Baltimore Apartment Snapshot

Local Economic Snapshot 

The Baltimore Metro area's economy continues to lean on the defense, health sciences, education and government sectors. Fortunately, those are industries that tend to hold relatively steady in economic downturns. The December metropolitan area unemployment rate of 7.6% is tracking much lower than the national average of 9.4%. Factors negatively affecting the local economy are the region's above average cost of business and living costs along with decline in old-line manufacturing. The multifamily sector of commerical real estate reacts faster to market changes than other major segments. That can be mostly be attributed to the shorter lease terms of apartment rentals. 

Baltimore Metro's Top Five Employers

- Fort Meade
- Johns Hopkins University
- MedStar Health
- Johns Hopkins Health System
- Aberdeen Proving Group  

Baltimore Apartment Fundamentals 

The Baltimore Metro area, as of Q3 2010,  had a multifamily vacancy rate of 5.3%, which is 1% lower than the prior quarter. That rate compares very favorably to the U.S average of 7.1%. The latter part of 2010 is bringing the area its first signs of positive rent growth in a couple years. Through the first three quarters of 2010, YTD rent growth through Q3 2010 was .04%. Even that modest growth shows signs of rent stabilization and looks to further growth moving forward. 

Central Baltimore City Avg Rents

Studio

$735

 

1 BR

$1,036

 

2BR

$1,295

 

 

 

What's Moving

The Baltimore region has seen a major increase in large apartment transactions in 2010. Through Q3 2010, 15 properties totalling $520M have sold, resulting in a 200% increase versus prior year. All of those transactions were greater than $5M and involved mostly institutional players.  Also moving are value add apartments, priced to sell, in desirable rental markets in the city. Those are typically all cash purchases or financed with 30+% down. We have seen value add Class B/C apartments trading in the range of $33-60k/unit, depending upon level of work required and occupancy.  

 Looking Ahead 

The region's apartment market will continue to be primarily affected by the local economy. Economic reports have Baltimore Metro's local economy staying ahead of the national leading indicators, which will lend favorably to apartment fundamentals. Loosening of the lending markets and continued historically low interest rates will lead to a continued increase transaction activity. Buying a home is also not looked on as favorably right now, causing more people to look to rent. Demographic factors, including the children of the baby boomer generation hitting their prime renting ages, will look to drive rents and occupancies up.  

Source: Justin Verner, SVN Associate Advisor 

References: REIS, Real Capital Analytics, Delta Assoc, greaterbaltimore.org