Fourth Quarter 2012 Market Review
The Washington DC office market finished the fourth quarter of 2012 with a vacancy rate of approximately 14.2%. This was a slight increase over the prior quarter. Vacancy rates were highest among Class C and B properties with Class A having the lowest vacancy rates. Aside from the overall sluggish recovery affecting the national office market, the Washington Metro area faced greater challenges given the large presence of government/federal contractors occupying a large percentage of the office property inventory. This, coupled with meager regional private sector job growth and Federal job losses, contributed to one of the worst office leasing markets on record for the Washington Metro area. In total, the Washington market generated approximately 1.8 million square feet of vacancy.
The Washington industrial market finished the quarter with a vacancy rate of approximately 11.9%, down slightly from the prior quarter. This compares to a 12.8% vacancy rate for the national industrial market. The vacancy rate for the suburban Maryland industrial market was approximately 12.5%. With limited new supply scheduled to be delivered in 2013, coupled with continued moderate economic growth, industry participants expect vacancy rates to continue declining throughout the year with modest growth in rental rates.
The regional retail property market continues to reflect the best fundamentals in terms of vacancy rates and stability in rental rates. The Washington metro area property sector ended the year with a rate of approximately 4.6%, a slight improvement over the prior quarter.
The TD Team expects stability across all property sectors/types will prevail in 2013. The most notable improvements are likely to occur in the industrial sector. The residential market will also continue with a long-awaited robust recovery which started last year.
TD Recent Transactions
Tyler-Donegan Real Estate represented Mid-Atlantic Chiropractic in leasing 3000 sq.ft. in their new location at 7196 Crestwood Drive. This convenient location allows Mid-Atlantic to better service its patients with ample and free parking, along with visibility from I270. The move was an expansion for Mid-Atlantic, which is owned and operated by Dr. Amir and Brandi Rashidian. The doors at the new location opened on March 15th. Mid-Atlantic specializes in pain relief and chiropractic care for patients of all ages. Tyler-Donegan's Health-Med specialty group worked on this transaction. The Health-Med Group services primarily the medical community throughout the region.
T-D Secures Biotech Space Assignment - The owners of 7320 Executive Way, Frederick MD have engaged T-D's Healthcare and Biotech Advisory Group to market 18,000 square feet of lab/office space in The Omega Center. The Omega Center is home to Life Technologies, Imquest, Fugro Earth Data, Metrico and Phoenix Mecano. The property offers 10,000 square feet of built-out lab space, loading docks and an outstanding corporate image. The property offers tenants easy access to I-270/I-70 and a large local amenity base.
TD is pleased to have leased Mid-Maryland Musculoskeletal Institute (MMI) 3500 square feet within the Knowledge Farms medical & professional building located on route 355 in Urbana, MD. MMI was represented by Henry Forster of Core Commercial Brokerage Services. MMI's surgical and rehabilitation center in Urbana will be a satellite facility to its main headquarters located on Thomas Johnson Drive Frederick, MD. As the exclusive leasing agent for Knowledge Farms Partners, Chad Tyler indicated that the building owners are very excited to add MMI to an extensive list of existing medical practices within the building. The target opening date for the new facility is March of 2013.
Nano Rods, LLC
David Kaye completed the transaction between The Biomedical Research Institute in Rockville (David's listing) and Nano Rods, LLC in December 2012.
Nano Rods, LLC is a nanotechnology company that produces and markets gold nanorods. Its health branch is currently developing coating methodologies and products for biotechnological applications. Nano Rods, LLC has currently licensed its precision nanorods to Siva Therapeutics for treatment of skin and neck cancer.
They lease roughly 300 square feet of lab space from the Association for Entrepreneurial Sciences (AES); AES is a privately-owned incubator in Rockville, MD.
Residential real estate in our area has begun to make a change for the better. Since 2008 our region has mirrored most of the real estate characteristics of the rest of the nation. Granted, we never experienced the extreme impacts that the market had on places like South Florida, Las Vegas, Detroit and San Francisco. But, like the rest of the country, we, too, experienced declining home values, limited housing starts and decreased tax revenue.
Then, in November of 2011, many communities in our region began to notice that home buyers, both investors and homeowners, were entering the market in a big way. The competition for limited housing stock led to most appropriately-priced homes receiving multiple offers throughout the latter half of 2012 and the first quarter of 2013. Investors were willing to pay higher than list price - again in an effort to meet the growing demand for rental properties and prospective homeowners found they were competing for a limited number of listings. Too, we were seeing more potential homebuyers enter the market due to attractive interest rates, an aggressive USDA lending spree and the re-entry of those potential home buyers who had sold their upside down homes in a short sale early in the housing bubble. With builders constructing a limited inventory of single family homes, attractive townhome projects like Urbana and Westwinds noted pre-sales and closings at pre-bubble rates.
At Tyler – Donegan Real Estate we see this competition for limited housing stock continuing throughout 2013 and into the first half of 2014. Why? Let's look at the numbers for communities in our region and for contrast Anne Arundel and Garrett Counties as well.
Based on the information above, listings for home sales are at all-time lows. Couple this information with the next table and you can see why pricing has increased in all but Garrett County. But, even at these rates we don't expect to see the re-capture of lost housing values for six to seven years.
Average Sold Price
What does this mean for the home buyer and investor? We feel that NOW is still a GREAT TIME TO BUY! We also feel that this is a GREAT time for HOMEBUILDERS to meet with their lenders and start building spec homes as well.
If you would like more information on the residential market or if you are interested in buying or selling, please contact Brian Duncan at firstname.lastname@example.org or 240-367-6490.
Information for this article was derived from various data collected by MRIS and rbi, complied March 5, 2013.