While overall lease activity in the first 6 months of this year is well below averages, the square feet of office space is the highest in 3 years during the same periods.
Go figure, with all the talk of employee layoffs and office work from home, total office space commitments exceeded 131,000 square feet in the first half of the year, as compared to 125,000 SF in 2019 and 120,000 SF in 2018. Other than the strong first half in 2017 (195,800 SF), it is the second-best performance for that sector in the last 6 years.
It will be more than interesting to see if the Frederick County business community will keep this trend going, as this COVID virus mess just does not seem to want to give the nation a break.
The average size of a leased office unit during this period held steady at just under 3,300 SF, which is better than the mean, since 2015.
The typical length of an office lease signed in the first 6 months of the year increased by nearly 17 months from 2.9 years to 4.3 years.
So, while the Office market threw a surprise at us, the Retail, Industrial and Flex leasing activity slipped considerably during this period. Total square feet leased in all 4 sectors totaled a mere 269,000, which is about 25% less than 2019, and 73% less that the 1 million square feet leased between January 1st and June 30th of 2018.
Getting back to the office sector of Frederick County’s commercial real estate market, while this early indication is promising, it’s still an open question about whether this “work from home” concept will become a catapult ahead of the steady trend that business has been taking over the last decade.
My bet, as noted in my recent post entitled The Post COVID-19 World For Commercial Real Estate Office Space, is that there will likely be a minimal negative impact on the future of office space. Now, if the economy falls into another significant recession because of the COVID dilemma, that is another story.
Think positively, folks … we will get through all this stuff!
Rocky Mackintosh, President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland, has been an active member of the Frederick 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.