I-395 Corridor Q1 2019
The Base Realignment and Closure (BRAC) proceedings and a lack of Metro access have had a devastating effect on the I-395 Corridor Submarket. The submarket suffered negative demand in five of the nine years of the current cycle, leading to skyrocketing vacancies. As part of BRAC, the Defense Information Intelligence Agency relocated from the I-395 Corridor to Fort Meade, vacating about 430,000 SF in 2011 and another 165,000 SF in 2014. The submarket never recovered from those move-outs, and the aging stock has only exacerbated the problem—nothing has been built since 2011, and the average building is more than 40 years old.
That being said, a couple of projects are underway, which will add a modest amount of office space. Upon delivery, though, there will be plenty of competition from other landlords, since the vacancy rate is among the highest in the metro. These issues have caused notable rent losses since 2012, resulting in rents that are still below their pre-recession peak. That being said, rents showed some signs of life in 2018. Institutional capital will occasionally enter the market and boost volume, but most trades of late involve local investors selling smaller buildings.
- I-395 Corridor Office Report Q1 2019
- I-395 Corridor Industrial Report Q1 2019
- I-395 Corridor Retail Report Q1 2019
Eisenhower Ave Corridor Q1 2019
The Eisenhower Ave. Corridor is a moderately sized submarket with a high exposure to federal agencies. Despite the departure of the Department of Defense, the submarket added another federal agency in the National Science Foundation last year. Another federal agency, the U.S. Patent and Trademark Office, occupies about 2 million SF, equal to almost 40% of submarket inventory. Limited construction, moderate absorption, and a high proportion of 4 & 5 Star properties have helped competitive vacancies drop below the metro average, a significant improvement since 2012. Regardless, rents suffered losses each year from 2014–16 and essentially stayed flat last year; however, things have looked better in 2018. As of late October, rents had increased by about 3%.
Sales have been infrequent for the past 10 years, and it was not unusual for only a couple of transactions to close annually. While volume in 2015 was more than one and a half times the submarket’s historical average, 2016 fell back to the norm: Three transactions accounted for about $27 million. In 2017, sales ground to a complete halt, but have rebounded strongly this year—as of late October, nearly $83 million had recorded.
- Eisenhower Ave Corridor Office Report Q1 2019
- Eisenhower Ave Corridor Industrial Report Q1 2019
- Eisenhower Ave Corridor Retail Report Q1 2019
Huntington/Mount Vernon Submarket Q1 2019