Baltimore Industrial Market Remains Tight Despite Economic Volatility
More than 2.7 million square feet of industrial space was leased in the Baltimore metropolitan region in the second quarter of 2022, according to the latest industrial report by Lee & Associates-Maryland.
This is slightly up from the 2.6 million square feet leased in the first quarter, on top of the nearly 15 million square feet of industrial space leased in the region last year.
“Demand from an investment standpoint and leasing activity makes industrial the hottest real estate sector, currently and in the foreseeable future,” Tom Whelan, principal at Lee & Associates-Maryland, told Commercial Observer. “The area has access to 8 million to 12 million consumers in one of the richest areas in the country, plus access to a competitive port.”
Net absorption grew to 1.7 million square feet of space, compared with 930,000 square feet in the first quarter, with the overall vacancy rate increasing from 3.7 percent to 3.95 percent, according to the report. Approximately 10.3 million square feet of industrial/warehouse space is available for lease locally, down from 10.9 million last quarter.
“While there has been a partial slowdown in demand for larger industrial spaces, the need for infill locations has increased and has been partially responsible for the vacancy constriction,” Whelan said. “The greater Baltimore industrial market continues to follow the growth pattern of the industrial sector nationally and [we] expect leasing to remain consistent for the balance of the year. Possibly as a direct result of inflation, rental rates also continue to rise.”
In fact, average rents increased from $7.28 to $7.66 per square foot. In addition, 66 sales transactions were completed at a cumulative value of nearly $517 million.
The largest leases in Q2 were the 598,000-square-foot lease signed by Baltimore International Warehouse & Transportation at 2800 Eastern Boulevard in Middle River; Infarm’s 186,000-square-foot lease at 8700 Robert Fulton Drive in Columbia; and Alcon’s 142,000-square-foot lease at 6740 Business Parkway in Elkridge.
The top industrial sales included the $104.8 million acquisition of 10900 Hopewell Road in Hagerstown by Fundrise and the $80.5 million acquisition of 1900 Clark Road in Havre De Grace by Apollo Net Lease Capital Corp.
Nearly 1.6 million square feet of space was delivered in Q2, bringing the total volume of space delivered in 2022 to approximately 3.6 million square feet of space. Looking at future industrial space, approximately 15 million square feet of space is currently under construction, topping the 12.2 million square feet of space reported in Q1.
These include a 1.8 million-square-foot building at Tradepoint Atlantic that will be delivered in Q3; a 1.2 million-square-foot building at 55 West Oak Ridge in Hagerstown scheduled for a Q4 delivery; and another 1.2 million-square-foot building at 10440 Downsville Pike slated for completion in Q2 2023.
Keith Loria can be reached at Kloria@commercialobserver.com