Columbia is part of the Baltimore-Washington Corridor, which is the center of the fourth largest U.S. market. This industrial market is comprised of approximately 75 million square feet of product, of which Columbia has approximately 10.5 million square feet, or 14 percent. Due to land and pricing constraints, there has been little industrial development within the Columbia marketplace over the last 10 to 15 years, says Allan Riorda, principal with KLNB in Columbia. "As a result, industrial development has shifted east, primarily along the Interstate 95 Corridor in the Jessup and Elkridge, Md., areas," he says. "The majority of the remaining land parcels within Columbia are controlled by The Rouse Company and are currently being sold to developers for office or flex-type projects."

Within the Columbia market, the two largest blocks of industrial space available are 205,000 square feet located at 8700 Robert Fulton Dr., which is owned by The Penrose Group, and 180,000 square feet at 9325 Snowden River Parkway, owned by the Walallan Corp. The property on Robert Fulton Drive was formerly a General Electric manufacturing facility and was redeveloped in 1997 for bulk distribution use. Since the redevelopment, the building has been successfully leased to Price/Costco, Public Storage Inc., Giant Foods and Genco Logistics.

Approximately 180,000 square feet of available distribution space is located on Snowden River Parkway in the Columbia Midway Distribution Center. This facility totals approximately 489,000 square feet and is leased to Lincoln Tech, Sears and Dal Tile. "The remaining industrial availability in Columbia is comprised of Class B product, which was typically developed between 1975 and 1984 and lacks the ceiling heights and loading features normally required by today's users," says Riorda.

The majority of recent industrial development has taken place just east of Columbia along the Route 1/I-95 Corridor. Commercial land prices in Columbia are now exceeding $400,000 per acre, which will only support an office or retail development, Riorda notes. For that reason, industrial developments have shifted east where industrially-zoned land is more readily available and priced at $125,000 to $200,000 per acre, depending on conditions.

As new developments have been completed, the market now faces constraints on larger land parcels that are readily available for development. As a result, those outparcels and smaller land parcels located within industrial parks have exceeded $175,000 per usable acre.

In Troy Hill Industrial Park, which was originally developed by AEW Capital Management, Prologis is constructing a three-building project totaling 540,000 square feet. The project will feature 28' clear ceilings with asking rates at $5.50 to $5.85 per square foot, triple net. Also in the park, which is located just northeast of Columbia along the I-95 Corridor, MIE Properties and Creaney & Smith will soon develop two projects totaling approximately 275,000 square feet of flex product. Rates for this product will be in the $10 per square foot range, industrial gross on a shell basis.

In addition, Prudential has recently completed four Class A bulk distribution buildings totaling over 800,000 square feet in Troy Hill Business Park. Asking rates for the space, which is currently 93 percent leased, are now exceeding $5 per square foot, triple net basis.

Columbia has been extremely successful over the last several years in attracting high-tech tenants, particularly those in the fiber optics industry. Corvis, a company that specializes in fiber optic products, has absorbed over 300,000 square feet in the Columbia Gateway Business Park. "As a result, we have seen a Šherd mentality' as companies in the fiber optic industry have preferred to locate within Columbia Gateway," says Riorda. "These types of facilities are typically 90 to 100 percent finished for a combination of general office with conditioned assembly areas. The interior build-out is significant, in some cases exceeding $70 per square foot due to electrical and conditioning specifications required by the tenants."

Rental rates for industrial product in Columbia currently range from $4 per square foot to $5.50 per square foot, triple net. New flex product is typically priced at $13.50 per square foot, triple net with a $20 per square foot improvement allowance. Current vacancy rates for industrial product and flex space in Columbia are approximately 7 percent, down from 15.5 percent at the height of the recession in 1993. If the two blocks of space currently available at Robert Fulton Drive and Snowden River Parkway are removed, vacancy would be reduced to 3.4 percent.

As sites in Columbia Gateway Business Park are being absorbed, developers have been eyeing remaining parcels owned by The Rouse Company located near the Route 175/I-95 intersection. In addition, there is a 77-acre parcel known as Blue Stream, which is located just east of Columbia along Route 1 in Jessup. For high-tech users, this parcel is currently being considered by developers as overflow for Columbia Gateway, versus an industrial park similar to the Meadowridge or Troy Hill Industrial Park. However, it remains to be seen if these types of users will locate out of the Columbia city limits.

Overall, the industrial market within the Baltimore/Washington Corridor currently has a vacancy rate of approximately 6 percent, which is the lowest in the last 20 years. "With new developments being readily absorbed, the market is somewhat stagnant, not due to lack of demand, but rather lack of readily available product," says Riorda. "We expect developers to continue to be bullish on the area as long as vacancy rates remain below 10 percent, rental growth remains strong and the local governments continue to provide the infrastructure needed for land development."

Allan Riorda, SIOR, is a principal with KLNB, Inc.


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