MARKETBEAT

Suburban Maryland
Office Q4 2016

Economy

SUBURBAN MARYLAND OFFICE

The Washington, D.C. metropolitan regions (DC Metro)

Economic Indicators

12-Month
Forecast

economy closed 2016 in very strong fashion. Over the course of

Q4 15

Q4 16

D.C. Metro Employment

3.20M

3.26M

most since 2004. Suburban Marylands accounted for 20,700 of

D.C. Metro Unemployment

4.2%

3.9%

the total job creation with strong growth in Education and

U.S. Unemployment

5.0%

4.8%

Healthcare, Retail, and Professional and Business Services

the year, the DC Metro created 70,700 net new nonfarm jobs, the

sectors. Regionally, unemployment ended the year at 3.9% with

the Montgomery and Prince Georges Counties registering 3.3%

Market Indicators (Overall, All Classes)

and 4.2%, respectively.

Q4 15

Q4 16

21.2%

20.6%

Net Absorption (sf, YTD)

116k

747k

Under Construction (sf)

234k

Average Asking Rent*

$26.26

$26.33

Vacancy

12-Month
Forecast

*Rental rates reflect gross asking $psf/year

Overall Net Absorption/Overall Asking Rent

x 100000

4-QTR TRAILING AVERAGE

$29.00
$28.50

Market Overview
Suburban Maryland closed 2016 with 747,438 square feet (SF)
of positive absorption, with the fourth quarter 2016 accounting for
61.3% (a total of 420,630 SF). With positive absorption,
Suburban Maryland vacancy dropped 60 basis points (BP) since
the fourth quarter of 2015 closing the fourth quarter 2016 at
20.6%. This marked the first year since 2013 that the Suburban
Maryland market has closed with positive absorption. T-Rex
Consulting Corporation signed and took occupancy of a total of
126,000 SF in two buildings on Ora Glen Drive: one at 76017605 Ora Glen Drive and the other at 7615-7637 Ora Glen Drive.

$28.00
1

$27.50

$27.00
$26.50

-1

$26.00
-2

$25.50

-3
2011

2012

2013

2014

Net Absorption, MSF

2015

$25.00
Q4 16

Asking Rent, $ PSF

Overall Vacancy
24%
22%
20%

Year-to-date, new leasing activity accounted for 2.9 million

square feet (MSF), a 46.7% increase from the same period a
year ago. This trend should continue upward due to the new
presidential administration which may result in both increased
GSA and private-sector leasing.
The only delivery of the fourth quarter 2016 was the 103,550 SF
Class B office building at 12358 Parklawn Drive located in the
Pike Corridor submarket, which delivered in November. Though
vacancy rates have begun to tick down, developers refrained
from kicking off any new construction during the fourth quarter of
2016. With no new deliveries, tenants with near term timing will
need to select from existing options, helping to trend vacancy
rates down. A limited pipeline, strong leasing activity, and
positive absorption should keep Suburban Marylands vacancy
on the downward trend.

18%
Historical Average = 19.5%

Outlook

16%
14%
12%
2011

2012

2013

2014

2015

Q4 16

Despite a cycle of uncertainty throughout 2016, leasing activity

trended upward. With a wave of lease expirations expected to hit
the market in the next 12 to 18 months, leasing activity is
expected to remain robust throughout 2017.
cushmanwakefield.com

MARKETBEAT

Suburban Maryland
Office Q4 2016
OVERALL
YTD
UNDER
AVERAGE
LEASING
CONSTRUCTION ASKING RENT
ACTIVITY
(SF)
(ALL
(SF)
CLASSES)*

CURRENT QTR
OVERALL NET
ABSORPTION
(SF)

YTD
OVERALL NET
ABSORPTION
(SF)

16.80%

-137,641

-153,273

466,502

$28.61

$29.47

524,899

11.50%

21,657

30,205

117,923

$29.03

$31.22

87,025

2,269,396

24.50%

282,841

304,013

667,416

$27.44

$30.32

4,616

404,255

21.40%

8,920

53,759

27,074

$24.42

$28.00

8,612,795

133,666

701,398

9.70%

128,324

278,153

680,415

$35.90

$41.43

Rock Spring Park

4,240,001

20,733

1,211,945

29.10%

19,722

-5,118

128,116

$30.25

$31.51

Gaithersburg

2,157,113

35,413

423,181

21.30%

-31,550

-5,688

50,841

$24.11

$24.77

North Silver Spring

1,055,127

206,284

19.60%

20,653

56,729

55,473

$24.75

N/A

Montgomery County

43,348,082

419,616

7,461,873

18.20%

312,926

558,780

2,193,760

$28.45

$30.52

Beltsville/College Park

4,209,640

24,892

1,108,514

26.90%

28,350

148,746

62,296

$21.07

$20.96

928,694

13,069

171,262

19.80%

29,593

-37,812

15,508

$18.61

$20.25

Greenbelt

2,837,971

13,558

1,038,485

37.10%

12,231

-37,279

235,855

$21.38

$23.23

Landover/Lanham

2,947,320

18,821

866,649

30.00%

40,290

104,815

450,684

$21.62

$21.91

780,082

5,789

153,678

20.40%

28,003

29,743

11,516

$24.74

$25.00

1,719,938

382,123

22.20%

6,973

-19,555

22,704

$25.44

$26.39

INVENTORY
(SF)

SUBLET
VACANT
(SF)

Pike Corridor

10,876,464

104,359

1,720,515

Silver Spring

4,877,684

33,804

I-270/Rockville

9,620,139

Germantown

1,908,759

Bethesda/Chevy Chase

SUBMARKET

Laurel

Bowie
Oxon Hill/Suitland

DIRECT
OVERALL
VACANTVACANCY RATE
(SF)
(%)

OVERALL
AVERAGE
ASKING RENT
(CLASS A)*

Prince Georges County

13,423,645

76,129

3,720,711

28.30%

145,440

188,658

798,563

$21.65

$22.47

MARKET NAME TOTALS

56,771,727

495,745

11,182,584

20.60%

458,366

747,438

2,992,323

$26.33

$28.84

*Rental rates reflect gross asking $psf/year

Key Lease Transactions Q4 2016

PROPERTY

SF

TENANT

TRANSACTION TYPE

SUBMARKET

6705 Rockledge Drive

250,000

National Institute of Health

Renewal

Rock Spring Park

6701 Rockledge Drive

240,492

National Institute of Health

Renewal

Rock Spring Park

7601 Ora Glen Drive

78,000

T-Rex Consulting Corporation

New

Greenbelt

4550 Montgomery Avenue

62,000

Cystic Fibrosis Foundation

New

Bethesda/Chevy Chase

7615-7637 Ora Glen Drive

48,000

T-Rex Consulting Corporation

New

Greenbelt

Key Sales Transactions 2016

PROPERTY
5601 Fishers Lane

SF
515,717

7272 Wisconsin Avenue

168,342

4800 Montgomery Lane

150,000

SELLER/BUYER
JBG/USAA
American Society of Health-System
Pharmacists/Carr Properties
American Realty Advisors/The Donohoe
Companies, Inc.

PRICE / $PSF

SUBMARKET

$177,846,000/$344.85

Pike Corridor

$105,500,000/$626.70

Bethesda/Chevy Chase

$74,500,000/$496.67

Bethesda/Chevy Chase

About Cushman & Wakefield

Cushman & Wakefield

2101 L Street, NW
Washington, DC 20037
cushmanwakefield.com

For more information, contact:

Nathan Edwards, Regional Director
Tel: +1 (202) 463 2100
Nathan.Edwards@cushwake.com

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Copyright 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple
sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or
representations as to its accuracy.