The pharmaceutical industry has been the bright spot of Suburban Maryland leasing activity. Supernus, Autolus Pharmaceuticals and Medimmune signed leases over 50,000 square feet during the first quarter.
Half of the top-ten deals for the quarter were renewals. MidCap Financial was the only tenant to expand its space requirement. The finance firm leased a total of 50,000 square feet at 7239-7255 Woodmont Avenue in Bethesda.
Demand & Supply
For the second quarter in a row demand for office space in Suburban Maryland increased significantly with net absorption measuring 426,000 square feet.
Much of the new demand came from Kaiser Permanente, which opened a new 200,000-square-foot, administration and IT facility at 4000 Garden City Drive in the New Carrolton area of Prince George’s County. The expansion marked another win for the Landover/Largo/Capital Heights submarket, which landed 2U in early 2017.
With Kaiser Permanente’s building and 1101 Spring Street delivering this quarter and nothing breaking ground, the amount of square feet under construction decreased to 2.77 million square feet at the end of the quarter.
Vacancy & Rental Rates
The new demand pushed the overall vacancy rate down 30 basis points to end the quarter at 14.4 percent. This marked the lowest vacancy rate in Suburban Maryland since the second quarter of 2009.
Even with increased demand, the direct average asking rental rate remained relatively stagnant. It increased a penny from the end of 2018 to finish the quarter at $27.84 per square foot on a full service basis.
Despite Prince George’s County’s recent success in attracting large tenants, the rental rate delta between Montgomery County and Prince George’s County remained sizable measuring $8.36 per square foot.