Frederick may be one of CNN’s Top eight small town comebacks and listed as one of Movoto’s 2014 Best Counties in America, but is it truly the perfect place for your business? MacRo Investigates how Frederick Commercial Real Estate stacks up against its neighbors.
Ask any business owner about their location and there is likely a story behind the lease or sale. Selecting a location to be open for business – no matter the type – is not an easy task. Taxes, location, traffic, regulations, employees, capital availability and more all have say in the decision process. But how does Frederick compare against its neighbors in Montgomery County, Northern Virginia, Southern Pennsylvania and West Virginia?
Full Service Gross Office Lease
Low lease rates are encouraging for growing businesses, in addition to new ones. According to Costar, both the City of Frederick and Frederick County have lower full-service gross office lease rates and annual full-service office leases than any of their neighbors per square foot. Affordable rates make small business the backbone of economic development in Frederick County with 98% of Frederick County companies employing 100 or fewer workers. In addition to traditional spaces, Frederick boasts a variety of shared and virtual workspaces including Regus, CoWork Frederick, Ridgecrest Investments and Business Factory of Frederick, Frederick County Innovative Technology Center, Inc, A Corner Office and Monarch Executive Suites. Despite these low rates and different space options, no new office space has been delivered in the City of Frederick since June of 2009 with negative net office space absorption during recent quarters. Conversely, retail space rent rates are rising and activity is increasing.
It is no secret that the state of Maryland doesn’t have a stellar reputation for corporate taxes with a 8.25% corporate tax rate, as compared to Virginia’s 6% corporate tax rate. The good news is that Frederick has taken business attraction and retention seriously despite the state’s tax rate, boasting no Business Property Taxes in Frederick County and the lowest Business Personal Property taxes in Frederick City as compared to any other metro area cities.
While low, Frederick City Personal Property Taxes still create a challenge for businesses looking to locate in the City. “Businesses looking to come to Frederick or are already established in the city face challenges from startup capital to municipal taxes,” according to Rocky Mackintosh, co-chairman of the city’s Economic Advisory Council and President of MacRo, Ltd. Despite low lease rates, taxes are a major consideration with locating a business in Frederick. While the City of Frederick’s taxes are the lowest, they still cause a burden on business. Taxes assessed on real estate, income and personal property are heavily weighed when shopping for new markets to conduct and locate business.
Frederick offers many incentives for businesses including funding available for the Downtown, and Golden Mile locations, historic buildings, vacant commercial properties, and arts and entertainment districts to name a few. In addition to the state programs, Frederick also boasts fast track permitting – one of the accomplishments of the last administration in Frederick County. While incentives and capital are available, some say they are underutilized or unavailable for small businesses. State programs exist for initial capital expenditures, but these businesses must have at least 25 employees. While incentives may not be available for everyone, they certainly can make a difference when choosing a location for a business.
Availability of a skilled workforce ranks as one of the top concerns of business owners in Frederick according to the Frederick Economic Development 2014 Forward Frederick Survey following permitting and taxes respectively. The same survey also shows that 75% of respondents felt that Frederick had the workforce to meet their needs, and 20% indicated that workforce talent was improving.
Frederick was recently named 5th among Movoto’s 2015 Top 10 Most Caring Suburbs, and in Frederick caring counts. For Chris Ritchie, owner of Industrial Home located on Market Street in Frederick, community was part of the decision to locate his business in Frederick. “I had been searching for a place to locate my furniture and interior design business, and took a drive through Frederick one day. I was struck by how community driven it felt. That’s important when you are starting a business–when the regional economy is down, you still have support through the local community. It’s almost impossible to find something like that anymore,” said Richie. “I was hoping downtown Frederick would be a good fit for my store and embrace it, and that has proven to be true ten-fold. I refer my clients to local businesses, and those businesses have supported my store the same way. I haven’t been open for a year yet, but sales have exceeded my expectations and I’m already making aggressive plans to grow my business.”
When considering a location to conduct business the numbers are certainly in favor of Frederick County and Frederick City Real Estate. For the business that is looking for the best bang for the buck despite Maryland’s tax rate, Frederick Real Estate is a bargain – not a bust.
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About the Author, Christina May: Christina is managing partner and CMO at Illumine8 Marketing & PR, an integrated inbound marketing agency located in Frederick, Maryland. A recent GALA award winner with 15 years experience in integrated marketing strategy; she is a popular speaker on topics that include real estate marketing, integrated marketing communications, inbound marketing and digital conversion strategies.