Demand & Supply
The Baltimore/I-95 Corridor industrial market delivered just over 200,000 square feet in the second quarter compared to 1.1 million square feet delivered in the first quarter of 2021. New construction continued to be focused around the Baltimore East submarket with 2.8 million square feet currently under construction accounting for over half of the total in the region. Demand has been extremely strong over the past five years averaging 1.2 million square feet per quarter slightly outpacing deliveries which averaged 1.1 million square feet over that same time. Expectedly, warehouse has been the driver in the market accounting for 953,464 square feet of demand this quarter and averaging 1.1 million square feet per quarter over the last five years.
Despite extremely strong demand for several years now, vacancy has remained stable due to new construction delivering. The second quarter saw vacancy drop by 10 basis points to end the quarter at 8.1 percent. This is identical to the three-year average and slightly lower than the five-year average of 8.6 percent. Warehouse vacancy has decreased even as nearly 18 million square feet has delivered over the last three years.
The industrial market along the I-95 corridor continued to be extremely popular, resulting with rents climbing even higher, ending the quarter at $7.92 NNN an increase of $0.34 cents from last quarter. Rental rates along the corridor have been on an upward trajectory since the second quarter of 2018 when they stood at $5.58 per square foot NNN. In just three years that is a 42 percent increase in asking rents. While unlikely to continue at that rate, it is expected to continue to increase with the significant amount of demand and the amount of new product expected to come online in the next several quarters.