2019-07-02_DTZ戴德梁行_Office_Q4_2018_Suburban_Maryland_2页_629kb

Suburban Maryland Office Market Summary Q4 2018

Core Content

The Suburban Maryland office market experienced continued growth and stability in the fourth quarter of 2018, marked by a decline in vacancy rates and an increase in asking rents. Despite a slowdown in leasing activity due to a high proportion of renewals, the market remained resilient, supported by notable tenant move-ins and the completion of key construction projects.

Key Economic Indicators

• D.C. Metro Employment: Increased slightly from 3.3M in Q4 17 to 3.34M in Q4 18.
• D.C. Metro Unemployment: Decreased from 3.6% to 3.3%.
• U.S. Unemployment: Continued to decline from 4.1% to 3.7%.

Market Overview

• Vacancy Rate: Declined by 100 basis points (bps) year-over-year (YOY) to 18.4% at the end of Q4 2018.
• Net Absorption: Positive 403,719 sf year-to-date (YTD) in 2018, with 166,391 sf absorbed in Q4 2018.
• Leasing Activity: Total YTD leasing activity reached 2,423,988 sf, with the fourth quarter showing a slight decrease due to the prevalence of renewals.
• Average Asking Rent: Increased by 2.9% YOY to $27.62 psf (full-service basis), with Class A rents rising by 2.1% to $30.78 psf.
• New Construction: The 75,000-sf speculative office building at 5801 University Research Court was fully leased to The State of Maryland in Q4 2018, helping to stabilize vacancy rates.

Submarket Performance

• Pike Corridor: Overall vacancy rate at 17.1%, with a net absorption of -16,385 sf in the current quarter.
• Silver Spring: Vacancy rate at 9.1%, with strong leasing activity and no new construction.
• I-270/Rockville: Vacancy rate at 18.1%, with net absorption of 127,465 sf in the current quarter.
• Germantown: Vacancy rate at 21.9%, with negative net absorption in the current quarter.
• Bethesda/Chevy Chase: Vacancy rate at 13.8%, with a net absorption of -3,546 sf in the current quarter.
• Rock Spring Park: Vacancy rate at 24.3%, with negative net absorption in the current quarter.
• Gaithersburg: Vacancy rate at 17.8%, with negative net absorption in the current quarter.
• North Silver Spring: Vacancy rate at 15.5%, with positive net absorption in the current quarter.
• Montgomery County: Vacancy rate at 16.6%, with a net absorption of 142,379 sf in the current quarter.
• Beltsville/College Park: Vacancy rate at 19.4%, with positive net absorption of 166,391 sf in the current quarter.
• Laurel: Vacancy rate at 24.4%, with a net absorption of 9,854 sf in the current quarter.
• Greenbelt: Vacancy rate at 33.7%, with a net absorption of 11,817 sf in the current quarter.
• Landover/Lanham: Vacancy rate at 19.3%, with negative net absorption in the current quarter.
• Bowie: Vacancy rate at 15.2%, with a net absorption of 15,572 sf in the current quarter.
• Oxon Hill/Suitland: Vacancy rate at 24.8%, with negative net absorption in the current quarter.
• Prince George's County: Vacancy rate at 23.2%, remaining significantly higher than the Suburban Maryland average due to a lack of suburban/urban infill developments.

Key Lease Transactions

• 7485 New Horizon Way (68,537 sf): Renewal by US Department of Veterans Affairs in Frederick.
• 8300 Professional Place (60,859 sf): Renewal by Northrop Grumman in Landover/Lanham.
• 6710 Rockledge Drive (42,462 sf): Renewal by IBM in Rock Spring Park.
• 5202 Presidents Court (25,907 sf): Renewal by Maximus in Frederick.
• 1801 Research Boulevard (18,487 sf): Direct lease by Marriott Employees’ Federal Credit Union in I-270/Rockville.

Key Sales Transactions

• 7316 Wisconsin Avenue (75,707 sf): Sold by Chevy Chase Land Company to Saul Centers for $35,500,000, or $510 psf.
• 15800 Crabbs Branch Way (63,000 sf): Sold by Equus Capital Partners to Rickman Development for $4,771,498, or $77 psf.

Outlook

The Suburban Maryland office market continued to tighten in 2018, with upward trends in rental rates and downward trends in vacancy. The market is expected to see a potential spike in asking rental rates if the JBG Smith building at 4747 Bethesda Avenue, scheduled to deliver in July 2019, is not fully leased.

Contact Information

For more information, contact:

Paige Wingate, Research Analyst
Tel: +1 301 634 2367
Email: paige.wingate@cushwake.com
Website: cushmanwakefield.com

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm with a presence in approximately 400 offices across 70 countries. The firm employs around 48,000 people and had revenue of $6.9 billion in 2017. It provides a wide range of services including property management, leasing, capital markets, and valuation. The information in this report is gathered from multiple sources and is presented without any warranty or representations.