2nd Quarter 2014 Market Review
Washington DC and Suburban Office Market
The second quarter vacancy rate for the Washington DC office market was 14.6% - up two tenths of a percent over the prior quarter. The suburban market vacancy rate also increased by two tenths of a percent during the second quarter to 16.6%. While the Washington and suburban office vacancy rates edged up, the national vacancy rate was down slightly to approximately 11.8%. This diverging trend has continued since mid-year 2012.
National Office Market Vacancy
Washington DC and Suburban Industrial Market
The Washington DC industrial market ended the second quarter with a 9.8% vacancy rate, down from 10.2% at the end of the first quarter. The 9.8% vacancy rate reflects a blend of traditional warehouse and flex space. The flex component has a high vacancy rate, particularly in the suburban markets. In Montgomery County, the vacancy rate on flex space is approximately 10.7%. In Frederick County, the flex component has a vacancy rate of 14.9%.
National Industrial Market Vacancy – Warehouse & Distribution
Washington DC and Suburban Retail Market
Retail buildings in the Washington DC market finished the second quarter with an average of a 4.2% vacancy rate. This is down two tenths of a percent over the prior quarter. Average quoted rental rates have increased by about 1 ˝ % over the first half of the year reflective of an improving retail market.
Flex/R&D National Market Vacancy
Despite lower year to date housing starts than expected, at the end of June, home builder confidence increased to its highest level since January 2014. The NAHB/Wells Fargo home builder confidence index showed a reading by surveyed participants of 56. Any reading above 50 indicates home builders see conditions as good. While poor weather contributed to slower new home sales at the start of the year, new home sales were up 18.6% in May.
Contributing to builder confidence, existing-home sales increased in June and reached an annual pace of 5 million sales for the first time since October 2013, while rising inventory continues to push overall supply towards a more balanced market, according to the National Association of Realtors®. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 2.6 percent to a seasonally adjusted annual rate of 5.04 million in June from an upwardly-revised 4.91 million in May. Sales are at the highest pace since October 2013 (5.13 million), but remain 2.3 percent below the 5.16 million-unit level a year ago.
Tyler-Donegan 2nd Qtr. Completed Transactions
TD represented the Giesler family in marketing and selling 22 acres for sale in Urbana, MD, near the intersection of MD 355 and MD 80. Matan Development contracted to purchase the property several months ago and thereafter worked through an entitlement process to build 352 apartments and some retail space, with a multi-building phased project. The project secured the required approvals in June and the sale of the property closed at the end of June.
Tyler-Donegan represented Lab Recyclers in their expansion this May at 801 N. East St. in Frederick. They leased 16,192 sf of warehouse space in addition to the 10,000 sf they currently occupy and signed a five year lease. Lab Recyclers is a supplier of new and used analytical instrumentation, lab furniture, biotechnology products and general lab equipment. Their lab furniture is refurbished to like-new condition and they service the equipment they sell.
Health Med Realty Partners
Health Med Realty Partners (medical division of TDRE) represented Stone Soup, LLC in leasing 8200 square feet for 15 years at 246 Eastern Blvd. in Hagerstown MD. The space was leased to DaVita, Inc. There are three more suites available for sale or lease at 246 Eastern Blvd. Health Med Realty Partners is the medical leasing and sales division for Tyler-Donegan Real Estate. HMRP is also involved in managing and lease administration for medical office buildings.
TD marketed and sold 14912 Chelsea Circle, Mt. Airy, MD, an REO property of Presidential Bank. TD has assisted Presidential Bank in marketing and selling some of its limited inventory of REO properties. Brian Duncan, a TD partner, carried out an innovative aggressive marketing plan in order to maximize the sale price/value on the bank’s behalf. Presidential is among several banks with which TD works on a regular basis.