IRR-Baltimore Mid-Year Viewpoint 2015 Local Market Report - Retail
The Baltimore Metro Area retail market has remained strong with vacancy hovering near 5.0% for all classes of retail space (community and neighborhood shopping center space) combined. Rental rates are generally stable ranging from $15.00/SF NNN to $40.00/SF for typical in-line space depending on location. New construction consistently achieves rental rate premiums over existing product regardless of location. Capitalization rates continue to compress as interest rates remain at historic lows. Typical retail capitalization rates are as high as 8.50% for Class B unanchored shopping centers, while reaching as low as 5.0% for NNN leased properties. Prices are being driven up by hungry buyers with relatively “cheap money” to spend and few assets coming to market.
According to local brokers, activity has begun to pick up in areas that had been considered less desirable in recent years. Low interest rates have been increasing entrepreneurial confidence with more small business owners seeking room for expansion than in previous years.
An ongoing trend in the Baltimore City retail market is the conversion of old industrial and office buildings into high-end mixed-use projects with ground floor retail. These conversions are predominantly in the city which has continued to attract millennials seeking the amenities of urban living. Ground floor retail units in these projects are achieving rental rates at nearly double the rate of the surrounding retail uses. This is pushing developers to take on more of these projects on a spec basis. Rates in these developments range from $25.00 to $30.00 per square foot, on a triple net basis.
Overall, the retail sector remains a bright spot for the Baltimore Metro Area as a whole and Baltimore City in particular. It appears as though Baltimore has weathered the storm of the great recession and has emerged strong and, in some areas, growing stronger than ever.
Download the full version PDF of this Local Market Report below. It includes graphs and tables.
IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.