From the growing demand for best-in-class buildings to the impact of hybrid work models to the need to improve energy in downtown Baltimore, Bisnow Baltimore’s recent “State of the Market” event provided wide-ranging perspectives on commercial real estate across Central Maryland.
Held on the top floor of 2455 Banner Street in Port Covington, the Bisnow event also featured insights from industry leaders on how the economic slowdown is causing companies to delay real estate decisions and how a new asset class – Industrial Outdoor Space – is capturing the attention of institutional investors.
Adam Middleton, Vice President, Vari
“The days of people coming into the office and working within a cubicle for eight hours straight are now gone. That is what employees do at home. In today’s environment, it is critical to provide amenities in the workplace, and that doesn’t mean just a simple gym, where you check off a box. It is important to bring a hospitality-like atmosphere with music, the right smells and programs and services that are unlike what employees experienced before. Companies and landlords have to design offices so it doesn’t feel like employees going to work. Humans are not meant to work alone. Look at athletes. They can train over and over, but they only improve their performances when they start working with a trainer. Next, they practice with their team to further improve their skills. Next, this team plays another team to bring everyone to the next level.”
Bill Struever, Principal, Cross Street Partners
“The shared-office trend was occurring many years before the pandemic hit, so that is nothing new. Employees want to collaborate with each other and, most of all, want a lively work environment. Everyone understands what the main issues and concerns are with Baltimore City, but it is critical to improve the overall energy downtown and get people back on the streets. We need to bring the city back to life.”
John Hermann, Vice President, Asset Management/Leasing, Corporate Office Properties Trust
“We are still seeing COVID impact the commercial office market with companies right-sizing due to remote work policies. The hybrid work model is still evolving and the long-term threat it poses to office demand remains to be seen. A few more companies are adopting the ‘hotel model’ in which employees reserve a space on days they choose to work from the office. Companies realize not everyone will be in the office at the same time so, in turn, they are able to repurpose space for other functions which often involve hospitality-oriented uses.”
Kate Paine, Research Manager, JLL
“Lease renewals historically represent approximately 50% of all lease volume but, this year, it has dropped to the 35% range. Across the board, we are seeing a flight to quality among office users and, to lure employees back to work, companies need to provide an enticing workplace.”
Dan Flamholz, Principal, Greenspring Realty Partners
“What used to be referred to as ‘down and dirty’ industrial sites has been renamed to Industrial Outdoor Storage and this new asset class has captured the attention of institutional investors. There is an especially high demand for these assets in major port cities such as Baltimore, based on the Port of Baltimore being one of the top roll on/roll off operations in the country. Approximately 30,000 to 50,000 vehicles are arriving to the Port of Baltimore each week, and they need to be stored for a short-term basis before being shipped to their next destination. There is no room for them at the port, so they need alternative sites. There has been a tremendous shift in the overall fundamentals of industrial real estate. When I started in the real estate business more than 15 years ago, we were offering an incentive for some industrial warehouse space for less than one dollar per square foot and trying to get to ‘market’ at $3.50 per square foot in the second year. Now, these same buildings are being leased for $12 per square foot in some instances.”
MaryAnne Gilmartin (MAG Partners) speaking during the September 2022 Baltimore State of the Market event.
MaryAnne Gilmartin, Founder and CEO, MAG Partners
“Cities have the capacity to bring something new and exciting to everyone, but only if they are created by everyone. There is a lot of love about Baltimore and it reminds me in many ways of New York, with its grit and diverse workforce and ideas. There are also a lot of hidden gems to be found here, including its location, low cost of living and amazing real estate. People can live and work in Baltimore, and travel easily to Washington, D.C. and other East Coast cities. At Port Covington, we are creating a community in which every important need is just 15 minutes or less away – including work, shopping and daycare. The waterfront is also what makes this city special and it is easy to access and enjoy.”