3rd Quarter 2014 Market Review
Urban Land Institute (ULI) Real Estate Forecast Optimistic
The ULI/EY Real Estate Consensus Forecast for October 2014 projects solid growth over the next three years for the U.S. economy, continued strengthening in real estate capital markets, and continued improvement in commercial real estate fundamentals and the housing sector.
Compared to the previous forecast in April 2014, this forecast is slightly more optimistic regarding commercial property transaction volume and prices, fundamentals in the multifamily sector and annual returns for institutional retail, industrial, and office properties.
Washington DC and Suburban Office Market
With the rate of recent average monthly job gains strong, it’s been expected this would contribute to a reduction in office vacancy rates locally and across the country. However, U.S. office vacancy rates remained flat for the third consecutive quarter at approximately 12%, and locally, office vacancy rates edged up slightly. The Washington D.C. office vacancy rate increased to 14.8%, rising from 14.7% in the prior quarter. The vacancy rate along the I270 corridor had a vacancy rate of 17.3% at the end of the third quarter. With the exception Bethesda/Chevy Chase which finished the third quarter with an 8.8% vacancy rate, all other submarkets in the region maintained their double digit vacancy rates.
Washington DC and Suburban Retail Market
The vacancy rate for retail space in the Washington Metropolitan Area was down slightly to 4.4%. This is a blended rate among various retail property types including traditional shopping centers, malls, big box stores and specialty retail. Among those property types, traditional shopping centers had the highest vacancy rates at approximately 6.5%. The regional retail property market is outperforming the national market with the stated 4.4% vacancy, versus a national average vacancy rate of 6.3%.
After a modest decline last month, existing-home sales bounced back in September to their highest annual pace of the year, according to the National Association of Realtors®. All major regions except for the Midwest experienced gains in September.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August. Sales are now at their highest pace of 2014, but still remain 1.7 percent below the 5.26 million-unit level from last September.
Locally, for Frederick and Montgomery County, year to date, existing home sales volume is up 6.6% and 7.6% respectively. However, year over year, the average home sales price was down in Frederick County by 7%, while in Montgomery County the average home sales price was up 6%. The overall inventory of existing houses for sale is up year over year by approximately 14% for Frederick County. Based upon the current sales pace, this represents about a 5 month supply. Inventory for Montgomery County year over year is up by 15%, and, at the current sales pace, represents a 4 month supply. TD expects the housing market to continue to improve regionally, as evidenced by increases in total units sold. However, price increases will be moderated as more inventory/supply will be put on the market as a result of the improving market.
Tyler-Donegan 3rd Qtr. Completed Transactions
American Karate Academy
Tyler-Donegan represented American Karate Academy in their relocation from 82 Worman’s Mill Ct., Unit D, Frederick, MD 21701 to their new space at 928 N. East St, Frederick, MD 21701 (Monocacy Village Shopping Center). The new facility is 4,000 sf and was leased for a five year term. It has ample parking, and includes a waiting area for parents during classes and well as convenient access to restaurants and shopping. American Karate Academy has been operating in Frederick for more than 20 years and is owned by Master Mark Clark. Master Instructor Clark has trained continuously for over 40 years in Martial Arts. He holds numerous Black Belts and Instructorships. Their curriculum includes Shotokan Karate and its Katas (Japanese forms). He also teaches kicking and striking techniques from Tang Soo Do and Hapkido(Korean Self Defense systems)as well as grappling skills that are a combination of Machado, Gracie, Du Mog (Brazilian and Indonesian Grappling). For close quarters grappling they use Chi Na and small circle, Jiu Jit Su
In representing the Landlord/Owner of the English Muffin Business Center in Frederick, MD, TD secured two leases totaling 3,600 square feet. Tenants included Hinnant Design Car Parts & Accessories • Automotive Customizing and 368 Fitness Training Center.
Tyler-Donegan listed and marketed 4 acres of residential land at 23543 Frederick Road, Clarksburg, MD 20871. In September the property sold and settled with CapStar Real Estate representing the Purchaser. The Purchaser will be developing an assisted living facility on the site.
Washington Gem and Mineral Company
TD leases 4,000 square feet to Washington Gem and Mineral Company. Washington Gem and Mineral has been in business for over 30 years and has relocated from Gaithersburg to Hyatt Park on the Montgomery/Frederick County Line. The company does mineral and gem processing, wholesale jewelry distribution and repairs.