Baltimore Office Building’s Sale a Sign of What’s to Come in 2023
An investment group led by Sam Tenenbaum has acquired 6340 Security Boulevard, a two-story office building in Baltimore with more than 60,000 square feet, for $5 million, Commercial Observer has learned.
The fully leased property, sold by Woodlawn MD III FGF, has a tenant roster that includes Accenture, Friendly Finance and Perfect Office Solutions. The property is situated directly across from the headquarters of the Social Security Administration and close to the junction of Interstates 695 and 70.
Owen Rouse, vice president of investment sales for MacKenzie Commercial Real Estate Services, indicates that 2023 is shaping up as the ideal time for owners and investors to consider shedding certain commercial office assets.
“The confluence of higher interest rates, elevated tenant improvement costs and the continuation of the remote and hybrid work models has created a perfect storm scenario that, collectively, is placing downward pressure on commercial office pricing,” Rouse said.
He added that companies are delaying decisions due to business and economic uncertainty, and the cost of doing business across the board is rising.
“For these reasons and more, we are recommending that commercial owners and investors engage in a property-by-property and region-by-region analysis of existing assets to determine if a disposition represents an appropriate strategy for the upcoming year,” Rouse said. “Many of the decisions will be based on the strength of the particular submarket, the long-term viability and financial resiliency of existing tenants, and the prospect of upcoming renewals.”
It’s not all bad news for building owners in suburban submarkets. Office leasing has been consistent this past year thanks to companies relocating from high-density urban areas or opening a second office in the suburbs in a hub-and-spoke work arrangement.
“Employers are offering its workforce complete flexibility with regard to where and when they work but, over the long term, we believe the traditional work environment will rebound with an increased emphasis on workplace culture, mentorship and collaboration,” Rouse said. “Well-maintained assets contained in infill locations with a strong tenant roster are still hard to come by, and there will always be a strong demand for these properties as capital also remains plentiful.”
Rouse, in collaboration with MacKenzie Real Estate advisor Allison Perry, senior vice president Hayes Merkert, and senior vice president Adam Nachlas represented the seller and procured the buyer in the deal.
Keith Loria can be reached at Kloria@commercialobserver.com.