Office Occupancy Growth for Class A Across BW Corridor Chugs Along, While Class B Lags

9/14/17

Led by Columbia, tenant growth for Class A product has continued at a steady clip across the Baltimore/Washington Corridor. Overall annual net absorption turned negative in 2016 for the first time in over 10 years, but this was due to several full building Class B move-outs at the end of the year in the BWI market.

Despite the addition of nearly half a million square feet through the first half of 2017, vacancy for Class A at 8.7% in the second quarter has remained far below its long-term average of 13.3%. A portion of that growth, however, has come at the expense of relocating tenants from lower tier product within the market, most notably Medstar in Downtown Columbia.

While Class B vacancy overall has reached 19.9% in the Baltimore/Washington Corridor, the Columbia market has remained comparatively tight with 13% vacancy for Class B product. Tenants pursuing purchase options will likely continue to target full building vacancies in BWI, while tightening dynamics in Columbia’s Class A market may push further leasing activity to Class B product.

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