Office demand in the Washington DC market picked up over the course of 2017. Lease rates increased, and recent 5-year statistics show growth and stability in the market. Suburban Maryland’s office demand is keeping pace throughout Prince George’s County, Montgomery County, and Anne Arundel County. These markets are all offering attractive lease rates and absorption. New office construction has increased in the DC market, with 2018 construction forecast to outpace other U.S. metro areas. The Prince George’s County Office Market is expected to achieve positive net absorption in 2018 after adding of several new office buildings scheduled to deliver in the fourth quarter. The Washington DC market’s office demand is supported by a vibrant economy and a labor pool of well-diversified government and non-federal employers. Office sales volumes began to rebound in 2017 and are forecast to continue in 2018. Federal government facilities and related leases have contributed to the stability of the market, which gives office investors and landlords confidence.
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.
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.
Prince George’s County has seen industrial property demand rise over the past few quarters. Our mid-year 2016 industrial market report examines this demand and shows growth for the county’s industrial market.
Prince George’s County’s location makes it ideal for serving the District of Columbia, suburban Maryland, and northern Virginia markets. This makes it highly attractive to storage and distribution businesses. There has been a significant increase in industrial property demand and we have seen ample new construction to meet this growing demand. Two new buildings totaling 275,000 square feet were delivered at Cabin Branch Distribution Center in 2015. We have already seen 225,000 square feet absorbed, primarily by the United States Government. Overall vacancy in Prince George’s County held at 8.1% during the first two quarters of 2016, even with the additional supply added of new buildings.
Also contributing to the industrial property demand in the county are attractive rental rates compared to the neighboring jurisdictions of the District of Columbia and northern Virginia. While rental rates in those neighboring markets are averaging north of $9 per square foot, tenants can still lease class A product in Prince George’s County for the mid $7’s per square foot NNN.
Lance Schwarz and Peter Burleigh of NAI Michael provide the full details and numbers behind the industrial market’s first two quarters of 2016.
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
NAI Michael’s Q2 Office Market Report is out!
The Prince George’s County office market borders the District of Columbia from I-95 to the north and around to the Wilson Bridge and Potomac River on the south next to National Harbor and the proposed MGM casino. The Prince George’s County office market totals approximately 26 million square feet in 1,134 buildings at very affordable rates just over $20 per square foot compared to rates as high as $50 per square foot in DC’s central business district and approximately $28 per square foot in Montgomery County.
NAI Michael has just released its fourth quarter office market report for Prince George’s County, covering everything from vacancy and rental rates to absorption trends and construction in the area. Though the year end numbers indicate a lot of vacancy, market conditions continue to be favorable for both buyers and sellers.
NAI Michael released its fourth quarter market report recently, which analyzes vacancy rates, average rental rates and the construction pipeline, as well as major sale and lease transactions. What this report forecasts is a positive absorption and rental rate growth for this year.