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News release

BALTIMORE, MD

JLL: Office Leasing in Baltimore Slow in Q3; Robust Q4 Anticipated

Tenants in Baltimore market seeking more than 2M SF of office space


BALTIMORE, OCTOBER 5, 2015 – Third quarter leasing volume in the Greater Baltimore office market was down 33.9 percent compared to last year’s numbers, but tenants in the market are seeking a robust 2.1 million square feet of space, which should drive strong leasing activity and additional construction starts in the coming quarters, according to research analysis from JLL.

The vacancy rate in Baltimore’s Central Business District (CBD) finished the quarter at 17.6 percent, aided in part by the ongoing conversion of more than one million square feet of obsolete office buildings into apartments. These redevelopments have helped neutralize the CBD’s cumulative negative net absorption of 1.7 million square feet since 2007.

Class A inventory in the CBD has fared better, finishing the quarter with 11.8 percent vacancy. Class A product along Pratt Street in Baltimore, where vacancy has dropped to 6.3 percent, is seeing the bulk of the market’s active capital markets activity.

The biggest growth in Baltimore’s office market is in Howard County, where vacancy rates have dipped below 10 percent and rental rates have increased. Columbia Town Center rental rates jumped 11.2 percent year-over-year in the third quarter.

“As more and more tenants place a premium on buildings with walkable amenities, leasing concessions in Howard County have dropped considerably,” said Mark Levy, Managing Director, Greater Baltimore Market Leader, JLL. “Columbia’s strong pipeline of leasing requirements combined with its limited available space should lead to new developments breaking ground in the near term.”

Conversely, Harford County’s office market saw its third quarter vacancy rate reach nearly 35 percent. The BWI Corridor remained quiet, as both developers and contractors cautiously watch the political environment in Washington, DC.

Baltimore’s tightest market is the I-83 North Corridor, where companies with lease expirations as far out as 2018 are evaluating limited options. No speculative development is anticipated, but second generation space from the relocated headquarters of engineering firm Johnson Mirmiran & Thompson and spice giant McCormick & Co. could provide some relief, albeit not immediately.

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.