KEY TAKEAWAY

Maryland has seen a major boom in industrial construction activity. Since 2011, 28
warehouse/distribution (W/D) projects have delivered. But, with year-over-year leasing activity down
by 24.2% in the W/D sector and 13 W/D projects currently under construction totaling 2.4 million
square feet (msf), one has to question is supply outpacing demand?

WANT TO SEE THE DATA? READ ON

61%

SPEC SPACE TOO ABUNDANT?

Over the last 4.5 years, 7.8 msf has delivered to the Maryland industrial market. During the same
period, 7.0 msf in new activity across 34 transactions has been executed in buildings built after 2011.
With 90% of all space delivered after 2011 leased, developers have every reason to move forward.
However, 13 of those projects, or 4.8 msf, were build-to-suits, leaving a remaining 15 projects, or 3.0
msf, to be filled upon delivery. Speculative leasing numbers are less appealing with only 61.0%, or 1.8
msf, of all speculative space built since 2011 leased to-date.

Amount of space leased on all

W/D speculative space built since
2011

LANDLORDS WAIT A YEAR FOR SOME ACTION

In 2015, 800,000 square feet (sf) of warehouse/distribution space has delivered in Maryland, with only
16% preleased/leased. Thats no surprise considering the slow leasing environment the state has
witnessed so far this year. The post-recession average space leased in a speculative project at the
time of delivery or within the same year has been 50.0%. Again, with those odds one has to wonder if
the 13 projects currently underway and announcements of more developers going spec later this year
are we heading in the right direction? Yet, you cant discount the rising asking and taking rents
which hover in the $6.50 per square foot (psf) range and the historically low overall vacancy rate
for W/D product in Maryland which stood at 8.3% at the end of Q2 2015.

1.5

Average number of years to ink a

deal on post 2011 newly built
space, if not pre-leased or leased
within year built

NOT A LOT OF ACTIVITY FROM OUTSIDE THE MARYLAND MARKET

Those projects not leased at the time of delivery can expect to wait on average 1.5 years before
another deal is inked. The lack of demand from the outside the region has hindered the markets
ability to quickly fill product. Out of the 34 leases executed, only 8 were by tenants from outside the
market. Owners will receive more activity from tenants within the market looking for distribution
centers that can provide the capacity and necessary functionality to optimize their operations. Out of
34 deals, 26 were tenants already within the market, but luckily 7 were expansion leases which
totaled 2.0 msf.

# of tenants outside of the market

that executed leases in projects
built post 2011.

Total Leases Vs. Spec Leases

4,000,000

14

3,500,000

12

12
11

3,000,000

10
9

2,500,000

2,000,000

7
6

1,500,000

500,000

1,000,000
2

0
2011

2012

Total Leases (SF)

2013

Spec Leases (SF)

2014
# of Leases

2015

# of Spec Leases

Spec Leasing Activity

2012

2013

2014

2015 QTD

Leased After Delivery

Leased @ Delivery

Speculative Built

Sources: Cushman & Wakefield Research.

FOR MORE INFORMATION, PLEASE CONTACT:

LAVETTE LAGON
Senior Research Analyst
(410) 685 9243
lavette.lagon@cushwake.com
www.cushmanwakefield.com
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