January, 2011

2010 in Review

In the Washington Metropolitan region, most sectors (office, industrial, retail and residential) have experienced mild improvement. In Washington, the office market had a vacancy rate at year’s end of 12.9% which was down about 1% from the start of the year.  The vacancy rate for flex increased from 15% to 15.4% over the year, while the vacancy rate for bulk distribution space fell from 11.7% to 11.5% over the year.  The vacancy rate on retail fell from 5.5% to 5% which reflects a blend between big box retail and traditional shopping centers. Breaking out traditional shopping centers on their own, that vacancy rate is at 8.5% as of year end 2010.

Nationally, vacancy rates fell across all sectors. Industrial (includes flex and warehouse) vacancy rates ended the 4th quarter at 10.2%, down from 10.5% at the end of the first quarter of 2010. Office (includes Class A,B&C) vacancy rates were down to 12.6% at 4th quarter end from 12.8% at the end of first 2010’s first quarter. Finally, Retail (includes power centers, malls, specialty retail and shopping centers) vacancy rates showed a decline of .2% - ending the year at 7.3% from the first quarter mark of 7.5%

Rental rates across all sectors have stabilized, albeit abundant lease concessions (i.e. free rent, tenant improvements) are still frequently offered. The volume of sales transactions has picked up comparable to a level experienced in calendar year 2002, albeit considerably less than the market peak experienced in 2007.

2011 Forecast

TD expects to see continued modest recovery across all property sectors with nominal further reductions in vacancy rates and rental rates that will remain close to flat. While improvements are expected, the pace will be reflective of the anemic national+ economic recovery which most economists concur is well underway. Other positive factors include the following:

• Available Liquidity/financing will continue to increase
• While the volume of distressed commercial properties hitting the market is likely to increase, it likely will be vastly lower than what was projected by many
• A variety of leading economic indicators exemplify the improving economy which will translate to better fundamentals for all property sectors
• These include increases in consumer confidence, rising stock market, several quarters of expansion/growth in manufacturing and reduced unemployment.
• Pricing trends will continue to improve

Image Direct

Jeff Cahall of TD represented Image Direct LLC in relocating and leasing 56,000 s.f. at 200 Monroe Street in Frederick MD. Ruppert Properties owns the Building on Monroe Ave. Image Direct is a private company which designs & prints advertising/direct mail post cards, brochures and other similar marketing pieces. The company was established in 2000. They have a particular focus on clients which are non-profit organizations. They employ 50+ people.  The relocation has positioned the company for continued long term growth and they realized significant cost savings in the process.

American Pest

Joe Donegan of TD represented American Pest in relocating its regional headquarters to Maple Lawn Blvd just off US Rt 29 in Fulton, MD. American Pest leased 17,000 square feet from Saint John’s Properties. American Pest has multiple satellite offices and operates in multiple states. Their clients include many private property owners and also the Federal Government. They are one of the largest Pest Control companies in the region

Presidential Mortgage Bank

Brian Duncan of TD represented Presidential Mortgage Bank in leasing 6,000 s.f. at 50 Citizens Way (Creekside Plaza)  in the City of Frederick for their residential mortgage operations. Presidential Mortgage Bank is an affiliate of Presidential Savings Bank based in Bethesda, MD.  Creekside Plaza is one of the premiere office buildings within the City and will accommodate Presidential growth plans to service the Frederick Market.

1502 Woodlawn Alliance, LLC

Chad Tyler represented 1502 Woodlawn Alliance LLC (Landlord) in leasing 4,000 square feet to SDV Solutions, Inc. at 1502 Woodlawn Drive in Woodlawn, MD. TD leases and manages the building on behalf of the owner. SDV Solutions, Inc., a Service-Disabled Veteran-Owned Small Business, has provided Client-Centric Solutions to federal government agencies since 2004.

TD to partner with Prizim Environmental for Public/Private Partnership

TD, with its joint venture partner Prizim Environmental, is joining with the City of Gaithersburg to construct a 20,000 to 30,000 s.f. office building at the corner of Diamond and Summit Avenues. The City owns the site and has sought to have it developed. Prizim will be the anchor tenant within the building. Construction will start mid year 2012. Prizim is an internationally recognized environmental and energy management firm. Their clients include the Federal Government and a variety of private and publicly traded companies. They are seeking to expand their City of Gaithersburg presence.

Karen Frazier – Joins TD

Karen Frazier joined TD in mid 2010 as a sales & leasing associate. Karen comes to TD having worked for Uberman & Associates for 20+ years. Uberman was a multifaceted family-owned business with holdings that included real estate and multiple restaurants. Karen is a CPA and also has real estate experience in the areas of leasing and property management. With Uberman executing a strategic sale of many of their assets at the market peak, the principals have scaled down their operations which resulted in Karen transitioning to TD.

TD Residential Division

TD Residential, led by managing partner Sean Brink, continued to list and sell a variety of residential properties at a torrid pace during the second half of 2010. They have represented a specific group of banks in helping them maximize the asset values of their distressed/REO properties. TD Residential offers a “turn key” solution in managing these properties on an interim basis and renovating them as necessary.

Many new investors are entering the market looking at purchasing property at or below $175,000 for rental potential. We project the rental market to remain strong for years to come.Contact us if we can be of service to you in any way.

Tyler-Donegan Real Estate Services, Inc.
301-831-8575
chad@tylerco.com