Increased demand for Suburban Maryland Metro-accessible office space has limited large-blocks outside of the Beltway
October 22, 2018
- We have seen a meaningful shift in demand to Northern Virginia Silver Line outside the beltway submarkets. The same demand for access to walkable transit and dense amenities is increasing in Suburban Maryland as well. This trend has left large-blocks availabilities (defined as blocks > 20,000 s.f.) on or near Suburban Maryland Metro stations in short supply with escalating rents, while available blocks farther out face rising time on the market at discounted pricing.
- Outside of the Beltway, more than 70% of large-block availabilities are located more than a mile from Metro, while just four large-block availabilities exist within a ¼-mile from Metro. Inside of the Beltway, there are just 20 existing availabilities >20,000 s.f. across the three submarkets.
- In 2018, almost 60% of relocation leases > 10,000 s.f. were located within a ½-mile of Metro. As a result of this increased demand, large-block availabilities for Metro-accessible buildings spend less time on the market.
- Large block availabilities within a ¼-mile of Metro inside of the Beltway have been on the market for 24 months compared with 38 months for buildings beyond ¼-mile from Metro.
- Outside of the Beltway, availabilities within a ¼-mile of Metro spend an average of 25 months on the market compared with 49 months for buildings beyond ¼-mile from Metro.
- Submarkets located both inside and outside of the Beltway also command rent premiums for Metro-accessible office buildings.
- Inside the Beltway, asking rents within a ¼-mile of Metro average $43.06 p.s.f. FS, while those farther than a ¼ -mile average $37.33 p.s.f. FS, a 15% difference.
- Outside of the Beltway, asking rents within a ¼-mile of Metro stand at $33.00 p.s.f. FS compared to $30.32 p.s.f. FS for ¼ to 1-mile and $27.29 p.s.f. FS for beyond one mile from Metro.
- As tenants continue to flock toward urban characteristics, Metro-accessible buildings will generate enhanced activity at faster lease-ups and command growing rent premiums.
- Though availabilities remain plentiful for buildings located more than one mile from Metro, that demand is largely focused on one robust sector: life sciences. Tenants in that sector have accounted for almost 25% of leasing activity >10,000 s.f. in 2018 and because of limited options for those types of users, conversion activity of previously underperforming office buildings to lab space such as 704 Quince Orchard, have commenced.
Source: JLL Research