During that span, there were several large expansions by firms such as Under Armour, Terry's Tire Town and MetroLogistix, which were all part of a torrent of absorption that eclipsed nearly 1 million square feet. Based on several large warehouse users actively pursuing space of more than 100,000 square feet, local real estate brokers and developers are sensing that the last few months of 2007 will be deja vu all over again.
There has also been vibrant leasing interest in the mid-size (30,000- to 80,000-square-foot) segment in the market, with recent transactions including HBI Priority Freight (88,000 square feet) in Hanover, Levantina (40,000 square feet) in Jessup and Vimco (42,000 square feet) in Savage.
Residential Correction
The slowdown in the residential real estate market has been felt in the industrial market for users that rely on construction, but has been offset by companies that specialize in home improvement projects. In addition, contractors who had previously been inundated with residential projects are now more readily available and responsive to handle fit-outs for commercial/industrial projects at more competitive costs to the landlords and tenants.
In addition, it will be interesting to see how the fed's seeming willingness to bail out aggressive borrows will affect inflation in the long-run.
Get Help
Experienced real estate brokers are vital to a good site selection process for a flex/warehouse user in today's climate. But with fewer viable options available to flex/warehouse users in today's market, the assistance of a specialist early in the process is especially critical.
Unlike other commercial markets where there are few barriers to entry and additional supply on the horizon for growing companies, the Corridor market has limited industrially-zoned land for future speculative and build-to-suit requirements. Demand from BRAC and other generally nonindustrial related development will create an even tighter industrial market locally.
Vacancy rate reports and the proliferation of "available" signs can be very misleading to tenants. For example, on a recent tour with a client seeking 25,000 square feet of warehouse/showroom, an initial survey of 20 available buildings was quickly whittled down to two options once "front-loaded buildings" were eliminated (that's where truck traffic and employee cars often overlap), as well as facilities with less than 24-foot ceilings.
Will McCullough is a senior vice president at Chesapeake Real Estate Group in Glen Burnie. He can be contacted at 410-787-8799, ext. 103 and mccullough@cregllc.com
