January, 2012

4th Quarter 2011 Market Review

Overall during 2011, every sector of commercial real estate showed improvement over 2010. Nevertheless, the recovery to sound market fundamentals remains slow.

The office market in the Washington DC area ended the 4th Quarter with a vacancy rate of 13.3%. This was a slight increase over the prior quarter. In some of the outlying suburbs, the vacancy rate including sublet space is as high as 18.1%. The industrial vacancy rate at the end of the quarter for the Washington market was 12%. This is slightly down from the prior quarter. In some suburban markets, the vacancy rate is as high as 20% when including sublet and flex space. For the retail sector, the vacancy rate stood at 4.7% at the end of the year which was down from 4.8% in the prior quarter.

Expectations for 2012

Limited new construction, combined with a modest improvement in business sentiment should contribute to further improvement in market fundamentals for every sector of commercial real estate. The National Federation of Independent Business Owners’ Optimism Index increased in December of 2011 which was the 4th consecutive monthly increase.

The Conference Board Consumer Confidence Index also had two months of consecutive increase through December, as did the Index of Leading Economic Indicators. While all of these indices are moving in the right direction, their relative strength is marginal. In short, industry participants expect continued modest improvement in CRE for 2012 with the recovery picking up momentum throughout the year and in 2013.

4th Quarter Transactions

Stanford Business Park

Chad Tyler of TD represented Commercial Fleet Services in purchasing a 24,000 SF warehouse building on Yukon Ct. in Stanford Business Park in Frederick, MD. Commercial Fleet is a truck maintenance and repair service center. It provides fleet maintenance services both on the road and within its service center. Purchasing this facility achieved two strategic goals for the company which were to expand and relocate. Lastly, in going from leased premises to owning, they were able to take advantage of a buyer’s market.

Hyattstown Center

TD in its capacity as property manager and leasing agent for the Hyattstown Center (retail and office building), leased 2400 SF to Pure Fitness. Pure Fitness is opening its third location and will serve Northern Montgomery County and Southern Frederick County with this athletic and aerobic facility.

Frederick Industrial Center

TD in its capacity as leasing agent for the Brodsky Group at the Frederick Industrial Center secured a new lease for 1500 SF with “I.T.Guys.” The I.T. Guys expanded and relocated from a nearby facility. The company provides a variety of information technology and related services, including computer networking, software design, installation and general trouble shooting of I.T. Systems.

Biomedical Research Institute

David Kaye, of TD represented the Biomedical Research Institute (landlord) in obtaining small lab space for Pro Cell, LLC. The Biomedical Research Institute is one of few in the region that has lab spaces under 1,000 sf. The Biomedical Research Institute (BRI), founded in Rockville, MD in 1968, includes the Association of Entrepreneurial Science (AES), an incubator for startup scientific companies, to bring scientists and basic research findings into the realm of commercial markets. AES brings together all the accompanying business skills required for profit making entrepreneurs to bring scientific products and services to the marketplace. BRI also houses a low temperature repository, currently supporting a wide variety of other medical interests.

Community and Charitable Involvement

Easter Seals at Holly Hills Country Club

TD is sponsoring a “meet and greet” cocktail fundraiser event for Easter Seals at Holly Hills Country Club on February 16th from 5-8PM. Contact Chad Tyler – chad@tylerco.com or Joe Donegan – joe@tylerco.com if you would like to attend.

City of Frederick

David Kaye, a TD Sales and Leasing Representative was appointed to a City of Frederick advisory committee. The purpose of the ad hoc advisory community is to strategize on resolutions for the city’s small private sector inventory of blighted and vacant properties. David is one of 9 voting members on the committee and he was chosen both because of his extensive real estate experience and because he is a long time resident of the City of Frederick.

YMCA Board of Directors

Chad Tyler of TD was recruited and has joined the YMCA Board of Directors for the Frederick County YMCA. Chad is pleased to play a role on the board as the YMCA has a great mission and is one of the most highly respected non-profits in the County.