RESEARCH

2Q11

Baltimore Office Market

The Baltimore office market continued to see improvement in the second quarter of 2011. Total net absorption was positive for the fourth consecutive quarter, with 496,305 square feet absorbed. The vacancy rate dropped to 15.8% in the second quarter from 16.1% in the first quarter, remaining down from 17.1% recorded one year ago. The average asking rent decreased to $22.34/sf in the second quarter from $22.58/sf in the first quarter and was lower than the $22.68/sf at this point last year. By the end of the second quarter of 2011, 353,553 square feet of office space was delivered to the market and 715,079 square feet were in the pipeline. The Bureau of Labor Statistics stated that in Baltimore, total nonfarm employment declined by 0.9% in the 12 months ending in May 2011, indicating a net loss of 11,800 jobs, although 1,900 jobs were created in May alone. Leasing activity slowed down in the second quarter of 2011 with 199 leases signed, compared to 210 leases signed in the first quarter and 227 signed one year ago. Law firm Miles & Stockbridge signed the largest lease, taking 92,028 square feet in the Transamerica Tower.
Figure 2 $22.05 2Q10 3Q10 4Q10 1Q11 2Q11
Rent (Price/SF) Vacancy (%)

Figure 1

Weighted Average Asking Rent & Vacancy

$22.80 $22.65 $22.50 $22.35 $22.20 18.2% 17.5% 16.8% 16.1% 15.4% 14.7%

Net Absorption (SF)

1,100,000 825,000 550,000

Table 1

Key Indicators
Total Inventory (SF) Average Asking Rent (Price/SF) Total Direct Sublet Vacancy Rate (%) Total Direct Sublet Net Absorption (SF) 2Q11 1Q11 4Q10 Under Construction (SF) 76,075,645 $22.34 $22.58 $19.56 15.8% 15.1% 0.7% 496,305 226,352 964,887 715,079

275,000 0 -275,000 2Q10 Figure 3 3Q10 4Q10 1Q11 2Q11

Total Nonfarm Employment, 12-Month % Change

1.6% 0.0% -1.6%

Table 2

-3.2% -4.8% -6.4% May-07 May-08 May-09 May-10

Baltimore

Year Over Year

2Q10 Vacancy Rate (%) Average Asking Rent (Price/SF) 17.1% $22.68 2Q11 15.8% $22.34 % Change -7.7% -1.5%

May-11

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