While Pentagon relocations and budget gridlock in Congress took a heavy toll on the Washington, D.C., office market in 2012, the Maryland suburbs were relatively unscathed, ending the year with total net absorption of negative 29,885 square feet, according to the fourth-quarter report by broker Jones Lang LaSalle.
At the same time, the greater Baltimore market gained, due to the military office shuffle, which sent jobs to Fort Meade in Anne Arundel County and Aberdeen Proving Ground in Harford County.
Frederick County was the bright spot in the Maryland suburbs, showing 120,382 square feet of positive absorption, while Montgomery County was negative 76,660 square feet and Prince George’s County was negative 73,707.
By contrast, the Northern Virginia suburbs were rocked with negative 2.3 million square feet of absorption, almost entirely from the loss of federal and private military tenants under the Pentagon’s base realignment and closure program.
“During the second half of 2011, the consequences of these BRAC movements began to manifest themselves in office market statistics,” according to a Cushman & Wakefield report focusing on Northern Virginia.
Part of Virginia’s loss was Maryland’s gain, as the Defense Information Systems Agency left more than 430,000 square feet at Seven Skyline Place in Springfield to consolidate at new headquarters in Fort Meade, the Cushman report noted.
But one reason for the relatively flat showing for Maryland’s D.C. suburbs is that only 388,001 square feet of new space was completed, according to Jones Lang LaSalle. And most of that was from redevelopment of vacant buildings that were put back on the market in Bethesda.
Washington and Northern Virginia each added more than 1.2 million square feet of new space.
However, the next two years should be more active for developers in the Maryland suburbs, where 2.1 million square feet is under construction. Most of that is related to federal projects, such as the redevelopment of more than 900,000 square feet of space for the Department of Health and Human Services at the Parklawn complex in Rockville and the ongoing consolidation of the Food and Drug Administration at its White Oak campus.
Throughout the Baltimore region, the office market can expect to see some further improvement related to BRAC, as Congress moves beyond the fiscal cliff and more military contractors follow Pentagon and national security agencies to Aberdeen and Fort Meade.
That will come as welcome news to office developers, which have completed millions of square feet, because the vacancy rate has skyrocketed to above 44 percent in Harford County.
Jones Lang LaSalle reported that “the anticipated tail of contractors following customer locations to Aberdeen Proving Ground due to [BRAC] has yet to materialize and left speculative buildings largely empty.”
Developers St. John Properties of Baltimore and Corporate Office Properties Trust of Columbia delivered numerous buildings over the past few years but so far there has been a “limited pipeline of prospective tenants,” according to Jones Lang LaSalle.
In Anne Arundel and Howard counties, office parks near Fort Meade have gained from expansion of the Army base and the National Security Agency.
“Tenants have expectedly put their real estate decisions on hold over the federal deficit debate, but even with potential cuts, the Fort Meade area and cybersecurity industry should remain drivers of growth as intelligence functions continue to receive increased funding,” Jones Lang LaSalle concluded.
EYA buys Bethesda site for 30-unit townhouse project
Residential developer EYA announced that it has acquired an infill redevelopment site in Bethesda, where it plans a 30-unit townhouse project.
The property, at the intersection of Little Falls Parkway and River Road, is next to Montgomery County parkland and the Capital Crescent Trail, between Massachusetts and Wisconsin avenues. The 1.8-acre site, previously owned by businessman and lawyer Peter B. Hoyt, was the former home of the Betco Block Plant, a manufacturing and distribution facility for brick and concrete building materials.
“Over the years, I dedicated my career to the building products industry,” Hoyt said in a news release. “I’m eager to see this site transformed from a manufacturing purpose into a neighborhood of homes which will use some of the very products we’ve made.”
The project will offer easy access to the Whole Foods Market on River Road, downtown Bethesda, Friendship Heights and Mazza Gallerie across the Washington line. EYA plans to build 25 luxury townhouses and five moderately priced dwelling units.
“What we’ve envisioned for Little Falls Place is a rare blend of vibrant city living in a peaceful, relaxing setting,” said Bob Youngentob, EYA’s president and co-founder. “There aren’t many places in Washington where you can achieve this level of access to world-class shopping and dining, yet enjoy acres of nature preserves and onsite trail access.”
EYA won planning board approval for the project’s site plan and preliminary plan in June, clearing the way to replace a cluster of industrial buildings at 5400 Butler Road.
Consistent with EYA’s other projects, Little Falls Place will be built to the U.S. Green Building Council’s environmentally friendly building standards. New home sales will begin in February from an offsite sales center, priced from $1.4 million.
Cassidy Turley tapped to lease industrial property
Cassidy Turley announced today that it is the exclusive listing agent for a 144,571-square-foot distribution warehouse in Annapolis Junction on behalf of TA Associates Realty of Boston.
The Howard County property, at 9060 Junction Drive, “can accommodate tenants ranging in size from 30,000 to 77,000 square feet,” Jarred Testa, a Cassidy senior vice president and principal, said in a news release.
The building is in the Baltimore-Washington corridor with immediate access to Md. 32, Interstate 95 and the Baltimore-Washington Parkway.
BECO buys two Owings Mills office buildings
BECO Management of Rockville announced that it bought two office buildings in Owings Mills, where it plans substantial renovations.
The sales price was not disclosed for Owings Mills Corporate Center I and II, which total more than 330,000 square feet of office space. The complex, at 10451 and 10461 Mill Run Circle, houses a variety of corporate tenants, including Aon Corp. and CareFirst of Maryland.
“The Owings Mills Corporate Center campus is the perfect addition to our portfolio — like our other buildings, they're well-constructed, provide an ideal development platform and are centrally located in a growth-rich location,” Jeffrey Cohen, BECO Management's co-founder and CEO, said in a statement.
Cushman & Wakefield marketed the complex, previously owned by General Growth Properties of Chicago, as a value-added investment. The project is 46 percent leased, which is significantly underperforming the 88 percent leased market, according to a Cushman sales brochure.
One Owings Mills Corporate Center, built in 1987, totals 127,719 square feet and is 73 percent leased. Two Owings Mills Corporate Center was built in 1988, measures 202,882 square feet, and is 29 percent leased. The complex includes a 928-space parking garage.
Owings Mills Corporate Center is next to Owings Mills Mall, with close proximity to Interstates 95, 695 and 795. The buildings are within walking distance of the Owings Mills Metro station and about 25 minutes from downtown Baltimore.
Colliers International will manage leasing of the project.
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