Gazette.Net: Marylands suburban office market listing, with no lift in short-term demand

Rendering by Lessard design Construction has begun on 3350 at Alterra, 283-unit apartment building in Hyattsville developed by Grady Management of Silver Spring. It will include studio, one-, two- and three-bedroom apartments, with a parking garage, pool and fitness center.

With federal leasing stalled by gridlock in Congress, the regional office market is listing and analysts dont expect any short-term swell in demand as the threat of huge budget cuts looms in January, according to the latest quarterly reports.

Because of the threat of federal budget cuts and larger economic challenges, the office market throughout the greater D.C. region remains flat, John Germano, executive managing director of CBREs Washington-Baltimore region, said in a news release. Defense contractors in particular are postponing signing leases until the election is over and defense budget decisions affecting employment and space requirements are made.

Although the Maryland suburbs showed growth in office jobs during the quarter, CBRE reported that has yet to translate into the office real estate market. The vacancy rate held at 15 percent for the third straight quarter.

In one hopeful sign, CBRE noted that 12409 Milestone Center Drive in Germantown was delivered, with 88 percent of the 162,000-square-foot building preleased to DRT/Boeing.

But the company reported that the suburban Maryland office market experienced low levels of overall leasing activity in the third quarter, with nine renewals in the Top 16 leases in excess of 10,000 square feet. Little of the action is coming from the private sector, with the top four deals all signed by federal tenants.

Jones Lang Lasalle painted an overall dismal picture, as net absorption for the suburban Maryland market for the quarter was negative 214,105 square feet, dragging the year further into the red to date at negative 241,188 square feet. There likely is more than that to come with more than 2 million square feet either under construction or renovation.

Do not expect the usual suspects the federal government, contractors and law firms to get the Washington region market out of this slump. Organic growth is going to have to come from another source, JLL managing director Creighton Armstrong warned. This is, and will remain, a tenants market for the time being particularly for tenants seeking under 25,000 square feet. The lack of a long-term federal budget, combined with approaching sequestration and fiscal-cliff, will perpetuate the current malaise, no matter who is in the White House or Congress come November.

Beltsville industrial complex sells for $27M

Industrial property giant Prologis bought a two-building distribution complex in Beltsville for $27 million, according to NAI KLNB, which was the sole broker in the deal.

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Gazette.Net: Marylands suburban office market listing, with no lift in short-term demand