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BALTIMORE-Latest statistics from Delta Associates show that the office market in Baltimore, an erstwhile manufacturing town that has remade itself into a services-oriented economy, is performing stronger than ever. More importantly, the firm sees this upward swing as a long-term trend.

“The Baltimore economy has a remarkable story,” Sandy Paul, co-author of the report, tells GlobeSt.com. “Specifically in the office market, construction has leveled off, which will allow demand to keep pace with supply.” Vacancies in the Baltimore office market are expected to decline to 10.9% from 11.7% during the next two years.

Government contractors, particularly in the BWI and Columbia submarkets, are expected to spur growth in the Baltimore area over the next few years, particularly firms that seek to be close to the National Security Agency, Delta Associates found. Another driver will be the Base Realignment and Closure (BRAC) initiative, which will start to have a significant impact in these submarkets in 2010.

Conversely, the Washington, DC, office market has been experiencing a slowdown of sorts–and Delta Associates report co-author Elizabeth Norton hastens to add that this market is still performing higher than the national average–as demand is failing to keep up with job growth as previously anticipated. At the same time, construction in the Washington, DC market is still strong, which is another concern, she tells GlobeSt.com. The good news, she says, is that “we do expect to see a modest increase in rents in the second half of the year–by 0.8% for all classes of office space combined.”

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