The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 91.7 million square feet of rentable space in 897 office buildings of 25,000 square feet and greater.
Direct vacancy increased to 15.4% in the fourth quarter, up from 13.3% in the third quarter, and total vacancy increased to 16.4% in the fourth quarter, up from 14.4% in the third quarter. The market recorded a decrease in net absorption in the fourth quarter with -248,356 square feet absorbed, down from the 532,554 square feet absorbed in the previous quarter. Contributing to negative absorption was Clark Construction vacating their 89,365-square-foot space at 7500 Old Georgetown Road. The largest lease signed this quarter was MacroGenics, Inc. signing a 122,601-square-foot renewal at 9704 Medical Center Drive. One building delivered in the fourth quarter: The Ella at Carillon (Class A, 125,000 sf, 6% pre-leased to Clearway Pain Solutions) delivered in November 2022. The largest office building sale in Suburban Maryland during the fourth quarter was Shady Grove Medical Pavillion in the North Rockville submarket, trading for $48.0 M. The year-over-year unemployment rate in Suburban Maryland decreased to 3.1% in the fourth quarter of 2022, down from 4.2% in the fourth quarter of 2021. From November 2021 to November 2022 employment in Suburban Maryland saw a net increase of 13,000 jobs. The sector with the greatest amount of job gain was Professional & Business Services with 4,000 jobs gained. Government increased by 1,100 jobs in the period from November 2021 to November 2022.