Category: Market Insight

Office Vacancy Reduced in Prince George’s County

Market InsightMarket Reports

Prince George’s County office vacancy reduced by over half a million square feet leased in the last six months!

Leasing of vacant space achieves over 357,000 square feet in the first quarter 2017 – the highest quarterly absorption for the last 10 years.  Recently signed leases and new leasing activity indicates that Prince George’s County is poised for continued significant growth in office leasing in 2017.

The Washington DC area office market includes the District of Columbia and adjacent suburban submarkets in Maryland and Virginia. The Washington DC area office market consists of about 470 million square feet in 10,051 buildings.  Net absorption for the overall Washington Area was positive 2,754,849 square feet for the first quarter 2017.  The Washington Area vacancy decreased from 14.6% to 14%.

Prince George’s County office space net absorption of vacant space was positive 357,767 square feet in the first quarter 2017.  Annual rental rates for Prince George’s County office space have increased steadily almost every quarter for the last five quarters with the first quarter 2017 rate per square foot of averaging in the mid-twenty dollar range on a full service basis.

FOR A FULL OFFICE MARKET REPORT, CLICK HERE

Office vacancy declined in 2016 in Prince George's County

Office Vacancy Declined in 2016 for Prince George’s County

Market InsightMarket Reports

Over the course of 2016, office vacancy declined in Prince George’s County and in turn, average quoted rental rates have risen steadily.

 It was a year for the Prince George’s County office market. Office vacancy declined steadily every quarter, from 19.2% at the beginning of 2016 to 18.8% by year end. Based on 5-year averages and known construction activity, office vacancy is expected to drop to 17% by the end of 2017. Average full service rental rates increased in 2016, from $20.96 in Q1 to $21.43 in Q4.

A total of 114 office sale transactions were completed in 2016. These transactions totaled 2,597,862 square feet and $168,786,687 in sales volume. Many new owners plan on investing substantial capital into their assets to retain and attract tenants. For leasing, over 153 full service leases were completed, representing 530,820 square feet. One of the largest lease deals of 2016 was with the growing tech-education company, 2U Inc. They are in the process of relocating into 252,950 square feet they leased at 4900 Harkins Road in the Lanham/New Carrollton area.

FOR A FULL OFFICE MARKET REPORT, CLICK HERE

 

Industrial Vacancy Rate Low in Prince George's County

Industrial Vacancy Rates at All-time Low

Market InsightMarket Reports
Industrial vacancy rates are at an all-time low of 6.7% in Prince George’s County.

High demand has contributed to low industrial vacancy rates. Approx. 880,000 square feet of new industrial space was delivered within the county in 2016. In addition, another 500,000 square feet is in the pipeline for 2017 delivery.

These positive trends have created a competitive Class A industrial market. Due to demand, average rental rates is at a high of $7.79 per square foot on a triple net basis. We expect rental rates to push higher in 2017 as industrial-zoned ground becomes increasingly scarce and the supply of vacant space continues to diminish.

As a result of these trends, we expect nearly all of Prince George’s County’s Class A industrial space will be absorbed within the next two years.

For additional details and transaction info, click here to view the full industrial market report.

Top 6 Commercial Office Sales and Leases in Q1 & Q2 2016

Market Insight

Over the first half of the year, 79 office leases and 18 office building sales over 15,000 square feet have demonstrated an increase in the number of transactions in Prince George’s County.

By Dave Wills

The volume of sales transactions, eight of which were investment purchases, averaged $84.93 per square foot, or a total of $55,787,949. The office leases, totaling 300,962 square feet, were term extensions or expansions of existing leases 45% of the time. Starting rents averaged $23.20/SF with full service terms. Rents usually included some remodeling or interior office construction. There were five executed leases that exceeded 10,000 square feet totaling 134,564 square feet with terms averaging five years. Below are the top three commercial property sales and the top three business office leases in the county that were executed by mid-2016.

Notable Sales

  1. Metro Plaza (Metro East) – 8100-8300 Professional Place, Landover:
    A four-building office property totaling 175,717 square feet was sold on May 6, 2016 for $13.175 million ($74.98/SF). The buildings were 75% leased at the time of sale. Market lease rates were $21.95/SF full service for comparable buildings in the Landover submarket.
  2. Corporate Plaza (Metro East) – 8200-8400 Corporate Drive, Landover:
    A three-building office property totaling 179,062 square feet was sold on June 14, 2016 for $14.6 million ($81.54/SF). The buildings were 82% leased at the time of sale. Market lease rates were $21.95/SF full service for comparable buildings in the Landover submarket. The Metro East buildings are located near the intersection of the Capital Beltway (I-495) and Route 50. They are within walking distance of the New Carrollton transit station.
  3. Triangle Centre – 6401 Golden Triangle Drive, Greenbelt:
    A four-story, 80,454 SF office building was sold on June 2, 2016 for $4 million ($49.72/SF). The building was 44.7% leased at the time of sale. The building is brick construction and includes interior/exterior structured parking. Market lease rates were $21.87/SF full service for comparable buildings in the Greenbelt submarket. The building is located near the intersection of Greenbelt Road and Kenilworth Avenue, with direct access to the Capital Beltway.

Notable Leases

  1. In the first quarter of 2016, ATA Aerospace leased approximately 12,000 square feet at Maryland Trade Center II, 7474 Greenway Center Drive, Greenbelt. The space will be used for a NASA contract along with ASRC Federal Space and Defense.
  2. Fluor Enterprises leased approximately 44,000 square feet at 6801-6811 Kenilworth Avenue in the Calvert Metro Park, Riverdale. Fluor Enterprises will be working on WMATA’s Purple Line, which is scheduled to be completed in 2022. The Purple Line is a 16-mile light rail line that will extend from Montgomery County through College Park and onto New Carrollton in Prince George’s County.
  1. 2U, Inc., a software company, has signed a lease for approximately 252,950 square feet at 4900 Harkins Road in Lanham. They will be relocating from nearby 8201 Corporate Drive in Landover, vacating approximately 80,000 square feet. The move is scheduled for the 2nd quarter 2017.

VIEW NAI MICHAEL’S FULL 2016 MID-YEAR OFFICE MARKET REPORT

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NAI Michael is a full-service commercial real estate firm located in the Washington, DC metropolitan area. We have been providing brokerage, property management, and development consulting services for over 40 years.

 

 

Increase in Office Investment Sales in Suburban Maryland

Market Insight

2016 is poised to be a great year for the office market, thanks to an increase in office investment sales in suburban Maryland. We are already seeing major growth in the number of sales and the total square footage being sold throughout Prince George’s, Montgomery, Howard, and Anne Arundel counties.

By the end of June 2015, the suburban Maryland* market saw 43 buildings sold, with a total of 2,856,583 square feet – the equivalent of nearly 6 football fields – according to data NAI Michael has gathered from the CoStar Group**. This year so far, CoStar reports the sale of 53 buildings and a total of 4,227,305 square feet. In other words, the first half of 2016 has seen a 19 percent increase in the number of buildings sold and a 32 percent increase in total square footage sold.

Increase in Office Investment Sales - Square Footage Sold Comparison
Increase in Office Investment Sales – Square Footage Sold Comparison

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Leasing Space for Small Businesses

4 Tips on Negotiating Personal Guarantees when Leasing Space for Small Businesses

Market Insight

Leasing space for small businesses can be difficult for tenants that don’t fully understand the commercial real estate process. One aspect of leasing space that small businesses should understand is the personal guarantee. Andy Mayr of NAI Michael provides some insight on how to best negotiate personal guarantees when leasing space for small businesses. By Andy Mayr, CCIM

Landlords usually require their prospective tenants to provide business financials, such as tax returns, income statements, balance sheets, and personal financials before moving forward on a formal lease agreement.  If the landlord is not comfortable with the review of these documents or requires additional security, s/he may also ask the tenant to sign a personal guarantee.  In the event of leasing space for small businesses, it is especially important to understand personal guarantees.  Personal guarantees have been around in the banking industry for many decades, though they have only been in the real estate leasing world for about the past 40 years.

A personal guarantee puts the tenant’s own assets — such as real estate, savings, or other valuables — on the line should their business not be in a position to pay rent or other lease obligations. If you are new to owning a business or desperate to obtain a lease, you might overlook the legality of the personal guarantee. It is important to know what you are committing to and that you can negotiate the extent of the guarantee. Landlords sometimes expect a tenant to either not accept or limit a guarantee to a specific financial or time constraint. The four most popular resolutions to achieving a mutually acceptable personal guarantee are as follows: Keep reading

New and ongoing development projects - Riverdale Park Station

State of the Economy Previews New and Ongoing Development Projects in Prince George’s County

Market Insight

There are a number of new and ongoing development projects that are contributing to economic development in Prince George’s County, according to the 2016 Prince George’s County State of the Economy Address that NAI Michael had the pleasure of attending on April 13, 2016.

Many new and ongoing development projects were highlighted during the State of the Economy for Prince George’s County. County Executive Rushern L. Baker III, Jim Coleman of the Prince George’s County EDC, Derrick L. Davis of the County Council, and Jim Estepp of the Prince George’s Business Roundtable all spoke about the transformation and re-envisioning of the County. In fact, Baker said that there are more than $7 billion worth of projects in the pipeline, including:

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2015 Industrial Market Report

2015 Industrial Market Year End Wrap-Up!

Market InsightMarket Reports

The Prince George’s County 2015 industrial market grew, with many new facilities delivered and new tenants coming into the market. We review the 2015 industrial market and look ahead to what 2016 will hold for the county.

The 2015 industrial market was rife with new inventory in Prince George’s County. Over 900,000 SF of new, class A facilities came to the market, including Cabin Branch Industrial Park, Andrews Federal Campus and Collington Park. Tenants are starting to make the switch from class B and C space into better class A space. Also, we are seeing many northern Virginia tenants moving into Prince George’s County, which has more affordable rental rates. The increase in demand led to positive tenant absorption and a 5.5% increase in rental rates on average.

In Prince George’s County, there are seven primary class A industrial projects which could be viable for a large industrial user. These include SteepleChase 95, Cabin Branch Industrial Park, Andrews Federal Campus, the Brick Yard, and Collington Park. This class A space will be in high demand during 2016 and is expected to be fully absorbed over the next 36 months.

Interested in reading more about the 2015 industrial market in Prince George’s County? Check out the full report here.

By Lance Schwarz & Peter Burleigh

 

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