The Baltimore office market posted its fourth consecutive quarter with occupancy loss, closing Q3 2021 with 178,058 sq. ft. of negative net absorption, bringing the 12-month occupancy loss to a total of 1.1 million sq. ft. The overall vacancy rate ended the quarter at 16.5%, up 110 basis points over the 12-month period. This is approaching the market’s peak vacancy level of 16.9% from 2012. Nonetheless, the rate of occupancy loss decelerated during the quarter, as the prior two quarters each recorded more than 350,000 sq. ft. of negative net absorption—more than double of the Q3 loss.

As the Delta variant surge dampened touring and leasing activity, gross leasing volume fell from the prior four-quarter average of 671,000 sq. ft. to end Q3 at 336,000 sq. ft. No leases sized 50,000 sq. ft. or larger were executed during the quarter. However, seven of the 10 largest leases signed in Q3 represented either relocations or new market entries—whereas only three were renewals in place—which offers a reason for cautious optimism as occupiers continue to plan for their post-pandemic use of office space.