Second Quarter 2012 Market Review
The Washington DC office market finished the second quarter of 2012 with a vacancy rate of 13.4%. This reflects a modest improvement over the prior quarter. For the suburban markets, there was 510,221 square feet of positive net absorption (net space leased).
The Washington industrial market ended the second quarter with a 12% vacancy rate. This reflected a modest increase over the prior quarter where the vacancy rate stood at 11.9%. The 12% vacancy rate for the current quarter is the average rate between flex and bulk warehouse. The vacancy rate for flex alone was the highest at 14.5%, where bulk warehouse stood at 10.3%. The I270 corridor had a vacancy rate for flex space of 13%. The Frederick County submarket had a vacancy rate of 20.2% for flex.
The Washington retail space market held steady with a low vacancy rate of 4.7%, essentially unchanged from the prior quarter. Average quoted rental rates across all retail product types was $23.54/square foot. In terms of retail product types, big box centers had the second lowest vacancy rate at 2.7%. General retail properties had a vacancy rate of 3.7%. Specialty centers had the lowest vacancy rates at 1.8%. The retail vacancy rate along the I270 corridor stood at 5.2%.
General Market Trends/Sentiment
Industry participants noted a modest increase in the number of tenants and buyers in the market. Nevertheless, decision making amongst tenants and buyers is slow and cautious. This is a result having both abundant options and conservative estimates for future business growth.
In general, market participants expect every sector of commercial real estate to continue its modest recovery. This is largely reflected by little to no new supply being delivered, combined with continued positive net absorption in space
TD Recent Transactions
Kemp Bio, Inc.
Kemp Bio, Inc. is expanding from its current location in MD Incubator Space (FITCI). The company will be relocating to 3,000 square feet at 5119 Pegasus Court, Suite P, Frederick, Maryland 21704, owned and developed by St. Johns Properties. David Kaye of TD represented Kemp Bio in their space search, and the transaction took several months to complete. Kemp Bio, Inc. specializes in providing Mammalian and Insect Cell Culture Services to the biotech community. Christopher Kemp, PhD, is the head of the company and has previously started and grown other successful biotech companies.
Lab Recyclers, Inc.
Lab Recyclers, Inc. currently has sales offices based in Gaithersburg, MD. For efficiency and cost savings reasons, they sought to locate the rest of their operations in Frederick, MD. Lab Recyclers is a supplier of new and used analytical instrumentation, lab furniture, biotechnology products and general lab equipment. David Kaye of TD represented Lab Recyclers in their search for suitable space options. An extensive search resulted in them leasing 16,136 square feet at 801 N. East St. here in Frederick, owned by Fitzgerald Realty. Dan Brower, president and owner of Lab Recyclers, Inc. is excited and optimistic about the long term growth for the biotech community in Frederick and throughout the region.
TD, as the property manager and leasing agent for the building, has leased 2,000 square of office space to IronData at 1502 Woodlawn Drive in Baltimore, MD. IronData is a software company. It offers a comprehensive suite of solutions, called Intelligent Process Management, that assess, improve, manage and monitor challenging operational process issues for clients in two key verticals: public sector and transportation/logistics. IronData is utilizing this space as a satellite office where they are a subcontractor to Lockheed Martin performing services for the social security administration.
TD represents DealerOn in its leasing of 8,800 square feet at 7500 Standish Place in Rockville, MD DealerOn was founded in 2003 by auto industry veterans to help auto dealers leverage online marketing best practices and technology to maximize the return on their marketing time and resources.. DealerOn has quickly become one of the fastest growing companies in the field of online marketing of automobiles. Joe Donegan represented DealerOn in securing its new headquarters space in a Class A building along the I-270 Tech Corridor. The new lease provides DealerOn with the ability to accommodate its exceptional growth while maintaining a competitive cost structure.
Avanti Marble & Granite
Avanti Marble & Granite is one of the premier distributers of quality stone in the Mid-Atlantic Region. Avanti has responded to the new economy by restructuring the company to focus on and expand the exceptional Avanti brand and continue to provide the highest quality materials, performance and service for a reasonable cost. As part of its new focus, Avanti has engaged TD to explore sale, financing and sale-leaseback options with regard to the company’s Class A 31,000 square foot headquarters facility at 3909 Cornell Place, Frederick, MD.