Suburban Maryland. Quarterly Market Report. 3rd Quarter lpcwashingtondc.com

Transcription

1 Suburban Maryland Quarterly Market Report

2 Table of Contents Metropolitan D.C. Market Overview...3 Suburban Maryland Quarterly Overview...5 Suburban Maryland Top Leases... 8 Suburban Maryland Top Sales... 9 Maryland Leasing & Market Research, 3Q 217: Bethesda-Chevy Chase...1 North Bethesda-Potomac... Rockville North Rockville Gaithersburg-Germantown Silver Spring...18 Beltsville-Calverton...19 Greenbelt-College Park...2 Paul Kern Senior Vice President pkern@lpc.com Brent Prossner Vice President bprossner@lpc.com John Olson Senior Vice President jeolson@lpc.com Jennifer Orr Associate jorr@lpc.com Landover-Largo-Capitol Heights National Harbor-Oxon Hill Columbia South Prince George s County Industrial Baltimore-Washington Corridor Industrial Frederick...27 Frederick Flex Tysons Corner

3 Metropolitan D.C. Market Overview Overall Market Summary The Washington, DC Metropolitan commercial real estate market is comprised of approximately 4.2 million square feet of rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland. The total vacancy rate decreased to 15.3% in the third quarter, down from 15.4% at the end of the second quarter. The market recorded 1,7,692 square feet of net absorption in the third quarter, a significant improvement from the -518,562 square feet absorbed in the second quarter. Leasing activity totaled approximately 5.9 million square feet in transactions signed. The largest lease executed was by Marriott for 72, square feet at 775 Wisconsin Avenue, a proposed building, in Bethesda, MD. Four buildings, totaling 1,53, square feet, broke ground ( DC, 1 VA, 3 MD); bringing the yearto-date 217 under construction pipeline total to 9,99,197 square feet (6% pre-leased). Four buildings, totaling 1,36,91 square feet and 66% leased, delivered this quarter (all were in Virginia). There were nineteen sale transactions in the third quarter, totaling $1.79 billion. The largest sale was 9 16th Street, NW in Washington, DC trading for $151,, ($1,238 psf). Average asking rental rates increased $.24 to $36.87 per square foot, Full Service. From August August 217 the DC Metropolitan area had a net increase of 67,6 jobs (63,4 private sector, 4,2 government) representing 2.1% growth, while the unemployment rate increased to 3.7%. The DC Metro is ranked 7th nationally in unemployment. DC VA MD Metro Area (YTD) Direct Vacancy (3Q 217) 1.3% 15.4% 15.% 14.4% Total Vacancy (3Q 217) 11.3% 16.2% 15.5% 15.3% Total Net Absorption (YTD 217) 435,85 SF 1.1 M SF 391,739 SF 1.9 M SF (YTD 217) 6.1 M SF 9.4 M SF 2.9 M SF 18.4 M SF 3

4 Metropolitan D.C. Market Overview Outlook The Washington, DC Metropolitan market showed signs of improvement in the third quarter as total vacancy ticked down and absorption was positive across all three markets. Asking rents and sales volume ticked up for the region as well Regional employment experienced 2.1% of growth YOY ending August 217, primarily driven by the private sector, specifically the Educational & Health Services industry. While the unemployment rate increased slightly to 3.7%, the DC Metro area s ranking improved to 7th in unemployment nationally (among cities of 1 million+ people). Looking ahead, the private sector will continue to be the primary driver for employment in the Washington, DC Metropolitan area. With GSA lease approvals being held up in the Senate, expect GSA leasing activity to remain sluggish for the remainder of 217. While overall market fundamentals improved, the Washington, DC region should remain a tenant s market. Aggressive landlords will continue to offer generous concessions and initiate capital improvements to remain competitive. While the awarding of a new, massive FBI Headquarters has been shelved for the time being, the entire region is now vying for the for the new, and larger, Amazon HQ2 Headquarters requirement. 4

5 Suburban Maryland Market Summary The Suburban Maryland office market, which encompasses Montgomery and Prince George s Counties, totals approximately 86.6 million square feet of rentable space in 887 office buildings of 25, square feet and greater. Direct Vacancy 3Q 217 2Q 217 3Q % 15.1% 17.% The market recorded a significant increase in net absorption in the third quarter with 145,756 square feet absorbed, up from the -53,622 square feet absorbed in the previous quarter. Direct vacancy decreased to 15.%, down from 15.1% and total vacancy decreased to 15.5% from 15.7%. There were four sale transactions in Suburban Maryland this quarter. A portfolio sale including 82 W. Diamond Avenue, 9713, 9715, and 9717 Key West Avenue in the Gaithersburg and North Rockville submarkets sold to Farallon Capital Management, LLC for $6.7 million. 96 Blackwell Road in the North Rockville submarket sold to Royco, Inc. for $25.5 million. 77 Upper Rock Circle in the North Rockville submarket sold to DSC Partners, LLC for $19.5 million. 463 Montgomery Avenue in the Bethesda/Chevy Chase submarket sold to Stonebridge-Carras, LLC for $15.2 million. The largest public sector lease executed this quarter was a new lease by the U.S. Citizenship and Immigration Services for 574,767 square feet at 59 Capital Gateway Drive in the North Bethesda submarket. Total Vacancy 15.5% 15.7% 17.5% Net Absorption (SF) 145,756-53,622-2,482 Leasing Activity (SF) 1.2 M 726,67 1. M Under Construction (SF) 1.1 M 292, ,639 Rental Rates (, FS) U/C Percent Pre-Leased $26.68 $26.73 $ % 6% 38% The largest private sector lease was a 72,-square-foot pre-lease signed by Marriott at 775 Wisconsin Avenue in the Bethesda/Chevy Chase submarket. The year-over-year unemployment rate in Suburban Maryland decreased to 3.1% in August 217, down from 3.4% in August 216. From August 216 to August 217 employment in Suburban Maryland had a net increase of 22,811 new jobs, representing 3.45% growth. Sectors with the greatest amount of job growth were the Government with 3,6 jobs, Mining, Logging and Construction with 3,1 and Leisure & Hospitality with 2,8 jobs. 5

6 Suburban Maryland Vacancy Rate The direct vacancy rate decreased to 15.%, down from 15.1% in the third quarter, totaling approximately.9 million square feet. Total vacancy decreased to 15.5%, down from 15.7%, totaling approximately 13.4 million square feet. Deliveries vs. 2.5 The sublease vacancy rate decreased to.5% at the end of the third quarter, representing 474,162 square feet of vacant space The Class A vacancy rate decreased to 16.5% from 16.7% in the third quarter, totaling approximately 7.4 million square feet. The Class B vacancy rate remained flat at 14.8% in the third quarter, totaling approximately 5.3 million square feet '8 '9 '1 '11 ' '14 '15 '16 '17 Absorption & Gross Leasing The Suburban Maryland market recorded 145,756 square feet of net absorption in the third quarter, a significant increase from the -53,622 square feet absorbed in the second quarter; totaling 391,739 square feet absorbed YTD 217. Five of the Top Ten leases signed this quarter were in Montgomery County and ranged between 72, and 13,554 square feet. Eight of the leases in the Top Ten this quarter were private sector transactions, while two were public sector. In the third quarter, total leasing activity totaled 1,288,196 square feet, a 77% increase from the 726,67 square feet leased in the second quarter. The total average asking rental rate was $26.68 Full Service, down $.5 from the previous quarter. The Class A asking rental rate was $28.5 Full Service in the third quarter, a $.37 decrease from the $28.87 asked in the second quarter. Deliveries Deliveries Net Absorption Vacancy Rate % 14.8%.2% A B C (%) of Building Class Vacant 6

7 Suburban Maryland Construction Outlook At the end of the third quarter 217, there were six buildings under construction. Fenton Street Plaza (Class A, 96, sf, 57% pre-leased) is set to deliver in January Spring Street (Class A, 1,724 sf, 1% pre-leased) is set to deliver in May University Research Court (Class A, 75, sf, % preleased) is set to deliver in December 218. The three buildings that broke ground this quarter were 4 Garden City Drive (Class A, 176, sf, 1% pre-leased) is set to deliver in November 218, 4747 Bethesda Avenue (Class A, 3, sf, 4.2% pre-leased) and 7272 Wisconsin Avenue (Class A, 357, sf, 2.3% pre-leased) are set to deliver in late 219. Expect the private sector to continue to drive leasing activity and job growth, while the GSA (public sector) remains limited to short-term renewals and space consolidations. Vacancy rates are expected to decline as a result of the private sector gaining confidence in an improving economy and is actively looking for longer lease terms. Renovations to existing commodity buildings in mass transit oriented locations, should encourage tenant moves; as tenants seek more efficient, amenity rich, easily accessible space. To be competitive landlords will continue to offer generous concession packages (TI Allowance and free rent). 7

8 Suburban Maryland Top Ten Leases In the third quarter 217, the Top Ten leases were evenly split between Montgomery and Prince George s County, with seven of the top leases being new transactions. Eight of the leases in the Top Ten this quarter were private sector transactions, while two were public sector. The largest lease executed in Montgomery County was a pre-lease for 72, square feet by Marriott establishing their new future Headquarters at 775 Wisconsin Avenue in the Bethesda/Chevy Chase submarket. There were three lease renewals this quarter, including ADP, Inc. signing for 23,798 square feet, Whiting Turner Contracting renewing and expanding for a total of 21,5 square feet, and the GSA signing for 13,554 square feet. In Prince George s County, the U.S. Citizenship and Immigration Services signed the largest lease of the quarter, by taking the entire square footage of the proposed building at 59 Capital Gateway Drive in Camp Springs. The Suburban Maryland market totaled 1,288,196 square feet of leasing activity in the third quarter 217, an increase from the 726,67 square feet leased in the second quarter. This represents a 77% increase in leasing activity. The market has totaled 2.9 million square feet leased YTD Wisconsin Ave. 843 Colesville Rd. Marriott Exiger 72, SF 19,52 SF New/Pre-lease New 59 Capital Gateway Dr. U.S. Citizenship & Immigration Services 574,767 SF New/Pre-lease 6411 Ivy Ln. CliftonLarsonAllen 19,149 SF New 41 N. Washington St. 455 Montgomery Ave. ADP, Inc. Aledade 23,798 SF 15,475 SF Renewal New 611 Frost Pl. Greenhorn & O Mara, Inc. 174 Waterfront St. CACI 21,633 SF 15,15 Sf New New 635 Ivy Ln Colesville Rd. Whiting Turner Contracting Co. 21,5 SF Renewal/Expansion GSA 13,554 SF Renewal 8

9 Suburban Maryland Suburban Maryland Sales 82 W. Diamond Ave., 9713, 9715, 9717 Key West Ave. Submarket Gaithersburg & North Rockville Date Sold July 217 Price Buyer Seller Class $6,72,65 ($143.3 & $ ) Farallon Capital Management, LLC Equity Commonwealth A Occupancy 86.7% Cap Rate Comments N/A Part of a 7 building portfolio 96 Blackwell Rd. Submarket North Rockville Date Sold July 217 Price Buyer Seller Class $25,51, ($ ) Royco, Inc. True North Management Group A Occupancy 97.5% Cap Rate N/A 77 Upper Rock Cir. Submarket North Rockville Date Sold July 217 Price Buyer Seller Class $19,5, ($83.95 ) DSC Partners, LLC JBG Companies A Occupancy.% Cap Rate N/A 463 Montgomery Ave. Submarket Bethesda/Chevy Chase Date Sold July 217 Price Buyer Seller Class $15,25, ($483.8 ) Stonebridge- Carras, LLC The Goldstar Group B Occupancy 98.4% Cap Rate N/A 9

10 Bethesda-Chevy Chase '8 '9 '1 '11 ' '14 '15 '16 '17 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate increased to 9.3% in the third quarter 217, up from 8.5% in the second quarter. Total vacancy increased in the third quarter to 1.8%, up from 1.3% in the second quarter. Class A total vacancy decreased to 8.2% in the third quarter, down from 9.1% in the second quarter, while the asking rental rate average decreased to $39.9 Full Service in third quarter, down $.62 from the previous quarter. Total net absorption increased to -56,488 square feet in the third quarter, up from -174,313 square feet absorbed in the second quarter. Total leasing activity increased in the third quarter to 872,992 square feet, up from 93,583 square feet leased in the previous quarter. Contributing tenants included Marriott signing a 72,-square-foot pre-lease for their new headquarter location in downtown Bethesda. 1 Year Averages (27-216) Total Absorption 52, SF / Year 58,55 SF / Year 893,194 SF / Year 1.8 M SF Direct Vacancy 9.3 % Total Vacancy 1.8 % YTD 217 Absorption -215,296 SF 657,7 SF Percent Pre-Leased % YTD 217 Deliveries SF There are currently two buildings under construction in the Bethesda/Chevy Chase submarket; 7272 Wisconsin Avenue, a 357,7-square-foot, Class A office building and 4747 Bethesda Avenue, a 3,-square-foot, Class A Office building. (Full Service) 27: $ : $37.43 YTD 217: $

11 Bethesda-Chevy Chase Major Leases 775 Wisconsin Ave. Marriott 72, SF New/Pre-lease 455 Montgomery Ave. Adelade 15,475 SF New Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate 463 Montgomery Ave. Bethesda/ Chevy Chase 7/2117 $15,25, ($483.8 ) Stonebridge- Carras, LLC The Goldstar Group B 98.4% N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s 7272 Wisconsin Ave Bethesda/ Chevy Chase 357, SF 357, SF 2.3% N/A Carr Properties N/A 4747 Bethesda Ave Bethesda/ Chevy Chase 3, SF 3, SF 4.2% N/A JBG Smith N/A 11

12 North Bethesda-Potomac '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate remained flat at 2.8% in the third quarter 217. Total vacancy also remained flat at 21.% in the third quarter. Class A total vacancy increased to 22.3% in the third quarter, up from 22.1% in the second quarter, while the asking rental rate average decreased to $29.39 Full Service in third quarter, down $.7 from the previous quarter. Total net absorption increased to 1,834 square feet in the third quarter, up from the -1,1 square feet absorbed in the second quarter. Total leasing activity increased in the third quarter to 45,79 square feet, up from 4,156 square feet leased in the previous quarter. Contributing tenants included Biophysical Society signing a 5,54-square-foot lease at 5515 Security Boulevard. 1 Year Averages (27-216) Total Absorption -43,739 SF / Year 98,256 SF / Year 745,714 SF / Year 1.7 M SF Direct Vacancy 2.8 % Total Vacancy 21. % YTD 217 Absorption 89,89 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $28.93 YTD 217: $28.52

13 Rockville '8 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 3 '8 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate decreased to 11.3% in the third quarter 217, down from.2% in the second quarter. Total vacancy decreased to 11.6% in the third quarter, down from.5% in the previous quarter. Class A total vacancy decreased to 18.9% in the third quarter, down from 2.% in the second quarter, while the asking rental rate average increased to $32.63 Full Service in third quarter, up $.14 from the previous quarter. Total net absorption increased to 8,457 square feet in the third quarter, up from -63,998 square feet absorbed in the second quarter. Total leasing activity increased in the third quarter to square feet, up from 98,3 square feet leased in the previous quarter. Contributing tenants included ADP, Inc. renewing a 23,798-square-foot lease at 41 N. Washington Street. 1 Year Averages (27-216) Total Absorption 19,662 SF / Year 195,97 SF / Year 74,872 SF / Year 9.8 M SF Direct Vacancy 11.3 % Total Vacancy 11.6 % YTD 217 Absorption 134,971 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $3.65 YTD 217: $

14 Rockville Major Leases 41 N. Washington St ADP 23,798 SF Renewal 326 Tower Oaks Blvd I.M. Systems Group, Inc. 11,462 SF Renewal 113 Rockville Pke Henry M. Jackson Foundation 13,9 SF Renewal Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales this quarter Rockville N/A N/A N/A N/A N/A N/A N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction during this quarter Rockville N/A N/A N/A N/A N/A N/A 14

15 North Rockville '8 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption '8 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate increased to 17.7% in the third quarter 217, up from 17.4% in the second quarter. Total vacancy remained flat at 18.9% in the third quarter. Class A total vacancy increased to 19.2% in the third quarter, up from 19.1% in the second quarter, while the asking rental rate average increased to $28.21 Full Service in third quarter, up $.2 from the previous quarter. Total net absorption increased to -5,551 square feet in the third quarter, up from the -97,215 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 95,754 square feet, down from 148,869 square feet leased in the previous quarter. Contributing tenants included J. Craig Venter Institute signing a 13,382-square-foot lease at 965 Medical Center Drive. 1 Year Averages (27-216) Total Absorption 62,184 SF / Year 171,141 SF / Year 956,33 SF / Year 13.1 M SF Direct Vacancy 17.7 % Total Vacancy 18.9 % YTD 217 Absorption 44,676 SF SF Percent Pre-Leased % YTD 216 Deliveries SF (Full Service) 27: $ : $24.99 YTD 217: $

16 North Rockville Major Leases 965 Medical Center Dr. J. Craig Venter Institute 13,382 SF New 9211 Corporate Blvd. SCI 7,315 SF New Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate 9713, 9715, 9717 Key West Ave. (Part of 7 building portfolio) N. Rockville 7/217 $6,75,65 ($ ) Farallon Capital Management, LLC Equity Commonwealth A 86.7% N/A 96 Blackwell Rd. N. Rockville 7/217 $25,51, ($ ) Royco, Inc. True North Management Group A 97.5% N/A 77 Upper Rock Cir. N. Rockville 7/217 $19,5, (83.95 ) DSC Partners, LLC JBG Companies A % N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction during the quarter N. Rockville N/A N/A N/A N/A N/A N/A 16

17 Gaithersburg-Germantown '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate decreased to 1.5% in the third quarter 217, down from 11.4% in the second quarter. Total vacancy decreased to 1.5% in the third quarter, down from 11.5% in the second quarter. Class A total vacancy decreased to 1.7% in the third quarter, down from.% in the second quarter, while the asking rental rate average decreased to $24.47 Full Service in third quarter, down $.1 from the previous quarter. Total net absorption decreased to 22,221 square feet in the third quarter, down from 33,14 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to,14 square feet, down from 42,36 square feet leased in the previous quarter. Contributing tenants included Global Reimbursement Consulting signing a 7,287-square-foot lease at 656 Quince Orchard Road in Gaithersburg. 1 Year Averages (27-216) Total Absorption 29,81 SF / Year 65,692 SF / Year 45,76 SF / Year 9. M SF Direct Vacancy 1.5 % Total Vacancy 1.5 % YTD 217 Absorption 42,887 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $23.94 YTD 217: $

18 Silver Spring '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 2 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate increased to 1.1% in the third quarter 217, up from 1.% in the second quarter. Total vacancy increased to 1.8% in the third quarter, up from 1.4% in the second quarter. Class A total vacancy increased to 11.6% in the third quarter, up from 1.1% in the previous quarter. The Class A asking rental rate average decreased to $3.2 Full Service in third quarter, down $.26 from the previous quarter. Total net absorption increased to -8,96 square feet in the third quarter, up from -24,91 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 55,529 square feet, down from 87,289 square feet leased in the previous quarter. 1 Year Averages (27-216) Total Absorption -32,875 SF / Year 5, SF / Year 451,45 SF / Year 6.3 M SF Direct Vacancy 1.1 % Total Vacancy 1.8 % YTD 217 Absorption -29,653 SF 217,724 SF Percent Pre-Leased 81 % There are currently two buildings under construction in the Silver Spring submarket. Fenton Street Plaza is a 96,-square-foot, Class A building, set to deliver in October 217 and 1 Spring Street is a Class A, 1,724-square-foot building, set to deliver in May 218. YTD 217 Deliveries (Full Service) 27: $ : $28.69 SF YTD 217: $

19 Beltsville-Calverton '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 5 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate decreased to 36.5% in the third quarter 217, down from 36.6% in the second quarter. Total vacancy decreased to 36.5% in the third quarter, down from 36.6% in the second quarter. Class A total vacancy decreased to 57.8% in the third quarter, down from 58.1% in the second quarter, while the asking rental rate average increased to $21.81 Full Service in third quarter, up $.1 from the previous quarter. Total net absorption increased to 2,27 square feet in the third quarter, up from -117,396 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 13,398 square feet, down from 29,576 square feet leased in the previous quarter. Contributing tenants included 4 Him Covenant Church signing a 8,4-square-foot lease at 46 Powder Mill Road. 1 Year Averages (27-216) Total Absorption -23,139 SF / Year SF / Year 81,74 SF / Year 1.6 M SF Direct Vacancy 36.5 % Total Vacancy 36.5 % YTD 217 Absorption -113,89 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $2.77 YTD 217: $

20 Greenbelt-College Park '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 4 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate decreased to 2.3% in the third quarter, down from 21.4% in the second quarter. The total vacancy rate decreased to 2.5% in the third quarter, down from 21.7% in the second quarter. Class A total vacancy decreased to 18.8% in the third quarter, down from 19.5% in the previous quarter. The Class A asking rental rate average increased to $23.56 Full Service in third quarter, up $.18 from the previous quarter. Total net absorption increased to 81,138 square feet in the third quarter, up from -37,18 square feet absorbed in the second quarter. Total leasing activity increased in the third quarter to 85,389 square feet, up from 4,988 square feet leased in the previous quarter. Contributing tenants included Whiting Turner Consulting Company renewing and expanding for 21,5 square feet at 635 Ivy Lane in Greenbelt. 1 Year Averages (27-216) Total Absorption 16,976 SF / Year 77,187 SF / Year 453,743 SF / Year 7.3 M SF Direct Vacancy 2.3 % Total Vacancy 2.5 % YTD 217 Absorption 199,3 SF 75, SF Percent Pre-Leased % YTD 217 Deliveries SF 581 University Research Court (Class A, 75, sf, % pre-leased) is currently under construction and set to deliver in December 218. (Full Service) 27: $ : $21.15 YTD 217: $22.3 2

21 Greenbelt-College Park Major Leases 635 Ivy Ln 6811 Kenilworth Ave. Whiting Turner Consulting Co. Perfect Office Solutions 21,5 SF 1,316 SF Renewal/Expansion New Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales this quarter Greenbelt/ College Park N/A N/A N/A N/A N/A N/A N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s 581 University Research Court Greenbelt/ College Park 75, SF 75, SF % December 218 Corporate Office Properties Trust N/A 21

22 Landover-Largo-Capitol Heights '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 4 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate increased to 21.1% in the third quarter 217, up from 2.7% in the second quarter. Total vacancy increased to 21.3% in the third quarter, up from 2.7% in the second quarter. Class A total vacancy remained flat at 22.2% in the third quarter, the asking rental rate average increased to $24.95 Full Service in the third quarter, up $1.1 from the previous quarter. Total net absorption increased to -17,491 square feet in the third quarter, up from -55,24 square feet absorbed in the second quarter. 1 Year Averages (27-216) Total Absorption -2,649 SF / Year 11,293 SF / Year 169,32 SF / Year 2.8 M SF Direct Vacancy 21.1 % Total Vacancy 21.3 % Total leasing activity decreased in the third quarter to 7,1 square feet, down from 192,76 square feet leased in the previous quarter. YTD 217 Absorption -87,698 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $21.71 YTD 217: $

23 National Harbor-Oxon Hill '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 5 '8 '9 '1 '11 ' '14 '15 '16 '17 Both the direct and total vacancy rate decreased to 13.8% in the third quarter 217, down from 17.8% in the second quarter. Class A total vacancy decreased to.1% in the third quarter, down from 18.3% in the second quarter, while the asking rental rate average decreased to $27.42 Full Service in third quarter, down $3.92 from the previous quarter. Total net absorption increased to 4,49 square feet in the third quarter, up from 15,435 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 1,792 square feet, up from 88,927 square feet leased in the previous quarter. 1 Year Averages (27-216) Total Absorption 13,52 SF / Year 21,29 SF / Year 52,93 SF / Year 1. M SF Direct Vacancy 13.8 % Total Vacancy 13.8 % YTD 217 Absorption 47,251 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $25. YTD 217: $

24 Columbia South '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate increased to 5.7% in the third quarter 217, up from 5.6% in the second quarter. Total vacancy increased to 5.9% in the third quarter, up from 5.8% in the second quarter. Class A total vacancy remained flat at 4.7% in the third quarter, while the asking rental rate average increased to $27.6 Full Service in the third quarter, up $.11 from the previous quarter. Total net absorption increased to -,292 square feet in the third quarter, up from -17,834 square feet absorbed in the second quarter. Total leasing activity increased in the third quarter to 166,7 square feet, up from 69,16 square feet leased in the previous quarter. 811 Maple Lawn Boulevard is the only building under construction. It is a 14,4-square-foot Class A building set to deliver in December Year Averages (27-216) Total Absorption 278,771 SF / Year 249,689 SF / Year 793,73 SF / Year 9. M SF Direct Vacancy 5.8 % Total Vacancy 6. % YTD 217 Absorption -1,327 SF 14,4 SF Percent Pre-Leased 15 % YTD 217 Deliveries SF (Full Service) 27: $ : $24.75 YTD 217: $

25 Prince George s County Industrial '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate remained flat at 11.2% in the third quarter 217. Total vacancy increased to.8% in the third quarter, up from.7% in the previous quarter. Total net absorption significantly increased to 288,61 square feet in the third quarter, up from -57,167 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 33,55 square feet, down from 14,864 square feet leased in the previous quarter. Contributing tenants included Launch Trampoline signing a 3,-square-foot lease at 11 Hampton Park Boulevard in the Capitol Heights industrial submarket. There are currently three buildings under construction in Prince George s County. 624 Columbia Park Road is a Class A building containing 95, square feet and set to deliver in November Alaking Court is a Class A building containing 46,168 square feet and is set to deliver in January Andrews Federal Campus Drive is a 167,33-square-foot, Class A building set to deliver in September 218. Two buildings delivered in the third quarter 217. Claybrick Road is a 216,-square-foot Class A building that delivered in July 217 and 92 Alaking Court is a 72,-square-foot Class A building delivered that in August Year Averages (27-216) Total Absorption 258,82 SF / Year 325,292 SF / Year 1. SF / Year 21.3 M SF Direct Vacancy 11.2 % Total Vacancy.8 % YTD 217 Absorption -145,74 SF 38,21 SF Percent Pre-Leased % YTD 217 Deliveries (Triple Net) 27: $ : $ , SF YTD 217: $

26 Baltimore-Washington Corridor Industrial '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate decreased to 9.5% in the third quarter 217, down from 9.8% in the second quarter. Total vacancy decreased to 9.9% in the third quarter, down from 1.2% in the second quarter. Total net absorption decreased to 42,883 square feet in the third quarter, down from the 233,94 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 622,597 square feet, down from 628,82 square feet leased in the previous quarter. Contributing tenants included Johns Hopkins Health System signing a 165,14-square-foot lease at 53 Holabird Avenue in the Baltimore Southeast Industrial submarket. There are currently five building under construction. 53 Holabird Avenue (413,1 sf, % pre-leased) is set to deliver in December Holabird Avenue (14,4 sf, % pre-leased) is set to deliver in December Lokus Road (35, sf, % pre-leased) is set to deliver in April Ridge Road (22, sf, 1% pre-leased) is set to deliver in June Perryman Court (5,4 sf, % pre-leased) is set to deliver in June Year Averages (27-216) Total Absorption 515,784 SF / Year 595,499 SF / Year 4. M SF / Year 49.7 M SF Direct Vacancy 9.5 % Total Vacancy 9.9 % YTD 217 Absorption 1,246,744 SF 1,38,8 SF Percent Pre-Leased 17 % YTD 217 Deliveries 289,55 SF (Triple Net) 27: $ : $5.51 YTD 217: $5.6 26

27 Frederick Office '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 4 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate decreased to 11.5% in the third quarter 217, down from 14.7% in the second quarter. Total vacancy decreased to.4% in the third quarter, up from 15.6% in the second quarter. Total net absorption increased to 78,172 square feet in the third quarter, up from -3,15 square feet absorbed in the second quarter. Total leasing activity decreased in the third quarter to 44,978 square feet, down from 95,69 square feet leased in the previous quarter. Contributing tenants included Community Imaging Partners Inc. signing a 16,674-square-foot lease at 522 Presidents Court and RoosterBio, Inc. signing a 14,55-square-foot lease at 5295 Westview Drive. 1 Year Averages (27-216) Total Absorption 41,83 SF / Year 57,71 SF / Year 27,691 SF / Year 4.3 M SF Direct Vacancy 11.5 % Total Vacancy.4 % YTD 217 Absorption 41,563 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Full Service) 27: $ : $18.31 YTD 217: $

28 Frederick Flex '8 '9 '1 '11 ' '14 '15 '16 '17 Deliveries Total Net Absorption 8 '8 '9 '1 '11 ' '14 '15 '16 '17 The direct vacancy rate increased to 9.1% in the third quarter 217, up from 8.7% in the second quarter. Total vacancy increased to 9.5% in the third quarter, up from 8.9% in the second quarter. Total net absorption decreased to -26,865 square feet in the third quarter, down from 27,762 square feet absorbed in the second quarter. Total leasing activity increased in the third quarter to 85,74 square feet, down from 19,14 square feet leased in the previous quarter. Contributing tenants included Equipment Manufacturers Inc. signing a 29,28-square-foot lease at 843 Spires Way. 1 Year Averages (27-216) Total Absorption 96,1 SF / Year 88,957 SF / Year 19,949 SF / Year 3.8 M SF Direct Vacancy 9.1 % Total Vacancy 9.5 % YTD 217 Absorption 44,759 SF SF Percent Pre-Leased % YTD 217 Deliveries SF (Triple Net) 27: $ : $13.11 YTD 217: $