After several years of growth, Frederick’s commercial leasing market contracts during first three quarters of 2015.
We’ve been closely tracking Frederick County’s commercial real estate market for almost four years now, and each year the news has gotten a little better. The market here has been improving—albeit with fits and starts—up and out of the trough of the longest recession on record.
Over the last several years, MacRo’s annual results have more or less paralleled the market. So with 2015 being the best year MacRo has seen in years, we assumed Frederick’s market was experiencing similar growth. However, the number of first-quarter Frederick all commercial sectors leasing deals (retail, office, flex and industrial) were down a bit from last year—not by a lot, just about 13%.
It appeared to be a temporary blip.
After all, even commercial land sales at MacRo have been strong this year, a nice recovery as commercial and farm land took the biggest hit when the bubble burst. And, we’ve kept busy writing lease deals, more this spring than in all of my previous years combined (office was the second-hardest hit of the commercial segments).
But no—second quarter over all commercial sectors lease deals throughout Frederick posted an even greater loss during the second quarter—a significant 23% drop in the number of deals from the second quarter of the prior year.
The later weeks of this summer were pretty quiet, which is very typical for this market … but when we crunched the data, the entire third quarter as a whole didn’t shape up well either.
Now here we are, heading into the holiday season, and with three quarters of 2015 data under our belts it’s pretty clear that Frederick’s commercial real estate leasing market has not had a good year, thus far (Hint: the word on the street among other Frederick CRE hangouts is that there are a number exciting large transactions in the works for the fourth quarter … so stay tuned!).
For the first three quarters of 2015, total square feet of commercial space leased is down by over 60%, the average size of the spaces being leased is down by nearly 50%, and the total number of transactions is down by 25%.
The high volume of office deals we were experiencing at MacRo was a red herring of sorts, as the office segment is the only commercial real estate segment in Frederick that saw an increase in the number of deals during the first three quarters of 2015 vs. 2014. However, the total square footage of office space leased, as well as the average size of the spaces, decreased during that time.
The author: Kathy Krach has served as a Vice President at MacRo and specialized in commercial sales and leasing. She is currently taking a sabbatical from brokerage activity, but continues to research and analyze Frederick’s commercial real estate market for MacRo, Ltd.