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Commercial Department: Spotlight: Maryland: April 2017

 

Spotlight: Maryland

The Old Line State is on the forefront of new frontiers.

With a population of more than 6 million people, Maryland is a state steeped in history, but moving swiftly toward the future. The Old Line State is at the forefront of biosciences, technology, manufacturing and international trade.

An educated workforce helps drive Maryland’s health sciences and tech industries. The state ranks first in the nation in several key areas, including the percentage of professional and technical workers, the concentration of employed doctoral scientists and engineers, and employed Ph.D.’s per capita in mathematics, health and biological sciences, according to the Maryland Economic Development Commission (MEDC). Twenty-eight percent of the state’s workforce is made up of professional technical workers — the highest concentration in the nation. Maryland also ranks third in educational attainment, with 38 percent of the state’s population over age 25 holding a bachelor’s degree or higher.

Additionally, Maryland is well-known for its famous educational institutions, including the U.S. Naval Academy in Annapolis and the world-renowned John Hopkins University in Baltimore — which ranks first in graduate biomedical engineering and public health, according to MEDC.

The state’s largest categories of employment are education and health services, and professional and business services, tied at 16 percent, according to MEDC.

The federal government and U.S. military play a large part in Maryland’s economy, which is not surprising given the state’s proximity to the nation’s capital. Trade also keeps the local economy humming. Baltimore, Maryland’s largest city, is a major trade hub, with the Port of Baltimore serving as a major focal point in the import and export of cars and trucks.

Even so, the federal government’s contribution to the state’s economy has waned in recent years because of reduced congressional appropriations and federal budget sequestration, according to MEDC. The military sector also remains at risk. Maryland’s Aberdeen Proving Ground faces the potential loss of 4,300 military and civilian jobs by 2020 as a result of federal cuts, although it remains to be seen how President Donald Trump’s desire to increase military spending will affect previously anticipated cuts.

skip to 3 Cities to Watch>>  

Baltimore office market

c_2017-04_Spotlight_chart1As Baltimore continues to recover from the Great Recession, its office market is slowly climbing back, according to a report from Integra Realty Resources (IRR). Education, health care and government are driving growth. In addition, demand from Fort Meade and the National Security Agency, located between Baltimore and Washington, D.C., is driving the largest concentration of new office development in the region.

At the end of fourth-quarter 2016, Baltimore’s metropolitan office market had 11.2 million square feet of vacant space and a 14 percent vacancy rate, according to a Cushman & Wakefield report. Vacant space increased by 307,000 square feet quarter over quarter, while total positive absorption for the entire year reached 1.5 million square feet.

Positive absorption continued to rise into the first quarter, according to Cushman & Wakefield’s outlook for this year. The company anticipates slow to moderate rent growth for the first two quarters of 2017. Vacancy rates are expected to decrease with the introduction of new build-to-suit construction projects, which will have smaller footprints.

Focus: Industrial sector

Baltimore’s industrial market is outperforming regional and national industrial markets, according to research from Integra Realty Resources (IRR). The city benefits from good truck, rail and port distribution facilities, as well as its proximity to the Interstate 95 corridor. The Port of Baltimore is poised to become a hub for the automobile import business, and in October 2014 it opened a $22 million berth at its Masonville-Fairfield Marine Terminal that will be used to load and unload both exported and imported vehicles.

Additionally, the 3,100-acre Sparrows Point redevelopment project, known as Tradepoint Atlantic, will include 15 million square feet of industrial space and contains more than 100 miles of short-line railroad tracks with switches to railroads owned by CSX and Norfolk Southern.

Unemployment

c_2017-04_Spotlight_chart2Maryland’s unemployment rate has remained below the national rate over the past five years — with the only exception being in 2015, when Maryland’s rate closed out the year matching the national rate of 5 percent. Since then, Maryland’s unemployment rate has dipped below the national rate once again, to an estimated 4.2 percent this past December, compared to the national rate of 4.7 percent.

Job growth in Maryland is slowing, however, with employers adding 900 jobs in December 2016, according to estimates released by the Bureau of Labor Statistics in January. Economists partly attribute the slowdown to population growth. Maryland’s population is increasing by about 1 percent each year, according to the Baltimore Sun. Uncertainty regarding future federal employment also may play a role, given the federal government’s substantial impact on Maryland’s economy.

Sources: Baltimore Sun, CBS Baltimore, Cushman & Wakefield, DCMilitary.com, Integra Realty Resources, JLL Maryland, Maryland Economic Development Commission, The Frederick News-Post, Time.com, U.S. Bureau of Labor Statistics, WHAG-TV



3 Cities to Watch

Columbia

Columbia, which sits about 30 miles north of Washington, D.C., and about 20 miles south of Baltimore, was named Money magazine’s No. 1 place to live for 2016. The magazine called the city “one of the most successful planned communities in the country,” citing its job growth, good schools and relatively modest real estate prices. County officials have expressed interest in turning Columbia Gateway — a business center housing more than 400 businesses and employing about 26,000 people — into an “innovation district” where leading-edge companies, educational institutions and startups would collaborate on new technology ventures.

Annapolis

c_2017-04_Spotlight_AnnapolisIn addition to serving as the state of Maryland’s capital city, Annapolis — the home of the U.S. Naval Academy and St. John’s, a small liberal arts college — is only 25 miles south of Baltimore and 30 miles east of Washington, D.C., connecting the small city to the hustle and bustle of Maryland’s largest city and to the wheeling and dealing of the nation’s capital.

Frederick

Maryland’s second-largest city behind Baltimore boasts a historic downtown and a thriving arts community. Frederick’s largest employer is Fort Detrick, a bioscience and communications research installation run by the U.S. Army, made up of around 11,000 military, federal and contractor employees. On the horizon, a proposed hotel and conference center in downtown Frederick, being built through a partnership between the city and private developers, is expected to create jobs and stimulate the economy at the historic sites of a railroad building and a tannery.

What the locals say

“The real standout for Maryland has been the industrial sector. … When you’re talking about big-box distribution — 500,000-plus square feet — the level of requirements has ticked upwards noticeably, and what we’re seeing is a lot more demand [for warehouse space in Maryland] coming out of neighboring markets like Pennsylvania and New Jersey as the tenants up there are squeezed by tightening market dynamics on the commercial real estate side, and also tightening labor trends up to the north.”

c_2017-04_Spotlight_local

Patrick Latimer 
Research manager,
JLL Maryland 


 

Steven Wyble is online content editor of Scotsman Guide Commercial Edition. Reach him at (800) 297-6061 or stevenw@scotsmanguide.com.

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