BALTIMORE, MD—Baltimore's industrial market has seemingly done the impossible: after a robust 2013 and a number of impressive trades this quarter, its overall lease activity dropped 38%, according to JLL's Q1 industrial market outlook for Baltimore.
Net absorption remained positive as vacancy dipped 9.3%. More than likely it will remain positive, said Mark Levy, Baltimore Market Leader for JLL. "It's difficult to imagine a scenario where the level of absorption this year doesn't match or exceed last year."
"We believe last two quarters of the year will be much more productive and that is where we are hedging our bets," he tells GlobeSt.com.
There are a number of relatively benign reasons why industrial leasing slowed so much in Q1, Levy says.
For starters, leasing is slow in certain segments of the market with most of the activity occurring in the larger format segment of the market. "Tenants larger than 75,000 square feet seem to be the most active," he says.
Tenants of smaller sizes continue to be concerned about the overall state of the economy and are reluctant to make long-term bets on the expense side of the ledger, he says.
Also, Levy says, the conversion rate is rather low because the cycle of getting the deal done has become elongated.
"The internal approval processes to sign a lease is more extensive than it was five years ago. Supply chain managers are more instrumental in the decision-making and CFOs and CEOs even will get directly involved and sign off on leases over a certain dollar value."
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Come back later on Monday afternoon when we discuss how the development pipeline plays into Baltimore's industrial market.
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