Q2 2020 Suburban Maryland Market Report
The coronavirus adversely impacted suburban Maryland’s office market in Q2 of 2020. The repercussions of forced layoffs, mandatory remote working, and delayed real estate initiatives began to materialize in April. Pandemic-induced economic uncertainty has played a role in slowing down leasing activity, which reached historically low levels in Q2. While leasing volume was well below average, the region’s strong pharmaceutical and federal industries supported Q2’s top leases. Given the nature of the current public health crisis, Maryland’s strength in biotech/life sciences could insulate the commercial real estate market from some of the recessionary pressures expected. Occupancy losses were measured at -175,289 SF in Q2, bringing year-to-date net growth to 78,987 SF. Vacancy increased to 15.6% and is expected to remain elevated through 2020 due to continued economic uncertainty and new construction deliveries. Though asking rents are relatively steady, larger urban submarkets, particularly in Montgomery County, have supported regional rent growth, which has been falling in many of Maryland’s more outdated rural markets.