CW MD 3Q15 Snapshot
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7/21/2019 CW MD 3Q15 Snapshot
1/2cushmanwakefield.com
Office Snapshot Q3 2015Suburban Maryland
MARKETBEAT
SUBURBAN MARYLAND OFFICE
Overall Vacancy
Net Absorption/Asking Rent
4Q TRAILING AVERAGE
Market Indicators
Q3 14 Q3 1512-Month
Forecast
Overall Vacancy 18.0% 18.7%
Net Absorption (300K) 93K
Under Construction 545K 205K
Average Asking Rent $25.98 $26.12
Economic Indicators
Q3 14 Q3 15 12-MonthForecast
DC Metro Employment 3.11M 3.17M
DC Metro Unemployment 5.0% 4.3%
U.S. Unemployment 5.9% 5.1%
$25.40
$25.60
$25.80
$26.00
$26.20
$26.40
$26.60
$26.80
-1.5
-1
-0.5
0
0.5
1
2010 2011 2012 2013 2014 2015
Net Absorption, MSF Asking Rent, $ PSF
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%20%
2010 2011 2012 2013 2014 2015
Historical Average = 16.2%
EconomyThe Washington, D.C. Metropolitan regional economy continued togain momentum in the third quarter of 2015. The unemploymentrate for the region stood at 4.3% as of August 2015, with year-over-year total nonfarm job growth totaling 64,000 positions. It isevident that the region will handily surpass the historical averageemployment creation of 30,000 net new jobs annually. SuburbanMaryland, for the most part, shared in the regions economicsuccesses. The unemployment rate for Montgomery and PrinceGeorges Counties ended the third quarter of 2015 at 3.9% and5.2%, respectively. Job growth reached 20,000 net new nonfarmpositions in August 2015 year-over year well above the historicalaverage of 7,300 jobs per year. While the majority of theemployment gains were in non-office-using sectors such aseducation, healthcare, retail, and hospitality, Prince Georges andthe surrounding counties saw strong growth in professional andbusiness services employment and Montgomery County has seenpositive, albeit modest, growth in research and developmentrelated jobs.
Market OverviewVacancy across Suburban Maryland ticked up by 0.2 percentagepoints to 18.7% over the quarter and has remained above themarkets historical average of 16.2% since the first quarter of 2014The market registered a relatively flat, but slightly positivequarter with 93,000 square feet (sf) of net absorption; however itstill witnessed the slight uptick in vacancy due to a number ofsmaller properties delivering with significant availability.
Completing construction in the third quarter of 2015 were fourbuildings that were 65% leased upon delivery: 275 N WashingtonStreet (11,700 sf in Rockville), 19851 Observation Drive (80,000 sfin Gaithersburg/Germantown), 4009 Sandy Spring Road (16,800sf in Silver Spring), and 7800 Harkins Road (110,000 sf in CentralPrince Georges County). 7800 Harkins delivered fully leased tothe Maryland Department of Housing and CommunityDevelopment which added a significant block of leased space tothe Central Prince Georges County (PGC) market. The deliverycoupled with Northrop Grummans 60,800 sf renewal at 8300Professional Place drove activity in Central PGC. Counteractingthese positive developments in Central PGC, the General ServicesAdministration (GSA) - Department of Treasury downsized by139,000 sf in Northern PGC as they relocated out of 248,000 sf at3700 East-West Highway and moved into 109,000 sf at 6505Belcrest Road. The Suburban Maryland market has had a slew ofsimilar large scale government consolidations and downsizing inrecent quarters that have hampered the modest demand amongother sectors. Looking forward, there are additional blockstotaling approximately 800,000 sf coming to outer Montgomeryand Prince Georges submarkets through 2017 as the agencies of
the U.S. Department of Health and Human Services and theirprivate contractors continue their aggressive reductions in spaceuse and implement other cost-saving measures.
Bethesda/Chevy Chase, the premier submarket in SuburbanMaryland, experienced positive 47,700 sf of absorption in thethird quarter and saw its vacancy rate tick down to 11.4% from11.6% in the previous quarter. Quality space is becoming scarce inthe submarket and increased competition is expected to quicklyknock out the few remaining blocks. In addition to strongeleasing activity, the sales market for top-quality product inBethesda reached new pricing heights as evidenced by the sale of7550 Wisconsin Avenue. Upon complete repositioning by Akridgeand Rockwood Capital, the 120,000-sf, class A asset sold to GLLReal Estate Partners for $75.5 million, a record breaking $631 persquare-foot-sale in the Suburban Maryland market.
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7/21/2019 CW MD 3Q15 Snapshot
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cushmanwakefield.com
Office Snapshot Q3 2015Suburban Maryland
MARKETBEAT
SUBMARKETTOTAL
BLDGINVENTORY
SUBLET
VACANT
TOTAL
VACANT
VACANCYRATE
AVAILABILITYRATE
CURRENT
ABSORPTION
YTD
ABSORPTIO N
UNDER
CONSTRUC-
TION
AVERAGEASKING RENT
Bethesda/Chevy Chase 102 11,233,762 157,256 1,281,000 11.4% 16.4% 47,725 30,739 0 $36.53
North Bethesda 75 9,880,127 37,570 2,138,678 21.6% 22.7% 17,307 109,181 0 $29.88
Rockville 94 8,821,199 126,680 1,443,960 16.4% 22.6% 63,674 51,660 204,930 $30.72
North Rockville 111 11,366,007 218,045 2,030,791 17.9% 25.7% (34,249) 45,121 0 $25.42
Gaithersburg/Germantown 98 6,528,643 48,131 1,214,773 18.6% 25.3% 70,672 85,748 0 $23.64
Silver Spring 100 7,654,652 46,315 998,695 13.0% 17.0% (81,373) (20,874) 0 $26.54
Montgomery County 580 55,484,390 633,997 9,107,897 16.4% 21.7% 83,756 301,575 204,930 $28.70
Northern PGC 134 10,165,584 59,123 2,770,146 27.3% 28.3% (77,209) (85,451) 0 $20.98
Central PGC 86 4,882,619 33,054 1,401,546 28.7% 29.2% 98,105 95,144 0 $20.69
Southern PGC 51 2,367,057 0 320,416 13.5% 19.1% (11,625) (4,894) 0 $23.66
Prince George's County 271 17,415,260 92,177 4,492,108 25.8% 27.3% 9,271 4,799 0 $21.22
SUBURBAN MARYLAND MARKET TOTALS
TOTAL 851 72 ,899,650 726,174 13,600,005 18.7% 23.0% 93,027 306 ,374 204 ,930 $26.12
p - preliminary
Key Sales Transactions YTD
Key Lease Transactions 3Q 15
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
6505 Belcrest Road 109,000 GSA - Treasury Department Relet Northern PGC
8300 Professional Place 60,800 Northrop Grumman Renewal Central PGC
9601 Blackwell Road 51,155 Shady Grove Fertility Relet North Rockville
4500 East-West Highway 42,400 Teaching Strategies Relet Bethesda/Chevy Chase
6006 Executive Boulevard 29,900 Executive Child Development Center Renewal North Bethesda
1700 Rockville Pike 27,500 Dovel Technologies Renewal Rockville
6110 Executive Boulevard 22,700 Federal Realty Investment Trust Relet North Bethesda
1451 Rockville Pike 13,000 American Association of Immunologists Relet Rockville
PROPERTY SF SELLER/BUYER PRICE SUBMARKET
7550 Wisconsin Avenue 119,591 Akridge / GLL $75,500,000 Bethesda / Chevy Chase
4520 East-West Highway 174,449 AEW Capital / Peel Properties $63,500,000 Bethesda / Chevy Chase
Shady Grove Portfolio 450,000 TA Associates / Lantian Development $50,000,000 North Rockville
7900 Harkins Road 327,240 CW Capital / Cohen Equities $20,350,000 Central PGC
Copyright 2015 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources consideredto be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
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