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The industrial market in Baltimore is down from its pandemic high but still going strong.
The Greater Baltimore area saw more than 2.3 million square feet of industrial space leased during the fourth quarter of 2022, according to a new report by Lee & Associates-Maryland.
What’s more, 13 million square feet of industrial space is currently under construction, as demand continues to increase. The largest new construction is MCB Real Estate’s 2.2 million-square-foot building in Hagerstown, expected to be delivered in the first quarter of 2023.
The fourth quarter saw a net absorption of more than 1.2 million square feet, contributing to an overall vacancy rate of 4.5 percent, with just over 12 million square feet currently vacant. Compared to the same time last year, both numbers have backtracked, as net absorption was approximately 3.7 million square feet with a vacancy rate of 3.4 percent.
The fourth quarter vacancy rate was also a tad over the third quarter’s 4.41 percent, while net absorption was more than 1 million square feet more at 2.3 million, suggesting a slowdown in the final quarter under economic pressures.
On the bright side, while industrial lease volume is down from a year ago, the total amount of space under construction is consistent with 2021, which represents confidence in the market, Tom Whelan, principal for Lee & Associates-Maryland, noted in a prepared statement.
Equally as important, rental rates for Class A product remain at all-time highs in the area, averaging $7.87 a square foot, and rents overall were up.
Notable leases signed during the fourth quarter included Baltimore International Warehousing & Transportation’s 244,304-square-foot lease at 5250-5330 Holabird Avenue; Amazon’s 241,962-square-foot lease at 1713 E. Patapsco Avenue; and Transdev’s 168,655-square-foot lease at 1610 Wicomico Street.
On the sales side, in the Baltimore market, Prologis acquired nearly 2.5 million square feet of industrial space from Duke Realty in various locations for approximately $230 million; Capital Electric purchased nearly 365,000 square feet of space from Trammell Crow Company for $76 million; and NorthBridge Realty Holdings acquired approximately 160,000 square feet of space from The Colad Group for $21.2 million.
“The warehouse/industrial sector, both nationally and regionally, is still being impacted by changing consumer buying habits precipitated by the health care crisis, and the resultant need for additional space near major population centers to deliver products,” Whelan said.
Keith Loria can be reached at Kloria@commercialobserver.com.
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