Skip to main content Skip to footer

Suburban Maryland Office Report Q4 2022

Download Report

The Suburban Maryland office market registered positive absorption during the fourth quarter. Leasing activity remained consistent with nearly 30 deals over 10,000 square feet completed. Notable leases were signed by Montgomery College at 2221 Broadbirch Drive who signed for 55,665 square feet, Sodexo who signed a new lease for 51,907 square feet at 915 Meeting Street in the Pike and Rose development and AstraZeneca who renewed for 50,000 square feet at 950 Wind River Lane in the North Rockville submarket.

Supply & Demand

The quarter ended with 730,841 square feet under construction, down from 1.7 million square feet a year ago. The market had one building deliver during the quarter, a newly renovated 56,600 square foot life science conversion at 2094 Gaither Road in North Rockville. Most of the remaining pipeline is in Rockville at the Pike & Rose development’s 915 Meeting Street, a 276,000 square foot building and Twinbrook Quarter 240,000 square foot building at 1600 Rockville Pike. Both are scheduled to deliver in 2024.

For the second time this year, the Suburban Maryland office market saw positive demand with 193,775 square feet removed from the market. Class A product registered the most demand with 114,982 square feet of positive absorption, compared to negative 387,205 the previous quarter. Class B product registered positive absorption for the fourth consecutive quarter, with 93,621 square feet of demand. Class C product was the only product class to register negative demand during the quarter adding 14,828 square feet to the market.

Rental Rate

The overall direct average asking rate increased during the quarter ending at $29.73 per square foot, up $0.09 over the last three months. The Class A rental rate increased $0.08 to end at $30.53, down $0.35 from this time last year. The combined Class B/C asking rent increased by $0.05 to end the quarter at $28.64 per square foot.

Vacancy

There was a 10-basis point decrease in the overall vacancy rate during the quarter, coming down from the recent record high of 17.1 percent seen during the third quarter to end at 17.0 percent. This is up 50-basis points from this time last year and is up 240-basis points from three years ago. The Class A vacancy rate ended the quarter at 19.9 percent, a 20-basis point decrease from the previous quarter while the combined Class B/C vacancy rate ended the quarter at 14.1 percent.


DC

Suburban Maryland Office Report Q4 2022

Download Report