Area office vacancy rate falls 15.14% is lowest since 1989

Real estate

June 07, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Thanks to steady improvement and a lack of new construction, the Baltimore area's office vacancy rate fell in the first six months of this year to its lowest point since 1989, a leading commercial real estate firm reported yesterday.

The 15.14 percent vacancy rate as determined by Colliers Pinkard continues the four-year decline in the amount of available office space, and represents the latest evidence of the industry's gradual recovery locally.

The last time the vacancy rate was as low as 15 percent was in 1989, a year before overbuilding and the economic recession caused a market collapse and led to the worst commercial real estate environment in Baltimore since World War II.

But as in recent years, downtown Baltimore continued to suffer as the suburbs prospered. Although the vacancy rate is mitigated by strong occupancy in the higher quality so-called Class A buildings, more than one-fifth of all office space downtown remains empty. And while downtown office space makes up just 38.2 percent of the 36 million-square-foot market, its vacancy accounts for 54 percent of all available space in the metropolitan area.

By comparison, Howard County's 8 percent vacancy rate -- the lowest in the area -- represents a three-fold decrease since 1992. Howard County's office space comprises 14.5 percent of the total market, but its vacancy level represents just 7.6 percent of the total.

"Downtown simply doesn't have a mix of companies that are growing," said Jeffrey B. Samet, a Colliers Pinkard vice president.

The suburbs have been steadily rebounding as white-collar employers rebound from the early-1990s recession. That recovery comes despite continued downsizing by government agencies such as the National Security Agency, a major office occupant around the Baltimore/Washington International Airport.

As a result, Samet predicted that limited speculative office development will occur in the second half of the year in stronger areas, primarily Howard County and portions of Baltimore County.

Already, David S. Brown Enterprises has completed a 50,000-square-foot speculative office building in the McDonogh Crossroads business park in Owings Mills.

Samet said most new office development will occur only with significant pre-leasing activity, however, where tenants commit to space before construction begins.

Pub Date: 6/07/96

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