Office Vacancy in Columbia, Md. at Highest Level Since 2020
By Keith Loria February 24, 2022 5:16 pm
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Despite seeing more than 315,000 square feet leased during the fourth quarter of 2021, office vacancy increased to 13.5 percent in the greater Columbia submarket of Howard County, according to a new report by Lee & Associates-Maryland.
The negative absorption rate of more than 60,000 square feet came as a result of a continuing delay in return to traditional office space, along with the addition of approximately 110,000 square feet of new space in the area.
Vacancy numbers have continued to trend upward since the first quarter of 2020 when it stood at 10.7 percent, the report reveals. In the third quarter of 2021, a little more than 250,000 square feet of office space was leased, resulting in 12.7 percent occupancy level.
However, current vacancy numbers are still not as high as the 15.8 percent level the area saw during the financial crisis in 2011.
“Two plus years of COVID-related fears creating a remote working environment that’s still trying to find its correct balance have resulted in these greater vacancy numbers,” Bill Harrison, senior vice president of Lee & Associates-Maryland, told Commercial Observer.
Early 2022 activity levels are continuing to increase with an easing of pandemic restrictions, so that should help the vacancy rates going forward, Harrison noted.
“Clearly this market’s strategic location between Baltimore and Washington, D.C. and the high level of government contracting it brings with it [attract tenants],” he said. “Office leasing trends year-to-date favor the highly amenitized Class A properties with the goal of incentivizing employees to return to some level of office presence.”
During the fourth quarter of 2021, average rental rates increased slightly to $26.10 per square foot, from $26.05 during the previous quarter.
Some of the notable leases signed last quarter include software designer Vectorworks inking 42,696 square feet at 8621 Robert Fulton Drive; cyber company DreamPort taking 36,956 square feet at 7000 Columbia Gateway Drive; and endoscopy company Ambu signing for 25,689 square at 6721 Columbia Gateway Drive.
“Although optimism is in the air and several significant leases were executed in the fourth quarter, overall activity remained stagnant as companies continue to delay major real estate decisions due to the implications of the current health care crisis,” Harrison said. “We believe conditions will improve in 2022 as employees accelerate their return to the workplace, the construction of new commercial office space slows and the pent-up demand for office space over the past two years manifests into above-average leasing activity.”
Keith Loria can be reached at Kloria@commercialobserver.com.
