Last month, I wrote about the top 10 cities for quality of life, and mentioned that, with my husband joining the military, we’ve been thinking a lot about where we would like to end up. For the next few months, the Air Force has taken us right outside Baltimore, where the office market is experiencing a positive trend in fundamentals.
Baltimore has had employment increase by approximately 31,600 jobs from the end of 2014 to the end of 2015, with the unemployment rate dropping from 5.6 percent to 5.3 percent, according to Cushman & Wakefield’s Baltimore Office Snapshot Q4 2015.
The Baltimore office market experienced approximately 286,000 square feet of net absorption in the fourth quarter, raising the annual total to approximately 1.1 million square feet of net absorption. This is the second consecutive year that Baltimore has exceeded 1 million square feet of positive annual net absorption. The office vacancy rate in Baltimore decreased from 15.7 percent to 14.7 percent. Overall, the vacancy rate has dropped 386 basis points since the end of 2012.
Looking to 2016, Baltimore’s average rental rate has grown and should continue on that path. Some 1.9 million square feet of new office space is currently under construction, but the large quantity of lower-quality buildings struggling to retain tenants will hold back overall rental growth, according to Cushman & Wakefield. Absorption in 2016 is expected to reach 1 million square feet for the third consecutive year.
With bustling hub of Washington, D.C., 40 miles to the south, Baltimore’s recovery from the recession has been slow in comparison, but the city’s outlook is improving and will continue in 2016.
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Zoë Wolff is a reporter with Institutional Real Estate, Inc.
