairfax, which had struggled through the economic recession, saw pricing rebound for warehouse/distribution space by 3.1 percent to $8.85 per square foot.
Year to date, Northern Virginia has absorbed 1.2 percent of its inventory, which has helped to bring overall vacancy for both warehouse and flex space down to 12.7 percent versus 13.7 percent in the third quarter of 2012. Northern Virginia, as well as Suburban Maryland, is seeing strong consumer fundamentals and renewed housing starts serve as growth drivers.

After a strong first half of the year, Suburban Maryland had a relatively flat third quarter, as reduced demand from the government and life sciences sectors had a greater impact here than it did in other areas in the region. But as the Baltimore market tightens and land inventory diminishes, the Suburban Maryland market and Prince George’s County should become increasingly attractive for new construction.

The industrial capital markets segment did slow in the third quarter, but investor interest in the region remains strong. A handful of significant transactions are pending. Significant transactions during the quarter included the sale of the 1.035 million square foot distribution center in Hampstead to a REIT for $44 million, or approximately $43 per square foot. Another REIT acquired a 540,000 square foot warehouse in Landover for $32.5 million, or $60 million per square foot. This activity in Suburban Maryland will help keep that investment market on par with 2012 activity.

For more news, videos and research resources, please visit and bookmark Jones Lang LaSalle’s Metro DC Media Center web page.  

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $46.7 billion of real estate assets under management. For further information, visit