Baltimore Industrial Excels in the Summer Months

The Baltimore Industrial market experienced more than 1 million square feet of positive absorption in the third quarter. As a result, the vacancy rate for the 162.7 million square foot industrial market has decreased to 10.94%. Demand for space was focused on warehouse product where the market positively absorbed about 1.13 million square feet of space. Demand for flex space was stagnant with 57,000 square feet of negative absorption. The resurrection of industrial construction continued in the third quarter as almost 2 million square feet of space is currently being built in the Baltimore market. Most notable is the groundbreaking of the new Clorox facility on Perryman Road inHarford County, a 945,720 square foot, build-to-suit project. An additional 650,000 square feet of spec space is under construction at nearby 531 Chelsea Drive. This project spawned from the success of 521 Chelsea Drive, a spec project that was fully-leased to Kenco Corporation shortly after delivery to the market. These projects demonstrate the high demand for bulk distribution space in the market, especially in Harford and Cecil counties. The I-95 North submarkets are leading the way in occupancy rates. The Baltimore City East, Harford County and Cecil County submarkets have occupancy rates of 92%, 94% and 93% respectively, thus contributing to the development of speculative product in the area. The tightening of the North market has driven tenant demand toward the southern borders of Baltimore City, where theSouthwest submarket experienced more than 450,000 square feet of positive absorption in the third quarter. The Baltimore-Washington (BW) Corridor was quiet in the third quarter, but continues to be an attractive submarket for companies seeking to serve the fourth largest consolidated metropolitan statistical area in the country. Capital Market activity continues to thrive in the Baltimore Industrial market as investors are attracted to the region. Several assets were traded in the BW Corridor, including two vacant warehouses that provided an attractive value-add opportunity. Perhaps the most notable sale of the quarter was that of the Solo Cup distribution facility in the West market. This sale marks the only transaction involving a single asset in excess of 1 million square feet in 2013. Additional sales of this magnitude may yet close by year end, showing that investors are following the demand for bulk space being driven by tenants in the market.
2013 Q3 Industrial North Market Review Click to View

2013 Q3 Industrial South Market Review Click to View

2013 Q3 Industrial Interactive Map Click to View

Forecast
Harford County absorption will be driven by new construction; with a vacancy rate of only 6.62%, the existing supply offers few options to large users. Positive absorption will increase in the BW Corridor as tenants seek to find space that is convenient to both the Baltimore and Washington D.C.

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consumer bases. Average rents should increase if the overall market continues to tighten.
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