Photos courtesy of Steve Adams, AAEDC.
New commercial permits in Anne Arundel County posted striking gains in the second quarter, due largely to strong activity in retail, restaurant and mixed-use properties, according to the Anne Arundel County Economic Development Corporation (AAEDC).
New commercial permits rose 75 percent compared to Q2 2024 and the total value of those permits rose 63.9 percent (compared to Q2 ’24) to a total of more than 134 million. That’s a substantial turnaround from the first quarter of the year, when new commercial permits fell 33.3 percent compared to the same period in 2024.
Addition, Alteration or Repair (AAR) permits posted a moderate 7.6 percent increase compared to Q2 2024.
“We’ve definitely been busy,” said Wesley MacQuilliam, Chief Operating Officer of AAEDC.
Some major retail centers, including Annapolis Mall and Annapolis Town Center, “have been going through new ownership and transitions, signing more leases, bringing in new tenants to fill some vacancies,” MacQuilliam said.
The restaurant industry in the county has remained strong. That has sparked new openings both by chain restaurants and independents, and the creation of some curious food hubs.
“Chicken restaurants have been a huge trend and, for some reason, they have all located on Route 3 in Crofton,” he said. “We have Raising Cane’s, Royal Farms, Popeye’s, Slim Chicken, the new restaurant that’s backed by Shaquille O’Neal [Big Chicken] and two Chick-fil-A’s. It’s like chicken corridor through there.”
Increased investment in mixed-use developments is supporting retail and restaurant properties.
“At Annapolis Town Center, they are adding some residential components to that development,” MacQuilliam said. “If you look at the Parole area, the Riva Road corridor of Annapolis, you will see a trend of creating retail fronting on Riva Road with multifamily behind it.”
The county, he added, recently completed its Plan 2040, which encourages more mixed-use development. The county is also working to advance several mixed-use, transit-oriented developments.
“In Odenton, a parking garage is being built at the MARC station and the State is in the final stages of an RFP process to select a private developer to build a mixed-use TOD on the site,” he said.
Demand for industrial space in Anne Arundel has declined since the peak of the pandemic. Meanwhile, some industrial projects launched during the pandemic are now delivering, “but we are slowly getting those big buildings leased up,” MacQuilliam said. “We’ve seen leases recently from Pandora, Elite Spice and RF Valves, and there are a couple of businesses that have taken up space in the Techwood Business Park that Amazon vacated a few years ago.”
Although demand for office space remains soft, “we have one anomaly in our county, which is The National Business Park,” he said. “COPT Defense Properties is probably the only company that is building spec office. But they have a good product, good location and a good niche, so they build huge, five-story, Class A office buildings and lease them.”
At the same time that commercial permits increased in Anne Arundel, vacancy rates in office, flex and industrial properties also nosed upwards. Office vacancy was 8.4 percent in Q2 compared to 7.17 percent during the same period in 2024, flex was 8.2 percent compared to 6.07 percent in Q2 ’24, and industrial was 6.57 percent compared to 5.77 percent.
“The vacancy rates did tick up slightly, but they are still healthy numbers,” MacQuilliam said. “On the bright side, I think those numbers present opportunities. I can’t tell you how many times we have gotten a call from a prospect or from the state about a business that is looking for 300,000 square feet of industrial space and we have had to say there’s nothing available. If we have more available space, then we have more opportunities to attract those companies.”