Office Market Snapshot

Baltimore Third Quarter 2012

market tracker
*Arrows = Current Qtr Trend

Vacancy
18.46%

Net Absorption
84,389 SF

Deliveries
446,060 SF

Asking Rent
$21.44

Northern Balt.-Wash. Corridor Drives Activity in Baltimore Office Market

Demand for office space in the Baltimore Metropolitan office market was relatively flat in the third quarter with the exception of the Northern Baltimore-Washington Corridor market. The overall Baltimore office market experienced 84,389 square feet of positive absorption in the third quarter, down significantly from the second quarter. The vacancy rate remained at 18.46% due to the low leasing activity combined with the delivery of several buildings.
baltimore office

The Northern Baltimore-Washington Corridor experienced the majority of the demand for office space in the metropolitan market. The BWI Airport, Howard County, and Greater Annapolis submarkets combined for almost 170,000 square feet of positive absorption in the
Q3 12 Q3 11
1.28M 7.9% 9.7% 50.26

Economic Indicators

third quarter. The flight to quality trend was again evident in the third quarter in the NBW Corridor as Class A product in these three submarkets combined for almost 217,000 square feet of positive absorption compared to almost 50,000 square feet of negative absorption in Class B product. The Downtown submarket experienced a quarter of flat demand with minimal negative absorption. There has been a general slowdown in activity in 2012 and the majority of the positive absorption in the submarket year-to-date can be attributed to deals executed in 2011. Prospective tenant activity has been focused on smaller requirements and average rental rates have decreased, indicating increasing competition between landlords for the few tenants in the market. The Suburban North submarket again experienced negative absorption as both Class A and B product saw space returned to the market. A significant portion of the 58,000 square feet returned to the market can be attributed to the delivery of Schilling Green II. This new project has pulled tenants from other buildings within the market and caused large blocks of space to be vacated. Towson City Center also delivered after a significant renovation; this project is almost fully-leased and features tenants like Towson University who have expanded in the market instead of vacating former spaces.

Baltimore Employment Baltimore Unemployment U.S. Unemployment U.S. CCI

1.30M 7.7% 8.2% 65.64

Net Absorption
1,000
Square Feet ('000s)

750 500 250 0

Vacancy Rate
22%

Speculative development continues in Harford County as construction is underway at The GATE. A speculative project also delivered at 650 McHenry Road, adding more than 95,000 square feet of vacant space to the market. The Northern Baltimore-Washington Corridor continues to see development driven by the cybersecurity and information systems industries.
Historical Average

20%

18%

Projects are ongoing at the National Business Park and Station Ridge and a 56,700 square foot build-to-suit headquarters is set to break ground in Columbia Gateway.

16%

14% 2007

2008

2009

2010

2011

2012

Forecast
Leasing activity will remain flat in the majority of the metropolitan area. Baltimore Metro vacancy rates will begin to rise as speculative development projects are delivered to the market with significant availabilities. The Northern Baltimore-Washington Corridor will be the exception. Competition for large requirements will remain tight as prospective large users balance the options between the few existing blocks of space in the market and build-to-suit development.
www.cassidyturley.com

cassidy turley office market Snapshot

Baltimore Third Quarter 2012
total blDGS inventory Sublet vacant Direct vacant averaGe averaGe ytD net unDer vacancy current net aSkinG rent aSkinG rent rate abSorption abSorption conStruction
(all claSSeS) (claSS a)

Submarket
BWI Airport Downtown Greater Annapolis Area Harford Howard County Suburban North Suburban West 153 156 89 34 281 223 145 10,518,228 20,607,449 3,573,185 1,985,014 15,571,334 13,428,541 7,628,713 35,792 82,348 56,817 67,783 232,571 53,150 21,655 1,673,874 4,369,333 593,990 633,233 2,384,673 1,908,351 1,418,220 16.25% 21.60% 18.21% 35.32% 16.81% 14.61% 18.87% 11,040 -533 50,058 4,652 105,898 -58,646 -28,080 292,079 196,925 75,709 2,033 203,027 -128,075 -94,556 227,830 0 130,000 122,000 174,700 0 538,000 $24.00 $20.08 $25.71 $29.07 $21.21 $21.65 $19.20 $27.17 $22.67 $29.39 $29.07 $24.32 $23.92 $20.21

baltimore market totalS

Class A Class B 317 764 1,081 33,933,008 39,379,456 73,312,464 350,387 199,729 550,116 5,902,542 7,079,132 12,981,674 18.43% 18.48% 18.46% 168,053 -83,664 84,389 571,540 -24,398 547,142 1,030,530 162,000 1,062,530 $24.13 $18.98 $21.44 $24.13

total
Office asking rents converted to Full Service

Key Lease Transactions Q3 12

property 1501 South Clinton Street Sf 46,427 tenant Care First Blue Cross/Blue Shield Tenable Network Security CSC CSC Undisclosed ACS EA Engineering tranSaction Expansion Relocation Sublease Relocation Lease Lease Lease Submarket Downtown Howard County
Cecil Co. Harford Co.

office Submarkets
Baltimore

7021 Columbia Gateway Drive 65,993 6721 Columbia Gateway Drive 83,010 6200 Guardian Gateway Drive 9055 Sterling Drive 7160 Riverwood Drive 225 Schilling Circle 26,475 153,500 57,332 65,000

Howard County
Frederick Co.

140

83
Baltimore Co.

95

Harford County Howard County

70

Carroll Co.

Suburban North

Harford County

Suburban West
795

695
Baltimore City

Howard County Suburban North

Howard Co.

Downtown
32 100

Howard County

270

Montgomery Co.

29

BWI Airport
95
Prince George's Co.
Anne Arundel Co.

97

Key Sales Transactions Q3 12

property COPT Portfolio Sf 1,387,000 Seller/buyer COPT/Greenfield Partners price $161,900,000 Submarket Suburban North

495

50

Greater Annapolis Area

David m. Gillece
Regional Managing Principal 100 Light Street Suite 1400 Baltimore, Maryland 21202 Tel: 410.752.4285 Fax: 410.576.9031 Email: david.gillece@cassidyturley.com
The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. Copyright 2012 Cassidy Turley. All rights reserved.

about cassidy turley

Cassidy Turley is a leading commercial real estate services provider with more than 3,600 professionals in more than 60 offices nationwide. The company represents a wide range of clientsfrom small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2011, manages 455 million square feet on behalf of institutional, corporate and private clients and supports more than 28,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate servicesincluding capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit www. cassidyturley.com for more information about Cassidy Turley.

www.cassidyturley.com