Baltimore/Washington, D.C. Corridor Current development activity in the Baltimore/ Washington, D.C. Corridor is predominately of Class A bulk distribution facilities, according to Allan Riorda, principal of NAI/KLNB, Inc. in Columbia, Maryland. "The development of flex product in this area has slowed somewhat primarily because of the economic impact to the telecommunications and fiber optics industries."

"The region remains one of the most diverse in the nation due in large measure to the presence of the federal government and the variety of growth industries including buyer science, healthcare, telecommunications and defense," Riorda continues. "Over the last 20 years, the close proximity to Interstate 95 has driven the success of this region in the distribution and warehousing sectors."

During the fourth quarter of 2001, ProLogis completed three buildings totaling more than 480,000 square feet at Troy Hill in Elkridge. Mack Truck pre-leased 314,000 square feet and Nechen leased approximately 65,000 square feet. The remaining 100,000 square feet is available for lease at $5.50 per square foot, triple net.

MIE Properties has constructed more than 800,000 square feet in Troy Hill Business Park in Howard County and Cromwell Business Park in Anne Arundel County. At Airport 100, Opus East constructed two new distribution buildings totaling 475,000 square feet. Approximately 58,000 square feet is currently available, according to Riorda.

Opus will continue development in Anne Arundel County. The company is constructing two bulk distribution facilities totaling approximately 400,000 square feet with rents around $4.95 per square foot, triple net lease. In March, the James F. Knott Realty Group in Jessup will complete construction of two bulk buildings totaling 153,000 square feet. The buildings will be front-loaded, 30-foot clear and have an asking rental rate of $5.25 per square foot, triple net lease.

Overall, there will be approximately 1 million square feet of product delivered in 2002 in the Corridor -- more if the demand increases, says Riorda.

"The Route 100 Corridor is where a substantial amount of land will be available for future industrial development," Riorda notes. "Currently, land constraints have limited the growth of new development. Due to market diversity, industrial vacancy rates in this region have remained relatively low with modest downward pressure on leasing rates and no negative effect in sales prices of investment buildings or land prices."

Columbia has the highest concentration of fiber optics and related companies. Those tech companies absorbed more than 1.5 million square feet over the last 2 years but recent activity has slowed dramatically. Over the last year, more than 200,000 square feet has been made available on the sublease market. Larger tenants include Ciena Corporation and Corvis, two of the most recognizable names in the fiber optics industry.

Recent major bulk/industrial leases include the 237,000-square-foot lease by Office Depot at 1781 Crossroads Dr. in Odenton and the 102,000-square-foot lease by Lagasse, Inc. at 8700 Robert Fulton Dr. in Columbia. As for office/warehouse leases, The RoomStore has absorbed 113,000 square feet at 8200 Stayton Dr., U.S. Aluminum Corporation has leased 19,800 square feet at 8301 Patuxent Range Rd. and Carrier Systems has leased 45,000 square feet 6711 Baymeadow Dr.

Ciena Corporation has leased 60,000 square feet of flex space at 8520 Corridor Rd. Fujitsu has leased 46,000 square feet of flex space at 2409 Pepper Mill Dr., and at 7767 Old Telegraph Rd. in Hanover, Kohler Power Rental has leased 23,000 square feet of flex space.

Rates for Class A bulk/distribution range from $4.95 to $5.50 per square foot, triple net lease. Class B space ranges from $4 to $4.75 per square foot, triple net lease. Office/warehouse space typically ranges from $5.50 to $7 per square foot, triple net lease, depending on office finish required. Flex product rates typically range from $10 to $14.50 per square foot, triple net lease, also depending on percentage of office build-out required.

At the end of 2001, with a market of 48.75 million square feet, the industrial vacancy rate for the Baltimore/Washington Corridor was 9.34 percent. The vacancy rate was 10.45 percent for bulk product, 4.49 percent for office/warehouse and 12.13 percent for flex product.

"For the year ahead, we project vacancy rates for industrial product to remain below 10 percent, overall rates should remain stable and sublet availability should not increase during 2002. Although troubling economic conditions persist, landlord concessions such as free rent, flat rent and increased tenant improvement allowances could increase," states Riorda.


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