Suburban Maryland 2020 Q2 Market Report

COVID-19 uncertainty begins to impact leasing activity while other market fundamentals remain unshaken

The Suburban Maryland market began Q2 in a government-mandated shutdown, and even though restrictions have eased, tenants are only allowed to use their office space again at reduced occupancy levels to comply with new health guidelines. Whether offices are in use or not, many tenants have upcoming lease expirations and are faced with the difficult task of making decisions about their real estate needs. During Q2, 0.6 million square feet (msf) leased, which was a significant (50.0%) decline in activity from Q1 (1.2 msf leased), but just a slight dip down from the five-year quarterly leasing average of 0.8 msf. Occupiers showed a preference to stay in their current office spaces rather than relocate with renewals comprising 53.2% of transaction volume – an 11.6% increase over the quarter. Leasing was bolstered in the second quarter by the government sector which made up 25.3% of activity. Much of that was a single lease, the Food & Drug Administration’s renewal at 12420 Parklawn Drive in Rockville for 93,014 square feet (sf).

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