Do you expect two-story warehouse/industrial buildings in the Central Maryland region?
Jannine B. Hayes
Commercial Leasing Representative
Knott Realty Group
“Not in the immediate future. To make a two-story warehouse worth any developer’s time in Maryland would require (1) land, which we are very short on, (2) rental rates well above average if you want a decent return on investment and (3) a user who can work with that type of design. For now, redevelopment of outdated buildings will be a lot more common over the next few years providing tenants with more trailer storage, higher clear heights, more dock doors, etc. Brooklyn, N.Y. just broke ground on a multi-level e-commerce distribution facility so we can see how that works out before jumping on the bandwagon.”
Daniel Hudak
Senior Vice President & Prinicpal
MacKenzie Commerical Real Estate Services
While I don’t believe we will see multi-story warehouses in the Baltimore/Washington combined market in the near term, I would not rule out seeing the first within the next five years. While global e-commerce spending is expected to reach $4.9 trillion in 2021, the timing expectations of consumers for expedient product delivery becomes more and more compressed. While we are witnessing the transformation from malls to warehouses, the challenges of going vertical for now are heavily impacted by increased construction costs and building code issues related to height restrictions. There is still enough runway in this market without having to go multi-story, unless the market is further stressed by land scarcity, consumer demand/expectations and increase traffic drive-times.”
Matt Laraway
Principal
Chesapeake Real Estate Group
“Probably not in the most immediate future for warehouse product servicing the greater Baltimore metropolitan region as there exists enough infill space to meet demand, and rents would not support the elevated construction costs. But there is a different story to tell just 50 miles to our south where data centers continue to snatch up nearly every piece of available land in this category. Just over the bridge, where more people reside in urban areas and rents are more expensive, there is a very real possibility for multi-story warehouse product in Northern Virginia to serve the ecommerce needs of suburban Maryland, Washington, D.C. and Frederick. I would not be surprised to see this come to pass within the next five years.”
Allan Riorda
President & Principal
Lee & Associates | Maryland
“Not anytime soon. Even though buildable land sites are becoming increasingly scarce throughout Maryland, multi-story warehouse buildings are more typically found in places where land is an absolute premium — such as Japan. In the United States, this real estate category has appeared in New York and Seattle. Our market still has an ample supply of buildings both inside and outside of the beltways to service the demand but, with the continued acceleration of ecommerce and next day or same day delivery models, I wouldn’t necessarily rule it out in the future.”