Demand for retail, commercial office and warehouse/industrial asset classes in the greater Hunt Valley and north I-83 submarket continues to rise, according to speakers at a recent Commercial Real Estate Symposium, sponsored by the Hunt Valley Business Forum.
Lizzy Sweeney, Senior Director at Cushman & Wakefield, said the Hunt Valley and North Baltimore commercial office sectors are performing well because they are less dense, near retail centers and amenities, and offer free parking. Patrick Smith, Vice President of MacKenzie Commercial Real Estate Services, said that it is now extremely difficult to find warehouse/logistic space in this region. Eric Walter, President of Greenberg Gibbons, presented a status report of Hunt Valley Towne Centre and indicated an additional 10,000 square feet of retail space and new residential product is coming soon.
Hunt Valley is positioned to “win out”
Employees want a “destination” when they come to work, Sweeney said. Consequently, developers and landlords –who have multiple amenities within their spaces, such as food options, fitness centers, entertainment and event programming – will be better positioned to win tenants. Town centers or the amenitized Executive Plaza complex in Hunt Valley are examples such destinations, he said.
“I believe it is not sustainable for employees to work from home permanently, especially young professionals who need tutoring and mentorship,” Sweeney said. “That is one reason why I believe workers will come back to the traditional office at some point. When they do, Baltimore County and Hunt Valley will be well positioned compared to other submarkets because they are less dense, near retail centers and amenities, and offer free parking.”
“The traditional workplace is probably changed forever, with employers offering full flexibility to their employees with the opportunity for remote and hybrid situations, but I firmly believe that companies will return to the office in greater force due to the need for corporate culture, mentoring and collaboration,” she added. “We are seeing a great deal of uncertainty in the marketplace, with many companies hesitant to sign long-term leases so, instead, they are signing short-term ones.”
Sweeney added that the average space requirement for the typical employee was expanded from 150 to 160 square feet of space to approximately 200 to 210 square feet, in response to social distance requirements.
Scarcity of warehouse/industrial space
“Activity in the flex /industrial asset classes has been so strong over the last several years that it is now difficult to find space for companies in the greater Baltimore metropolitan region,” stated Smith. “Nationally, there have been some reports of Amazon giving back some space which would loosen things up. Locally, we have seen Amazon recently close two facilities, but they have also continued to expand simultaneously. However, my SIOR colleagues around the country have not experienced this trend.”
He said that “one crack in the foundation [of demand for that asset class] may be occurring among private equity firms, with their interest beginning to wane slightly based on steadily rising interest rates.”
Low supply of product has driven up interest rates 11.6% nationally this year, compared to the historical 2-3%. Smith predicts additional rent growth for 2023. He also predicts that some vacant big box retail product will be converted into distribution hubs, based on the availability of these spaces and the scarcity of traditional warehouse/industrial product.
“We believe flex buildings may be repurposed to accommodate retail/entertainment uses. Self-storage is another category that is extremely strong currently, given its alignment with multifamily projects that are being built throughout the greater Baltimore metropolitan region.”
More residential coming to Hunt Valley Town Center
“Hunt Valley Towne Centre has come a long way since its former version was listed prominently on the Dead Malls website more than 20 years ago,” Walter said. “In many ways, we continue to improve and refine the product mix in response to the needs of area consumers and a changing real estate landscape.”
When Hunt Valley Mall was transformed into Hunt Valley Towne Centre and opened with the first Wegmans Food Markets in greater Baltimore as well as nearly 60 complementary retailers, that was considered version 1.0. The next phase involved the incorporation of multifamily product ringing the center as well as the conversion of some retail space into commercial office use. Greenberg Gibbons is now working to implement version 3.0, which will “further densify Hunt Valley Towne Centre with the addition of Brightview Senior Living and its independent, assisted living and memory care product,” said Walter. Additional multifamily units are also on the horizon, as well as an additional 10,000 square feet of retail space that could support up to four new tenants.
Walter said the next improvement program will focus on the addition of architectural elements and other features that will help lengthen consumer dwell time. “The real estate landscape was significantly altered by the pandemic and changing consumer behavior. It is our job to consistently reinvent our assets so they remain relevant and compelling to consumers.”
Placer.ai – a third-party market research company that reports on consumer behavior by analyzing visitations in restaurants, shopping malls and retail stores – indicates that Hunt Valley Towne Centre is the second most frequented shopping center in Maryland with an average consumer dwell time of 68 minutes.