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BALTIMORE, MD-Four leases signed in the Baltimore industrial market last month absorbed some 750,000 sf of space, leaving just over 3 million sf available. That is a very small amount for such a robust market, Edward Harris, first vice president of CB Richard Ellis’ Industrial Group tells GlobeSt.com. He expects to see rental rates rise from the current asking rate of $5.30 per sf. by some 5% next year.

Industrial space in the Baltimore Washington Corridor, which spans Howard and Anne Arundel Counties in Maryland, has been tight for some time, as companies jockey for space that is as close as possible to the Washington market and as the Baltimore-Washington International Airport become more and more active. The leases inked last month by Under Armour, Metro Logistics, American Wood Moulding and Recall Total Information Management pushed vacancy rates down even further, from 9% at the end of Q3 to less than 8% for only the second time in more than ten years, according to data released today by CB Richard Ellis Baltimore Industrial Group. Furthermore CBRE expects to see another 300,000 sf of industrial space signed by year end.

There is some 1.4 million sf of new industrial product expected to be delivered shortly, but CBRE says that the market’s demand will have absorbed it by next year. The pipeline beyond that is not very robust; Harris points to the scarcity of zoned land as one factor. Another factor is the rapidly rising cost of land, which has doubled in the last six years, Harris says. “Today industrial space is going for $300,000 per acre and more. Also it is very difficult to assemble parcels of land to develop a 100,000-sf building.”

Recent sales comps reflect these trends. In July, for instance, 1901 Park 100 Dr., a 109,700-sf empty facility was bought by ProLogis for roughly $9.5 million or $86.47 per sf. In May the three buildings at 8700 Larkin Rd., 8263 and 8265 Patuxent Ridge traded from $28.5 million. Morgan Stanley sold the properties to Invesco Realty Advisors.

Cap rates for investment properties are holding steady at 7%, but are expected to creep lower as investors find value in the rising rental rates, CBRE also reports. The Larkin-Patuxent Ridge properties, for instance, traded at a cap rate of 4.6%.

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