Q3 2022 Multifamily Real Estate Report: Baltimore, MD
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Baltimore’s multifamily market seems to be holding steady in the short term: Rents grew by about 1% over Q2 2022’s average, and the area’s submarkets seem to be performing well.
Baltimore’s labor market grew by over 4% and added nearly 72,000 jobs at the beginning of Q3 2022; however, its employment rate is still below the national average.
Unemployment reached 3.7% for the larger metro area.
The leisure and hospitality industry saw the most significant job increases, adding 26,900 jobs in total.
The population of Baltimore declined in 2021 by 0.1%, with the loss of 3,300 residents, while the national population grew by about 0.1%.
General Area Overview & Demographics
Baltimore is the largest city in Maryland, with 576,498 residents as of 2021. Its population is 56% African American and 32% White. Other racial breakdowns include Asian (6%), Hispanic or Latino (4%), and Other (2%).
Regarding age demographics, the median age in Baltimore is 33.7 years old, with 38% of residents between 18 and 34 years old, 24% between 35 and 44 years old, 21% between 45 and 54 years old, and 16% between 55 and older.
The median household income was $47,391 in 2019. Approximately 25% of households in Baltimore make less than $25k per year, while around 15% make more than $100k per year.
The University of Maryland, Baltimore (UMB) is the oldest public university in the state, founded in 1807. UMB offers over 130-degree programs across seven schools and colleges and is home to the world-renowned Medical Center.
The National Aquarium in Baltimore is one of the most popular public aquariums in the United States. The facility opened in 1981 and houses over 17,000 aquatic animals from more than 750 species.
The city enjoys a mild climate with four distinct seasons. Summer in the city is hot and humid, with temperatures typically ranging from the mid-70s to mid-90s. Winters are generally cool to cold, with average temperatures between the high 20s to mid-40s.
Summary of Baltimore Multifamily Real Estate Performance in Q3 2022
Vacancy reached 3.9% in Q3 2022. Year-over-year, occupancy fell to 96.2%, which is above the national rate of 96%.
Renter-by-choice properties saw a decline of 0.3% in occupancy, settling at 96.1%, while renter-by-necessity dropped 0.2% to 96.3%.
What are multifamily rents like in Baltimore?
Quarter-over-quarter, rents for multifamily real estate in Baltimore were up 0.9%.
The average monthly rent was $1,664 per unit, while the national rate was $1,706.
Renter-by-choice rents averaged around $2,080 per month, a 1% increase compared to Q2 2022, while renter-by-necessity averaged $1,460 per month, a 0.7% increase and a burden to most Americans living in the area.
Purchase & Leasing Activity
Baltimore multifamily assets in the larger metro area cleared $1.1 billion in the first half of 2022.
Investment volume was down 27% year-over-year, as the volume in 2021 reached over $3 billion.
Of the sales done in 2022, renter-by-necessity properties made up $794 million of the $1.1 billion.
The average price per unit was around $197,000 at the beginning of Q3 2022, a 3% price increase compared to 2021.
Notable Multifamily Real Estate Deals in Baltimore in Q3 2022
Several notable office deals and leases occurred for multifamily real estate in Baltimore.
These include:
- Renaissance Management Group’s acquisition of Renaissance Hills at Ellicott for $210 million.
- Marble Partners’ acquisition of Ellicott Grove for $81 million.
- Corner Lot Development’s acquisition of Ashbury Courts for $35 million.
- Concordia Properties’ acquisition of The Reserve at West Hills for $22 million.
These are among other notable sales transactions and leases.
New Multifamily Real Estate Development Activity in Baltimore in Q3 2022
There were 5,150 multifamily units under construction at the beginning of Q3.
Over 78% of the construction pipeline comprised higher-tier lifestyle products, while a little less than 17% were affordable properties. Another 31,000 units were in the planning and permitting stages.
In the first half of 2022, six projects accounting for 834 units began, while 782 units were completed.
80% of the pipeline in the third quarter was for product to be delivered in the urban submarkets, with Baltimore-Brewers Hill accounting for 649 units.
Market Forecast for Baltimore’s Multifamily Real Estate Market
Baltimore’s multifamily market remains steady for the near term.
However, rising inflation and interest rates are increasing recessionary risks that could temper demand in 2023.
Takeaways for Multifamily Real Estate Investors
Desirable submarkets like Annapolis and Federal Hill, with higher-quality properties, are the ideal locations for investors.
Assets in this area cost $20 million to $100 million and often experience first-year returns in the mid-3 percent range.
Stay diligent and invest wisely.
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