FEATURE ARTICLE, DECEMBER 2005

Baltimore

The Baltimore metropolitan market is centrally located along the Mid-Atlantic coast and is 45 minutes north of Washington, D.C. The greater Baltimore commercial real estate market has historically avoided the major ups and downs that plague other markets because of a few primary engines that help to keep the area strong:   defense, financial services and biotechnology.

Defense is the driving force in the southern metropolitan market where the direct net absorption is 572,772 square feet with leasing activity of 1.4 million square feet. Major tenants in this market include Northrop Grumman, Lockheed Martin, Titan Systems and Booz Allen Hamilton. In the Northern metro market, the effects of the U.S. Department of Defense Base Realignment and Closure process (BRAC) will greatly affect the Aberdeen Proving Ground in Harford County. Opus East, LLC, a Maryland-based developer, sees the economic potential in the basing decisions and has plans to build up to 3 million square feet of office space on Aberdeen's grounds. Further south at Fort Meade in northwest Anne Arundel County, more than 5,000 defense-related jobs will be added. These two areas will experience significant changes in the next 2 to 5 years in the form of job growth, with several million square feet of new office space predicted.

The overall industrial market, including flex, office-warehouse and bulk product, has had positive net absorption; there is currently 2.6 million square feet of construction underway in the greater Baltimore region. Baltimore Crossroads @ 95 is a 1,000-acre development in northeastern Baltimore County that is expected to generate at least 10,000 new jobs in the pharmaceutical, biotechnology and technology industries. Bethesda, Maryland-based Somerset Construction Company and its partner, St. John Properties, will build up to 2.5 million square feet of office space, while First Industrial Realty Trust will build 2.5 million square feet of manufacturing and industrial complexes. Another area slated for tremendous biotech growth is in Baltimore City, adjacent to Johns Hopkins Hospital, where a new 188-acre campus is underway and one fully leased 200,000-square-foot research facility is being built.  

In the general vicinity of the central business district, tenants are shifting from the Inner Harbor area to the eastside of the harbor where developers H&S Property Development, Struever Bothers Eccles & Rouse and Hale Properties are working on new projects totaling 1.5 million square feet. One of the great stories of a change in Baltimore City has been the explosion of residential development in both new construction and conversion. According to a new study, downtown Baltimore has the potential to be one of the country's top 10 retail markets thanks to the flourishing residential market. This new influx of young executives with significant purchasing power should spur tremendous retail development during the next 2 to 5 years.   

In 2006, the Baltimore metropolitan market will see growth mainly on the southern and northern tip of the market as a result of   September 11 and the BRAC report. Much of the demand for future office space is expected to be driven by medical research and spin-offs from the merger/swap of Legg Mason and Citigroup. The outlook for 2006 and beyond looks extremely favorable for the greater Baltimore area; this area is fortunate to have a diverse business base and not an economy dependant upon a single driving force.

— Mark Deering is vice president   with Baltimore-based MacKenzie Cushman & Wakefield Alliance.


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