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Q1 2014 | OFFICE USE

BALTIMORE METRO AREA

Office Market Report

Shifting Demographics Signal Changing Demands


The Baltimore Regional office market consists of Baltimore City and the surrounding counties of Anne Arundel, Howard, Baltimore and Harford. The Colliers defined submarkets of Annapolis, BWI Area, Howard County, Baltimore County West, Baltimore County North, Baltimore County East and Harford County are all located within this region. According to Costar, Inc., there were 377 existing Class A buildings within the Baltimore Metro area with more than 45,800,000 square feet of space. In the 1st quarter of 2014 approximately 6,000,000 square feet of that space (13.10%) was vacant.

MARKET DEFINITION

MARKET OVERVIEW
Class A Net Absorption
Thousands 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2010 2011 2012 2013 2014

The Baltimore Metro Area Class A office market improved over the second half of 2013 and into the 1st quarter with an ending vacancy rate of 13.1%, down from 14.2%. One of the fastest growing industries in the country is Cyber Security, an area that Maryland law makers are pushing hard to foster with tax incentives programs. While the harsh winter may be to blame for a slowing of activity, there were several significant lease and sales transactions that occurred this quarter, including the sale of 1 E. Pratt Street signaling a return of investors at pre-recession rates. Large tenants, CareFirst and Booz Allen & Hamilton, renewed their leases and several high profile relocations are in the works. As was the case for most of 2013, the majority of the leasing activity is centered on downtown Baltimore and areas surrounding BWI, Ft. Meade and NSA. Areas with historically higher vacancy rates like Harford County and Baltimore County East continue to struggle with an over-supply and lack of interest. Rick Williamson, Senior Vice President at St. John Properties, is cautiously optimistic of the commercial real estate market moving forward in 2014. According to Mr. Williamson, We are seeing improvements in the market. There is growth in the corridor; Maple Lawn continues to do well. The areas surrounding the airport are doing better, and improvements can be seen in Owings Mills and the County West area.

Class A Vacancy Rate


18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% Q3 2010 Q3 2011 Q4 2012 Q3 2013

The Baltimore Metro area scores high in a number of attributes that make it attractive for businesses. These attributes include a strategic proximity to D.C. and a significant number of well-educated young professionals. While the region has suffered from many obstacles recently (e.g. Federal spending cuts and sequestration, higher taxes, etc.), there are many indications of a strengthening economy and increased confidence throughout the City, State of Maryland, and Region. These reasons include the following: Maryland ranks 17 out 102 of U.S. cities with the highest number of residents with advanced degrees; Maryland has the 2nd best elementary-high schools nationally; Maryland has the highest concentration of millionaires in the country; Unemployment rates appear to be improving locally and nationally with the national rate falling to 6.6% and Maryland to 5.8%.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

While efforts in the region are being made to attract and retain young talent (apartment renovations in downtown Baltimore and increased transportation spending), there are fewer companies moving to the region possibly as a result of higher corporate tax rates than in neighboring states.

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE METRO AREA

The Baltimore Region ranks high in attracting and fostering tech startup, energizing the economy with Home Grown companies and capital. JPMorgan Chase hopes to build on Baltimores enterprising population by opening its first commercial banking office in Harbor East this year. The generational demographic of the region is shifting as more Baby Boomers retire and Millennials take their place. As a result, population increases will slow, and real estate demands will change as Millennials are more likely to live in urban environments and be fiscally conservative due to the most recent recession.

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

Class A Asking Rental Rates


$26.00 $25.50 $25.00 $24.50 $24.00 $23.50 $23.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

Class B & C Asking Rental Rates


$21.00 $20.50 $20.00 $19.50 $19.00 $18.50 $18.00 Q1 2013 Q2 2013 Q3 2013 Q4 1013 Q1 2014

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

NET ABSORPTION

Net absorption in the Class A Baltimore Region office market continued a positive trend in the 1st quarter with over a million square feet of space absorbed. However, Class B & C space experienced negative absorption. Not a surprising trend as the flight to quality can be felt throughout the office market. Fortunately, at least in Baltimore Citys downtown, the older Class B and Class C building inventory is diminishing due to increasing amounts of residential adaptive reuse projects, e.g. 10 Light Street, 10 N. Calvert St., and 114 E. Lexington St.

RENTAL RATES

Average rental rates were mostly unchanged at $21.90 psf. Class A office rental rates rebounded to $25.00 psf, while Class B & C office rental rates evened out at $19.50 psf.

VACANCY
Overall, vacancy rates in the Baltimore Regions office market were relatively unchanged at 12.5%, with Class A office vacancy dropping to 13.1%, Class B&C space increasing slightly to 12.1%. Vacancy is not expected to rise as very little new space is projected to be delivered for the rest of the year.
SELECT LEASE SIGNINGS
TENANT LEASED SF PROPERTY ADDRESS CITY

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

ReMax Enterprise Community Partners CareFirst AON Service Corporation VNA Services Neuberger, Quinn, Gielen, Rubin & Gibber, PA Booz Allen & Hamilton SELECT SALES ACTIVITY
PROPERTY ADDRESS SELLER/BUYER

11,499 sf 72,703 sf 26,040 sf 26,683 sf 16,840 sf 19,000 sf 35,124 sf

5575 Sterrett Place 11000 Broken Land Parkway 10451 Mill Run Circle 10461 Mill Run Circle 7008 Security Blvd. 1 South Street 4694 Millennium Drive

Columbia Columbia Owings Mills Owings Mills Woodlawn Baltimore Aberdeen

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

SALE PRICE

SF

PRICE/SF

1 E. Pratt Street 20 Wight Avenue 9755 Patuxent Woods Drive 307 International Circle 180 Admiral Cochrane Drive 36 S. Charles Street

Griffith Properties/Emmes Group Liberty/Greenfield Liberty/Greenfield Liberty/Greenfield Liberty/Greenfield Clark Enterprises/Laurus Corporation

$58,700,000 $12,407,764 allocated $16,492,742 allocated $31,809,720 allocated $20,726,523 allocated $26,100,000

355,779 77,047 102,413 197,525 128,703 194,824

$164.99 $161.04 $161.04 $161.04 $161.04 $88.69

Accelerating success.

www.colliers.com/marketname

Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

DOWNTOWN | BALTIMORE REGION

Downtown Baltimore City Office Market Report


MARKET DEFINITION
The Baltimore City office submarket comprises the traditional Central Business District (CBD) as well as the adjacent areas of Harbor East & Fells Point, Canton, Stadium/West, and South Baltimore. Within this expanded downtown area there is more than 13,150,000 square feet of Class A office space. In the 1st quarter of 2014 2,140,000 square feet of that space was vacant for a 16.27% vacancy rate.

MARKET OVERVIEW
The downtown Baltimore Class A office market vacancy rate improved in the 1st quarter, down from 17.05% at the end of 2013. As is usually the case, vacancy rates for Pratt Street properties outperformed the overall market, with vacancy at 13.8% and slated to reduce even more with the imminent signing of the 100,000 SF Pandora Jewelry headquarters lease at 250 West Pratt. The vacancy rate is also significantly better for properties in Harbor East, Fells Point and Canton areas, whose overall vacancy rates ended at 12.45%.
Q1 2014

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE

As has been the case for the past several years, the buildings with the highest vacancy rates (over 20% vacant) are the Charles Center-era buildings north of Lombard Street and fronting Charles Street, built prior to the 1980s. During the last 10 years, overall rental rates for these properties have not fluctuated more than two dollars per square foot. In certain situations, rental rates for some properties, are at an all time low. 20 South Charles Street and 1 North Charles Street are quoting full service rental rates in the $16-$17/SF range, rates not seen in 15 20 years. In addition to 114 E. Lexington, 10 Light, and 10 N. Calvert, other properties such as 111 W. Heath Street are moving to the living side of Downtown Baltimores shift to Live Work Play. According to Downtown Partnership President Kirby Fowler, there are several other redevelops in the pipeline. While this is helping the residential development community, it has created a shortage of Class B properties for lease by government agencies and the not for profit community. The Partnership reports that downtown Baltimore

City, which now boasts the the 8th largest population in the country, added more than 9,000 new jobs in 2013. This job growth, coupled with a desire to live near the jobs created, has generated a current apartment occupancy rate in downtown Baltimore of 95.3% indicating the ability to develop significantly more units. There is some skepticism surrounding the actual number of new jobs and if the number may spur an overdevelopment. As a result, efforts are being made to rebrand and reinvigorate the downtown such as giving neighborhoods their own names and identities as well as redevelopment projects around neighborhoods on the Westside and Lexington Market. Several long-stalled projects in the City showed signs of life and moving forward, most notably Harbor Point, new headquarters home for Exelons Baltimore operations. Reports indicate that the State Center project, long stalled by litigation, is poised to recommence as a result of a favorable Court of Appeals ruling. Regrettably, the Westport redevelopment project is still mired in the courts, with the developer working very hard to preclude the lender Citicorp Global Markets Realty Corp.- from foreclosuring on the project. Additionally, plans for the redevelopment of the former Mechanic Theatre and Old Town Mall will likely move forward this year, according to BDC President Brenda Mckenzie. And due to a new ownership group led by Under Armour founder and CEO Kevin Plank, the long awaited redevelopment of the Fells Point recreation pier into mixed-use hotel with retailing, is expected to proceed.

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE DOWNTOWN

Significant activity in the market includes Pandora Jewelry in lease negotiations at 250 W. Pratt Street which would move their US headquarters from Columbia to downtown. East Baltimore saw a fair amount of activity this quarter. Woofound is preparing to move to the 4,000 SF at 101 N. Haven Street. Eyemaginations plans to move from Towson to the Union Box Co. Building in Fells Point, while Millennial Media expanded by 60,000 SF in the Can Company building in Canton. Mindgrub intends to move into 13,000 SF of space being redeveloped at the Phillips Food site in Locust Point. MedStar will lease space at Caves Valleys project at Riverside Wharf in Federal Hill. This activity demonstrates the renewed vitality of downtown Baltimores commercial real estate activity, at least enough vitality to enable a return to asset sales. Large sales included 36 S. Charles which sold to Laurus Corporation for $26.1 million, and 1 E. Pratt Street which sold for $58.7 million to Emmes Asset Management Company, a rate that compares with pre-recession sales deals.

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

UPDATE
Net Absorption
Thousands
400 350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
22.0% 20.0% 18.0% 16.0% 14.0% 12.0% 2010 2011 2012 2013 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

Asking Rental Rates


$24.00 $23.50 $23.00 $22.50 $22.00 $21.50 $21.00 $20.50 $20.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

Accelerating success.

Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

ANNAPOLIS | BALTIMORE REGION

Annapolis Market Report


MARKET DEFINITION
The Annapolis submarket is located approximately 25 miles south of Baltimore City and 30 miles east of Washington D.C. The city of Annapolis serves as the Capital of the State of Maryland, the county seat of Anne Arundel County and is also the home of the United States Naval Academy. The local office market consists of 158 properties and more than 5,500,000 square feet of space. In the 1st quarter of 2014 approximately 710,000 square feet of this space was vacant.

MARKET OVERVIEW
Negative absorption in the Annapolis office market during the 1st quarter resulted in a vacancy rates rising from 12.6% to 13%. Multistory buildings vacancy rates also rose slightly to 11.8%, as did single story buildings rising to 18.6% after improving in the second
Q1 2014

completed this quarter bringing 31,600 SF of Class A office space. Beyond that, 2510 Riva Road is slated for redevelopment into a LEED certified Class A office building. Additionally, St. John Properties has plans to develop 120,000 SF of Class A office on 28 acre on Harry S. Truman Parkway breaking ground the beginning of 2015. First Annapolis Consulting recently announced they would relocate their headquarters from Linthicum to 21,000 SF at 3 Park Place. I-Jet is currently in the market looking for approximately 35,000 SF of office in the Annapolis market.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE

half of 2013. Class A office average rental rates continued to drop to $26.57 psf on a full service basis, as did Class B ending at $21.50 psf, the lowest either have been in recent history. Office development and renovations are in the works in and around Annapolis, and touring activity has increased in this market. 1730 West Road, the first spec building to open since 2008,

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE REGION - ANNAPOLIS

UPDATE
Net Absorption
Thousands 120 100 80 60 40 20 0 -20 -40 -60 -80 -100 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2009 2010 2011 2012 2013 2014

Multistory Asking Rental Rates


$27.00 $26.50 $26.00 $25.50 $25.00 $24.50 $24.00 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

Single Story Asking Rental Rates


$30.00 $28.00 $26.00 $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Office (FS) Flex (NNN)

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Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

BALTIMORE COUNTY EAST | BALTIMORE REGION

Baltimore County East Market Report


MARKET DEFINITION
The Baltimore County East submarket includes Baltimore County suburban areas located east of Baltimore City. The submarket is defined by the I-95 corridor as well as I-695 and includes the local markets of White Marsh, Perry Hall, Dundalk and Essex. The area encompasses one of the smaller regional office use submarkets with 109 buildings and just over 3,600,000 square feet of space. In the 1st quarter of 2014 just under 600,000 square feet of that space was vacant.

MARKET OVERVIEW
Vacancy rates in Baltimore County East office market climbed slight to 16.4% after improving in the second half of 2013. However, with no new construction anticipated vacancy is Leasing activity in the first quarter of 2014 was slow in all submarkets possibly as a result of a particularly harsh winter, and the Eastern part of Baltimore County was no exception. There were some notable transactions such as Mariner Finance signing a 34,850 SF lease at 8211 Town Center Drive in White Marsh, and Morris Hardwick Schneider who renewed their 13,367 square foot lease at 5355 Nottingham Drive. Otherwise, the majority of leases signed in the 1st quarter were for flex space.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

expected to drop over the next several quarters. Multistory buildings vacancy rates crept up to 13.4% after steadily decreasing throughout 2013, while single story buildings declined to 19.1% and is expected to continue to improve. Overall rental rates for office space

have not changed dramatically over the past year ranging from $11-$27 on a full service basis, with the limited number of Class A buildings in the submarket fetching mid-high $20s full service, and Class B space averaging $19-$20 full service.

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE COUNTY EAST

UPDATE
Net Absorption
Thousands 160 140 120 100 80 60 40 20 0 -20 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
23.0% 22.0% 21.0% 20.0% 19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 2009 2010 2011 2012 2013 2014

Multistory Asking Rental Rates


$21.00 $20.50 $20.00 $19.50 $19.00 $18.50 $18.00 $17.50 $17.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

Single Story Asking Rental Rates


$25.00 $20.00 $15.00 Office (FS) $10.00 $5.00 $0.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Flex (NNN)

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

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Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

BALTIMORE COUNTY NORTH | BALTIMORE REGION

Baltimore County North Market Report


MARKET DEFINITION
The Baltimore County North submarket is located in the northern areas of Baltimore County and borders the northern end of Baltimore City. The submarket incorporates major thoroughfares including the I-83 corridor as well as I-695. In addition to the local submarkets of Towson and Timonium, the area also includes Hunt Valley, Cockeysville and Sparks. The overall Baltimore County North market contains 277 properties and just over 15,000,000 square feet of space. In the 1st quarter of 2014 over 2,000,000 square feet of that space was vacant.

MARKET OVERVIEW
Vacancy rates were relatively unchanged throughout the end of 2013 and into the 1st quarter of 2014 ending at 13.2%. Overall full Lifebridge Health leasing 10,700 SF at 118 Shawan Road. IMRE, LLC renewed for 15,000 SF at 909 Ridgebrook Road, as did Aarsand Management Company at 11019 McCormick Road. The Package Design Group signed a long term lease at 11019 McCormick Road, while Batelle Memorial Institute signed on at 6115 Falls Road for 14,000 SF. As far as investment sales, Greenfield Partners bought a large portion of Liberty Property Trusts portfolio including 20 Wight Avenue, 307/309/311 International Drive and 10 & 4 N Park Drive.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

service office rental rates averaged $19.90, with Class A office buildings averaging $22.49 psf on a full service basis, and Class B office space rental rates at $18.50 psf. Single story building vacancy rates dropped dramatically from 17.6% to 13.6% after the first quarter of significant absorption in over a year, however multistory building vacancy rates rose slightly to 13.2% Despite the harsh winter, the Northern part of the region faired relatively well with regards to leasing activity. Significant transactions included

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE COUNTY NORTH

UPDATE
Net Absorption
Thousands 150 100 50 0 -50 -100 -150 -200 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 2011 2012 2013 2014

Multistory Asking Rental Rates


$21.00 $20.80 $20.60 $20.40 $20.20 $20.00 $19.80 $19.60 $19.40 $19.20 $19.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

Single Story Asking Rental Rates


$25.00 $20.00 $15.00 Office (FS) $10.00 $5.00 $0.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Flex (NNN)

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

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Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

BALTIMORE COUNTY WEST | BALTIMORE REGION

Baltimore County West Market Report


MARKET DEFINITION
The Baltimore County West submarket is located in suburban areas of Baltimore County bordering the western and northwestern portions of Baltimore City. The submarket is defined by I-695 and Reisterstown Road corridors. It includes the local markets of Owings Mills, Pikesville, Woodlawn, Catonsville and Arbutus and consists of 295 buildings and more than 13,000,000 square feet. In the 1st quarter of 2014 approximately 2,150,000 square feet of that space was vacant.

MARKET OVERVIEW
Overall office vacancy rates in Baltimore County West dropped from 17.5% to 16.5% with the help of strong absorption in the first quarter. Single story building vacancy dropped to 16.5%, as did at the end of last year. This quarter CareFirst doubled the amount of space they lease by taking an additional two floors. BusinesSuites also signed at BECO Towers for 13,200 SF, as did AON Service Corporation which renewed for 26,600 SF. Greenberg Gibbons project at Foundry Row is progressing with new, highly anticipated office space being delivered. Other significant transactions included VNA Services, Inc. signing at 7008 Security Boulevard for 16,800 SF, and Schneider Electric USA who is consolidating their operations to 22,500 SF at 9 Easter Court.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

multistory building vacancy which also improved to 16.6%, the lowest it has been since the first half of 2012. Average rental rates were between $19.60 - $30 psf, full service. Average Class A office rental rates were at $22.90 psf full service, slightly lower than at the end of 2013. Class B average full service rental rates also dropped marginally to $18.65 psf. Undeterred by the relentless winter, Baltimore County West had strong leasing activity in the 1st quarter of 2014. CareFirst renewed their lease at BECO Towers in Owings Mills for 26,000 SF

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE COUNTY WEST

UPDATE
Net Absorption
Thousands 200 150 100 50 0 -50 -100 -150 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 2010 2011 2012 2013 2014

Multistory Asking Rental Rates


$21.00 $20.50 $20.00 $19.50 $19.00 $18.50 $18.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

Single Story Asking Rental Rates


$20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Office (FS) Flex (NNN)

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

Accelerating success.

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Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

BWI AREA | BALTIMORE REGION

BWI Area Market Report


MARKET DEFINITION
The BWI Area submarket is located around the Baltimore-Washington Thurgood Marshall International Airport in northern Anne Arundel County. The submarket includes Fort George Meade, NSA headquarters, Linthicum, Hanover, Glen Burnie, Elkridge and small portions of Howard County bordering BWI Airport to the west. This market consists of 196 existing properties and over 12,700,000 square feet of space. In the 1st quarter of 2014 a little less than 1,500,000 square feet of this space was vacant.

MARKET OVERVIEW
Overall vacancy rates in the BWI office market dropped in the first quarter to 11.3% helped along by strong positive absorption. Multi-story vacancy as of late demand seems to be increasing. Some of the larger transactions in the region included Skyline Technologies taking 28,700 SF at 6956 Aviation Boulevard. 7321 Parkway Drive sold for $8.32 million, which is fully leased to Chesapeake Lighthouse Foundation. Chesapeake Innovation Center will relocate to 2288 Blue Water Boulevard from Annapolis siting a need to be closer to other cyber security organizations. Not unexpectedly, COPT handed over nine buildings to special servicer LNR partners after experiencing difficulty leasing the space.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

rates improved to 11.9% after a slow leasing cycle at the end of 2013, as did single story vacancy rates which declined slightly to 10.6%. Overall office rental rates averaged $24.10 psf on a full service basis, about a dollar less than average rental rates at the end of 2013. Class A office average rental rates also declined to $27.23 psf, while Class B office space changed very little ending at $21.00 psf, both full service. Overall absorption was positive in the BWI submarket, and although activity has been spotty

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE REGION - BWI AREA

UPDATE
Net Absorption
Thousands 500 450 400 350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
20.0% 19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 2010 2011 2012 2013 2014

Multistory Asking Rental Rates


$26.50 $26.00 $25.50 $25.00 $24.50 $24.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

Single Story Asking Rental Rates


$25.00 $20.00 $15.00 Office (FS) $10.00 $5.00 $0.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Flex (NNN)

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

Accelerating success.

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Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

HARFORD COUNTY | BALTIMORE REGION

Harford County Market Report


MARKET DEFINITION
The Harford County submarket is located approximately 25 miles northeast of Baltimore City and is defined by the I-95 and Route 1 Corridors. The area includes the local markets of Bel Air, Aberdeen and Havre de Grace. The Aberdeen Proving Ground is also located in Harford County. This market consists of 131 properties and just over 4,100,000 square feet of existing space. In the 1st quarter of 2014 about 940,000 square feet of that space was vacant.

MARKET OVERVIEW
Vacancy rates in the Harford County submarket has risen continuously over the past four years, ending the 1st quarter of the year at 22.7%. Overall average rental rates dropped to $23.00 Plagued by budget sequestion, a brutal winter, and oversupply, the Harford County office market continues to struggle with high vacancy. Landlords are offering generous incentives to lure tenants, and with the abundance of vacant space that trend will not turn any time soon. Of transactions completed in the 1st quarter, Booz Allen Hamilton renewed their lease at 4694 Millennium Drive 35,000 SF. Waters Edge saw several lease transactions this quarter including Science & Technology Corporation and Applied Research. Northrop Grumman leased approximately 19,000 SF at 210 Research Drive.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

psf on a full service basis, the lowest rates have been since 2011. Class A rental rates have not fluctuated in the past 4 quarters hovering around $28.25 psf, while Class B space dropped to $21.00 psf. Single story buildings average vacancy rates reached 22.5% the

highest it has been in recent history, while multistory building vacancy rates stayed about the same at 23.8%

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE REGION - HARFORD COUNTY

UPDATE
Net Absorption
Thousands 300 250 200 150 100 50 0 -50 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Vacancy Rate
27.0% 25.0% 23.0% 21.0% 19.0% 17.0% 15.0% 13.0% 11.0% 9.0% 7.0% 2010 2011 2012 2013 2014

Over

Multistory Asking Rental Rates


$28.00 $27.00 $26.00 $25.00 $24.00 $23.00 $22.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

Single Story Asking Rental Rates


$25.00 $20.00 $15.00 Office (FS) $10.00 $5.00 $0.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Flex (NNN)

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

Accelerating success.

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Q1 2014 | OFFICE USE

RESEARCH & FORECAST REPORT

HOWARD COUNTY | BALTIMORE REGION

Howard County Market Report


MARKET DEFINITION
The Howard County submarket is located between Baltimore MD and Washington D.C. along the interstate I-95 corridor. The submarket is comprised of 381 buildings and about 18,300,000 square feet of space. In the 1st quarter of 2014 more than 2,100,000 square feet of that space was vacant. The submarket boasts a sturdy Landlord pool with REITs and local developers such as Corporate Office Properties Trust, First Potomac Management, LLC, General Growth Properties, Greenfield Partners, Abrams Development and Merritt leading the pack.

MARKET OVERVIEW
Overall vacancy rates dropped to 11.5%, and are expected to continue to decline over the next 12 months. Single story office building vacancy enjoyed a stable real estate market helped by a strategic location between Baltimore and Washington, D.C. Select transactions included OncoSource RX who expanded into 31,000 SF at 7172 Columbia Gateway Drive. Toll Brothers expanded at 7164 Columbia Gateway Drive into 11,500 SF. American Contracting & Environmental Services signed at 10330 Old Columbia Road for 4,700 SF, and Network Building & Consulting, LLC signed a lease at 6095 Marshalee Drive for 20,211 SF. As for investment sales, Knott Realty bought 50 acres at 9111 & 9025 Sterling for $13 million with plans to build 2 office buildings. 9199 Red Branch Road sold for $3.475 million, and Guardian recently put One Columbia Center on the market.

MARKET INDICATORS
Q4 2013 VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 2014

rates have hovered between 10-11% for the past several quarters ending at 10.9%. Multistory office buildings show a similar trend ranging between 12-13.5% improving slightly over last quarter at 12.4%. Overall rental rates average about $24.00 psf full service, and have been

relatively stable for the past 2 years. Average Class A office rates increased marginally to $25.00 psf full service, as did Class B office rental rates which rose to an average of $23.50 psf. Howard County had some leasing success this quarter, but weaker than anticipated at the end of 2013 possibly due in part to the harsh winter. Howard County, particularly Columbia, has

www.colliers.com/greaterbaltimore

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE USE | BALTIMORE REGION - HOWARD COUNTY

UPDATE
Net Absorption
Thousands 450 400 350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014

482 offices in 62 countries on 6 continents


United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85
$2

billion in annual revenue

1.12

billion square feet under management 13,500 professionals

Over

Vacancy Rate
16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 2010 2011 2012 2013 2014

Multistory Asking Rental Rates


$25.00 $24.80 $24.60 $24.40 $24.20 $24.00 $23.80 $23.60 $23.40 $23.20 $23.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

RESEARCHER: Nadia Kahler Vice President, Research & Transaction Management | Baltimore 100 North Charles Street Suite 1710 Baltimore, MD 21201
TEL +1 443 543 1222 FAX +1 443 543 0191

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy as to the accuracy of the information. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2014. All rights reserved.

Single Story Asking Rental Rates


$25.00 $20.00 $15.00 Office (FS) $10.00 $5.00 $0.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Flex (NNN)

Accelerating success.

www.colliers.com/marketname