Q4 2022 Office Space Report: Baltimore, MD
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Baltimore is well-known for its rich history, unique culture, and iconic crab houses. In addition to its great seafood, the city is home to various major businesses, including Johns Hopkins Hospital and Under Armour, one of the largest sportswear companies in the US.
The city’s unemployment decreased by 0.6% quarter-over-quarter to 3.1% in Q4.
Its metro population increased from 2.33 million in 2021 to 2.34 million in 2022.
Baltimore’s office space market saw rents hold steady, vacancies increase, and negative absorption in Q4 2022.
General Area Overview & Demographics
Baltimore has a population estimated at 576,500 people, making it the largest city in Maryland and the 31st largest in the nation. It comprises 61.3% African American, 30.5% White, 4.1% Hispanic or Latino, 2.7% Asian, 1.0% two or more races, and 0.3% Native American.
Baltimore, MD Median Household Income & Population
The median household income is $51,000. Approximately 47% of households in Baltimore have an income below this level, while the other 53% make more than $51,000. Of those making over $51,000, 11% earn between $75,000 and $99,999.
According to the U.S. Census Bureau, the age demographic of Baltimore is composed of 18% aged 0-17, 49% aged 18-44, 12% aged 45-64, and 21% aged 65 and older. This indicates that Baltimore has a large population of young people.
Baltimore is home to a diverse range of higher education institutions. The largest school in the city is Johns Hopkins University, which has an enrollment of more than 21,000 students. Other universities in the city include the University of Maryland Baltimore County, Morgan State University, Loyola University Maryland, and Coppin State University.
One of its most famous attractions is the National Aquarium, open since 1981 and features over 17,000 animals from over 750 species. Another major attraction in Baltimore is the Maryland Science Center, which opened in 1976.
In summer, temperatures are typically warm and humid, averaging around 80°F. Winters in Baltimore can be cold and snowy, dropping as low as 20°F. Spring is usually the wettest season, with common thunderstorms and rain showers. Fall is generally dry and cool.
Summary of Baltimore Office Space Performance in Q4 2022
Overall vacancy for Baltimore’s office space was 14.6% in Q4, an increase from Q3’s 14%.
The Harford submarket had the highest vacancy rate at 29.9%, with Baltimore City following at 19.5%.
BWI Airport had the lowest at 8.7%, the only submarket with a vacancy below 10%.
Baltimore Office Space Absorption in Q4 2022
Baltimore recorded an overall negative absorption in the fourth quarter, at -118,200 square feet.
Baltimore City was the lowest at -86,300 square feet, and Suburban North had -84,000.
Howard County and Harford were the only submarkets to post positive absorption in Q4 at 62,000 and 27,400, respectively.
Overall absorption for 2022 for Baltimore office space came to -642,000. Every submarket was negative except BWI Airport (178,500). Baltimore City accounted for -375,700 square feet absorbed.
What are office space rents like in Baltimore?
Rents for office space in Baltimore averaged $25.31 per square foot in Q4, remaining unchanged quarter-over-quarter.
Greater Annapolis recorded the highest at $29.11, with BWI Airport second at $27.24. In contrast, Suburban West had the lowest average at $22.69.
Purchase & Leasing Activity
No notable purchase activity for Baltimore office space took place in Q4 2022.
Leasing activity reached 1.5 million square feet in Q4, a 50% increase over Q3.
Annual total for 2022 ended at around 3.2 million. Baltimore City accounted for nearly 1 million of all activity, the highest of the submarkets in Baltimore.
Harford accounted for only 35,000 square feet of activity.
Notable Office Space Deals in Baltimore in Q4 2022
There were several notable leasing deals that took place for Baltimore office space in Q4 2022:
- Morgan Stanley leased 242,000 square feet.
- Maryland State Office of the Comptroller leased 67,500 square feet.
- Maryland Department of Budget and Management leased 44,200 square feet.
These are select examples among other activity.
New Office Space Development Activity in Baltimore in Q4 2022
Baltimore’s office space market delivered 500,000 square feet of space in Q4, accounting for all deliveries in 2022.
There remain 743,000 square feet of product in the city’s construction pipeline.
Market Forecast for Baltimore’s Office Space Market
Even though Maryland transferred the midtown State Center complex to Baltimore City, the downtown submarket is expected to face chronic vacancy issues due to increased move-outs and relocations.
The older buildings in the CBD will need substantial upgrades to stay competitive, but this might not be achievable with current asking rent averages.
Takeaways for Office Space Real Estate Investors
Investors should consider demand for up-to-date office space as tenants increasingly seek modern amenities and technology.
Do your research, stay diligent, and invest wisely.
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