Total square footage of improved commercial office space leased in Frederick County jumps 56% over 2015 statistics.
That good feeling that we CRE brokers and their clients had all last year about the leasing market activity seemed to be real!
In the MacRo Report Blog-All Signs Point to Frederick County as Poised for Continued Growth–posted on January 18, 2017, we outlined the statistics showing that the office, warehouse and flex markets experienced strong gains with significant drops in vacancy rates and increases in lease rates, but the retail sector held its own in those categories.
Consider the following:
- The total number of lease deals in Frederick in 2016 increased by 10% over 2015.
- The total amount of square footage leased increased by 28% in 2016 vs. 2015.
- The weighted average space size grew during 2016 by 40%.
Here’s a look at the amount of lease activity pulled from CoStar (the world leader in commercial real estate information, which has the most comprehensive database of real estate data) in each sector. This data sheds more light on why our landlords are generally feeling better and more optimistic:
It appears that the office leasing market is clearly on its way back. After two years of 185,000 SF of annual gross absorption, the Frederick market experienced a 56% jump to over 285,000 SF. This was mirrored by an increase in the number of deals struck from 86 transactions in 2015 to 96 last year. Since the latter only yielded a 12% increase, the good news here was that the average unit size grew by about 40% from 2,120 SF to 2,970 SF last year.
This sector of Frederick County commercial real estate also showed a very respectable increase in the number of transactions and in gross absorption with a 17% increase over the preceding year – 58 deals vs. 50 and 417,300 SF vs. 356,000 SF. With low vacancy rates, about 700,000 SF of new space came online in 2016, which was another sign that the market is back.
As reported in the our January 18th post, the retail sector new deliveries of retail space fell off of its 5 year average of 80,000 SF to just 30,000 SF last year. This is likely a reflection of the competitive nature of the market catching up with itself. Nearly 130,000 SF was inked in 40 deals last year, compared to 110,000 SF across 50 deals for 2015. But the 130,000 SF was still 17% less than 2014’s figure of 155,000 SF. The good news here was that the average unit size grew by nearly 50% from 2,195 SF in 2015 to 3,230 SF last year.
Gains at MacRo, Ltd., too!
As reported in our fall 2016 newsletter, MacRo had reached a 14% increase in the number of sales and leasing transactions by the end of the 3rd quarter of 2016 over 2015. As of year end our leasing activity increased by a margin of 53% in inked lease deals over the year before.
Overall, these statistics are good signs for the commercial real estate leasing market in Frederick! There is no question that prospective tenants are out in large numbers and doing more than just kicking tires.
Please let any member of the MacRo Team know if we can be of assistance!
Rocky Mackintosh is President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He has been an active member of the Frederick, Maryland community for over four decades. He has served as chairman of the board of Frederick Memorial Hospital and as a member of the Frederick County Charter Board from 2010 to 2012. He currently serves as chairman of the board of Frederick Mutual Insurance Company. Established in 1843, it is one of the longest enduring businesses in Frederick County.