Juggling high vacancy rates and pockets of growth
Faced with soft demand and heightened expectations among office tenants, a challenged but solid retail sector, and clear enthusiasm for new, highly amenitized, mixed-use developments, Owings Mills is a sub-market rife with contrasts.
Near the community’s center, three developments — Mill Station, Foundry Row and Metro Centre at Owings Mills – have expanded Owings Mills’ retail offerings and boosted interest in nearby office space.
“The flight to quality in office leasing means the nicest, newest properties are the ones winning the tenants,” said Patrick Smith, Vice President, MacKenzie Commercial Real Estate Services. “Metro Centre is a great project with a lot of attractive attributes. It definitely brings life to the area. Also, Foundry Row and Mill Station have brought in a lot of retail amenities that are attractive to office tenants.”
Consequently, Metro Centre at Owings Mills’ 200,000-square-foot office building is now fully leased “and we are preparing to break ground on an additional five-story office building,” said Kevin Keane, Senior Vice President of Office Leasing at David S. Brown Enterprises. In addition, “the Marriott hotel has been a tremendous success and we are now preparing to break ground on an extended stay hotel within the project and a fourth, residential apartment building.”
Metro Centre at Owings Mills’ live-work-play environment plus the added amenities from Foundry Row and Mill Station have boosted office leasing in select buildings as employers look to upgrade and, in some cases, downsize their space.
“Owings Mills has seen very strong interest from office tenants seeking to relocate from the Woodlawn area and from downtown Baltimore,” Keane said.
For example, new leases have been signed with Gannett Fleming, Siemens, STV, Inc., Peak Custom Remodeling, and Schnabel Engineering, which are all relocating from older buildings in Woodlawn to newer spaces in Owings Mills, Keane said. Element Fleet is the largest new corporate tenant coming to Owings Mills with 64,000 square feet at Metro Centre at Owings Mills — down from 210,000 square feet in Sparks.
That demand, however, isn’t nearly enough to fill the expanse of office space currently on the market.
“Typically, Owings Mills is one of the softest office markets in the region,” Smith said. “It has a 15 percent office vacancy rate currently, which is the highest vacancy rate in Baltimore County.”
Furthermore, many office tenants who are looking for space, dismiss Owings Mills as “somewhat off the beaten path” and opt for properties closer to I-95, I-695 or I-83, he said.
To overcome those challenges, some owners have opted to modernize select buildings that are close to Owings Mills’ newer amenities.
“Renovations can significantly enhance the attractiveness of office spaces and contribute to increased occupancy rates,” said Ashley Reimer, Leasing Agent with Merritt Properties. “For instance, Merritt saw a positive response to the renovation of one of our office buildings… That project converted a former research and development laboratory into a two-story, 63,000-square-foot, Class A office space at 10065 Red Run Boulevard [in Owings Mills Corporate Center] to deliver a modern building for a new customer base.”
Reimagined, innovative interiors, energy efficiency improvements, Merge by Merritt programming, and new community space with a micro market and outdoor patio enabled Merritt to release the building which currently has just 2,000 square feet remaining to be fit out for a prospective tenant, Reimer said.
At other office parks, new amenities designed to appeal to today’s hybrid workers are also helping to attract and retain tenants.
“Regularly scheduled food truck events at Red Brook Corporate Center have been great for existing tenants and prospects,” said Brent Magnum, Vice President of Office Leasing at David S. Brown Enterprises. “Jimmy’s Seafood, Cousins Maine Lobster and Taco Bar set up on-site often and provided a delicious, but also convenient, alternative to ordering carry-out lunch or delivery. Red Brook features a well-equipped 15,000-square-foot fitness center with showers/lockers and added two high-end conference centers equipped with connectivity for presentations. All of which have been instrumental in helping to secure a new lease.”
Shifts in the economy and working arrangements are also contributing to interest in Owings Mills properties.
“Government agencies are starting to open back up post-Covid and put out requirements for a variety of users,” said Stephanie Caronna, Leasing Representative for St. John Properties. “The Owings Mills market’s centralized location, high accessibility, and diverse population make it prime for these types of contracts. Owings Mills has benefitted from this with multiple, long-term government contracts that have been signed in the past 12 months.”
St. John Properties, Caronna said, recently completed two new flex buildings in Dolfield Business Park. One has already been fully leased by the Baltimore County Board of Elections. The company recently completed a two-story office building in Reisterstown, which has a flurry of activity between multiple potential users.
Meanwhile, the Metro Centre at Owings Mills, Foundry Row, and Mill Station developments have also eased Owings Mills’ longstanding problem with being “under-retailed.” And the retail improvements aren’t restricted to those three sites.
“Foundry Row is our flagship Owings Mills project and it has performed exceedingly well since it opened in 2016,” said Matt Mittenthal, Vice President of Asset Management with Greenberg Gibbons.
The company, however, also purchased Reisterstown Shopping Center and St. Thomas Shopping Center in 2016 as redevelopment opportunities and has spent $10 million and $23.7 million respectively repositioning both centers with new-to-market grocers and other retailers, services and restaurants, Mittenthal said. Both properties are expected to reach stabilization in 2024.
“We remain bullish on the present state of the market and its outlook over the next decade,” he said. “Owings Mills offers a diverse customer base of affluent and well-educated residents and a robust daytime workforce population. Foot traffic at our centers remains busy throughout the weekdays, evenings and weekends.”
Retail property owners, however, have had to make adjustments to attract and support retailers as they contend with high inflation, high interest rates, and tighter profit margins, Mittenthal said.
“We’ve aligned our sustainability goals with our capital partners and have implemented programs to reduce our energy consumption through LED retrofits and landscaping redesigns,” he said. “By passing these savings along to our tenants, we hope to make their businesses more profitable and they can better serve our collective customers.”