Marcus & Millichap

Baltimore Office Investment Report

2019 Outlook

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Improved Demand, Less Construction Aid Vacancy; Investors Look Toward High Yields in Suburbs

Technology firms bolster space demand as development slows. Home to both U.S. Cyber Command and the National Cybersecurity Center of Excellence, Maryland hosts many of the nation’s vendors for network security. Rising office demand from these organizations is supporting the development of new technology hubs. The most prominent of these is the Merriweather District in Columbia, where Tenable will be moving later this year. Non-technology businesses are locating here as well, including MedStar Health, Pearson PLC, and Nike. Confidence in the overall market has spurred the development of multiple speculative office buildings in Anne Arundel totaling over 228,000 square feet and opening in 2019. As the highest delivery total for the submarket in nine years, these arrivals will weigh on local vacancy in the short term, but the growth of the cybersecurity industry, nearby government agencies and medical centers will support long-term leasing demand. In most other parts of the metro the construction pipeline is contracting, enabling a drop in the overall vacancy rate to its lowest value in a decade.

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