Vacancy Rate For Industrial Space In Baltimore North I-95 Corridor In 4th Quarter Dips To 3.3%, A Historic Low Says CBRE

Vacancy Rate For Industrial Space In Baltimore North I-95 Corridor In 4th Quarter Dips To 3.3%, A Historic Low Says CBRE

January 12, 2022

The seemingly insatiable demand for industrial real estate product nationwide is mirrored in the Baltimore North I-95 Corridor, with more than 11 million square feet of industrial space leased in 2021, creating a 3.3% regional vacancy rate. This data is reported by CBRE, the world’s largest commercial real estate services and investment firm, which operates a full-service location in Baltimore and defines the Baltimore North I-95 Corridor as the area encompassing Baltimore City Southeast, Baltimore County East and the entirety Harford and Cecil counties. The leasing activity resulted in an overall net absorption of approximately seven million square feet of space, which subsequently reduced the vacancy rate to a historic low.

CBRE also reports the following market-specific information.

  • Approximately 1.5 million square feet of space was leased in Baltimore County East, resulting in a vacancy rate of 2.4% at year-end 2021.
  • The vacancy rate in Cecil and Harford counties ended the year at 4.3 %, based on the nearly three million square feet of space leased last year.
  • With a limited speculative construction pipeline on the immediate horizon, the vacancy rate is expected to decrease in 2022 as demand continues to outpace supply which will also result in increased pressure on rents.
  • Significant leasing transactions in 2021 included a 1.2 million square feet lease signed by Wayfair at 1500 Woodley Road; a 656,000 square foot lease executed by WebstaurantStore at 1100 Woodley Road; Elite Comfort Solutions’ nearly 615,000 square foot lease at 1900 Clark Road; a 500,000 square foot lease signed by Fanatics at 811 Old Philadelphia Road and a 715,000 square foot lease executed by Bella + Canvas at 200 Nazarene Camp Road in North East.
  • Bulk occupiers continue to consider Maryland sites as part of a larger geographic region encompassing Pennsylvania, New Jersey, Virginia and West Virginia, leading to stiff competition for occupiers between various jurisdictions and states.

Sharp rise in on-line shopping over the past year

Changes in consumer shopping habits fueled by the pandemic resulted in US ecommerce sales eclipsing the $1 trillion mark, which marks an all-time high, a trend that was edging up over the past five years but dramatically accelerated over the past 18 months. Real estate experts now consider shopping patterns permanently changed, and according to information released by the US Census Bureau, more than 13% of all retail purchases now come via digital orders.

Access to 4th largest MSA and 34% of US population within one-day truck drive

Baltimore City, as well as Baltimore, Cecil and Harford counties have same-day access to the 4th largest Metropolitan Statistical Area (MSA) in the country, with more than 10 million consumers. This region is also considered the nation’s wealthiest, based on per capita income. Nearly 35% of the United States population can be reached within a one-day truck drive, including densely populated areas of Pennsylvania, New York, New Jersey and Virginia. In addition, The Port of Baltimore is considered the #1 RoRo (roll on/roll off) destination in the country, due to its strategic location, highway connections and heavy rail component.

According to a report in Forbes, the demand for warehouse logistics workers increased by 244% last year, while the search for new truck drivers expanded to 761%. Warehouse positions offer the opportunity for growth, flexibility and variety, with Maryland considered a fertile area to recruit highly-skilled workers needed in warehouse positions.

The availability and quality of labor remains a significant driver of real estate decisions, according to Spencer Levy, Global Chief Client Officer and Senior Advisor for CBRE. “Labor is everything, so the availability of talent is often the key factor that drives real estate decisions among companies.”

Over the next five years, nearly 1.5 billion square feet of logistics space will be added to the worldwide inventory of space in response to the surge in e-commerce, according to CBRE.

Consumer delivery expectations driving demand of industrial space

“The development of industrial and warehouse product both nationally and in Maryland is in direct response to the dramatic rise of e-commerce spending, combined with the next-day and same-day delivery demands of the American consumer,” said Bill Pellington, CBRE’s Executive Vice President. “The activity that has occurred in the Baltimore North I-95 Corridor are consistently new requirements that have created meaningful employment opportunities for Maryland residents, while increasing the tax bases of our local jurisdiction.”

“There simply has been no sign of a slowdown in demand for space in the warehouse and logistics category,” added Pellington. “We expect this trend to continue in the foreseeable future, based on the positive economic fundamentals existing in the greater Maryland region. The lack of speculative development on the horizon means there simply will not be enough product to meet the continuing demands of end-users.”

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