"The Baltimore industrial market continued its robust leasing activity in 2020 after a record-breaking year in 2019. This has led to historically low vacancy rates, record-high asking rents and a sizeable development pipeline. We fully expect these trends to continue in 2021, which will further increase both rental rates and underlying land values."
More than 18 million people—23% of them in the 18-to-34 age demographic—live within 100 miles of downtown Baltimore, with a 3.4% projected growth rate over the next five years. Baltimore is ranked among other major industrial markets (such as New Jersey, Inland Empire, Los Angeles and Chicago) for reaching a high population concentration within a 100-mile radius. Furthermore, its proximity to Washington, D.C. makes it an ideal location for distributors to service the larger regional population, especially as e-commerce grows.
Figure 1: Baltimore Population Analysis
Distance from Downtown Baltimore (miles)
Source: CBRE Location Intelligence.
An influx of occupiers has led to a positive outlook for warehouse workers in the Baltimore region. According to CBRE Labor Analytics
, 41,730 people work in the local distribution industry, with a forecast 12.1% increase over the next 10 years. The average salary for non-supervisory warehouse workers is $14.90 per hour, 5.9% above the national average.
Figure 2: Baltimore Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics.
There have been 131 economic incentives deals totaling more than $153 million at an average of $6,723 per new job in the Baltimore metropolitan area over the past five years, according to CBRE Location Incentives.1
Figure 3: Top Incentive Programs
The Advantage Maryland program is among the top incentive programs offered for projects in metro Baltimore. This program provides grants and loans to support economic development opportunities that offer significant returns to the state through job creation and capital investment, To qualify, businesses must be within a priority funding area and an eligible industry sector, including agriculture, aerospace, biotechnology, transportation, distribution, financial services, health care, telecommunications, manufacturing, technology and businesses with Maryland headquarters. Under Armour, Stanley Black & Decker, Amazon and PepsiCo are just a few leading companies that have used incentive programs for industrial projects in the Baltimore metropolitan area over the past five years.
Another popular incentive program available in Baltimore is the Job Creation Tax Credit (JCTC), which is intended to attract new businesses to Maryland and encourage existing businesses to expand. The program provides eligible companies with income tax credits in exchange for creating at least 60 new jobs for Maryland residents or 25 new jobs if located in a designated revitalization area.
Baltimore’s strategic location on the East Coast has already attracted dozens of major e-commerce and bulk goods distributors. The city provides convenient access to CSX and Norfolk Southern rail lines, and every terminal at the Port of Baltimore is within one stoplight of an interstate highway. The port generates approximately 15,300 direct jobs and nearly 140,000 indirectly. Baltimore has one of a few East Coast ports capable of handling ships carrying 14,000 twenty-equivalent units (TEUs) or more. Construction is underway for a second 50-foot-deep berth at the Seagirt Marine Terminal, which will allow the port to handle two supersized ships simultaneously. Four additional neo-Panamax cranes are scheduled to arrive in April 2021 and be operational by summer.
Baltimore’s location within the I-95 Corridor provides direct highway access to the entire Eastern Seaboard. BWI Airport’s freight transportation business provides an additional mode of transport easily accessible to manufacturers and distributors across the region.
SUPPLY AND DEMAND
Industrial activity has been robust in Baltimore with 26.2 million sq. ft. of net absorption and a 3-percentage-point drop in the warehouse vacancy rate to 5.4% over the past five years. Last year alone, 3.2 million sq. ft. of industrial space was absorbed, after a record 9.5 million sq. ft. in 2019. These strong market fundaments led to 21.9 million sq. ft of new industrial development over the past five years.
Figure 4: Baltimore Historical Data
Warehouse asking rents have grown consistently in recent years, ending 2020 at $6.40 per square foot (NNN), up by 8% from 2019. Strong and steady demand in the Baltimore-Washington Corridor, complemented by record e-commerce demand in the I-95 North submarkets, resulted in a strong year for the market amid a global health crisis.
The future looks promising for the Baltimore industrial market. The region has withstood the COVID-19 downturn with strong leasing activity and low vacancy rates that, combined with the region’s logistics advantages and projected demand for warehouse space, point to robust rental rate growth over the next five years. CBRE Econometric Advisors forecasts that Baltimore industrial asking rents will increase by 5% annually over the next five years—in line with expectations for the U.S. industrial market.
Source: CBRE Research, Q4 2020.
Figure 5: Baltimore Size Range Comparison
Source: CBRE Research, Q4 2020.
1 Source: WAVTEQ Incentives Monitor; January 2015 to December 2019