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News release

WASHINGTON, DC

Lab Space Shortage Could Spur New Investments in Suburban Maryland

500,000 SF of pent-up demand could push vacancy rate for prime lab space below 3 percent


WASHINGTON, SEPTEMBER 14, 2015 - Healthy demand in the life sciences sector has helped drive the total vacancy for Suburban Maryland lab space into the single digits, leading some landlords to raise rental rates by as much as 20 percent, according to research analysis from JLL.

After decades of stagnation, where space might sit vacant for as long as two years, some Suburban Maryland landlords have started to curb the large tenant improvement allowances and rent abatement offers that had been commonplace in the market.

“Organizations looking for prime lab and R&D space in Suburban Maryland will soon experience rising rental rates and fewer concessions,” says Pete Briskman, Managing Director in JLL’s Mid-Atlantic region. “With an eye toward securitization, the REITs that own the market’s most desirable inventory will have the ability to pick and choose among the highest credit tenants.”

The market has nearly 500,000 square feet of pent up demand, according to Briskman, who says that some colleagues are predicting the vacancy rate for the market’s prime lab space will dip below three percent before the end of the year.

In August, CoStar reported that BioMed Realty Trust had signed MacroGenics to a full-building headquarters lease at its 122,600-square-foot asset at 9704 Medical Center Drive in Rockville, MD. The clinical-stage biopharmaceutical company will be relocating from 9640 Medical Center Drive. This could be the first of several significant lease deals in the market, according to JLL.

Despite these strong market conditions, Briskman still does not believe there will be any speculative development in the corridor.

“Pre-leased buildings will drive future development locally,” he said. “Spec development dollars should continue to be earmarked towards more mature markets such as Massachusetts, the Research Triangle and San Diego, which have historically provided higher returns.”

For more news, videos and research resources on JLL, please visit the firm’s U.S. media center Web page: http://bit.ly/18P2tkv.

About JLL
JLL (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. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $56.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.