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Suburban Maryland Office Report Q2 2022

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 The Suburban Maryland market registered positive absorption to the end of the second quarter, which marked four consecutive quarters of positive demand. Notable leases were signed by Maryland Transit Solutions at 5700 Rivertech Court which leased 30,757 square feet, and Rapid Finance at 4500 East West Highway for 28,000 square feet. Although absorption was positive, the Suburban Maryland office market’s vacancy rate rose this quarter due to the delivery of Avocet Tower at 7373 Wisconsin Ave.

Supply & Demand

The second quarter ended with over 1.2 million square feet under construction, down from 1.6 million square feet a year ago. In the Bethesda/Chevy Chase submarket, 7373 Wisconsin Ave, the Avocet Tower delivered, adding over 300,000 square feet to the market. The building delivered mostly vacant, however, Long and Foster signed a 21,841 square foot pre-lease.

Positive demand in Suburban Maryland continued for the fourth consecutive quarter with over 160,000 square feet absorbed. Class A product registered just over 24,000 square feet of positive absorption, up from negative 194,595 square feet the previous quarter. Not only did the combined Class B/C product have the biggest impact on absorption, but it also marks three quarters in a row of positive demand, removing 140,419 square feet from the market this quarter.

Rental Rate

The overall direct average asking rate increased during the second quarter ending at $29.50 per square foot up $0.09 from the previous quarter. The Class A rental rate decreased $0.11 to end the quarter at $30.32. The combined Class B/C asking rents increased by $0.27 to end the quarter at $28.48 per square foot.    

Vacancy

There was a 30-basis point increase in the overall vacancy rate during the quarter, ending at 16.5 percent. The Class A vacancy rate ended at 18.9 percent, which marks a new high, surpassing its former peak of 18.3 percent which occurred earlier this year. The combined Class B/C product remained flat ending at 14.0 percent and is a decrease of 10-basis points from the same time last year.


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Suburban Maryland Office Report Q2 2022

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