4 Signs That it’s Time for a New Office Space
According to the NAIOP Research Foundation’s “Economic Impacts of Commercial Real Estate, 2018 Edition”, Maryland ranks number seven in the United States in terms of state gross domestic product generated by office real estate development. The report further stated that commercial real estate in Maryland supports nearly 48,000 jobs and contributes $7.78 billion to the economy.
As is the case for the rest of the nation, Maryland is seeing a boon in commercial real estate development thanks to a healthy and established economy. This growth is critical to creating new jobs, improving existing infrastructure, and developing places for residents to live, work, and play–and with the hot market in the Baltimore-Washington corridor, it’s easy to see the industry thriving.
Vince Bagli, President of NAIOP Maryland, commented on the news:
Maryland, buoyed by a diversified economy and a more business-friendly environment in recent years, continues to rank extremely high nationally in the commercial office, industrial and retail categories. Some of the largest and most ambitious new developments in the country are currently underway in the greater Baltimore metropolitan region. Necessary fundamentals are in place, led by a highly-educated labor market, to maintain this momentum in the foreseeable future.
Notably, Maryland did not rank in the top 10 states in terms of total development impacts–although neighboring Pennsylvania was number three, a major rise from number nine in 2016, with $36.38 billion in contribution to the gross domestic product.
National Numbers
We discussed the 2018 outlook for the industry previously, but the Foundation touched on several key factors that will impact commercial real estate in the future:
- Interest rates are projected to move higher in 2018 as the Federal Reserve raises its rate three-quarters of a point in three increments over the year.
- Labor shortages are already appearing in several key sectors, including construction, which will tighten further in 2018 with resulting increases in wage inflation.
- Energy prices are currently projected to stay relatively steady in 2018, but slightly above the 2017 average.
- The impact of the new 2017 federal tax law and the effects of lower tax rates on consumer spending and corporate investment.
Across the United States, the commercial real estate industry supported nearly 7.6 million jobs and contributed more than $935.1 billion to the gross domestic product in 2017. In addition to the reasons discussed above, growth in the construction sector was a notable contributor to commercial real estate’s growth. Specifically, building and non-building construction as well as infrastructure for water, sewer, highways, and power combined accounted for 18% of the nation’s economic activity in 2017.
Final Thoughts
Economic growth, both in the state of Maryland and on the national level, positively impacts the commercial real estate industry. While we can’t foresee the future of the economy, we’re hopeful that this trend stays steady for continued industry growth.
Murphy Commercial Real Estate, a full service real estate company in Annapolis, specializes in sales and leasing for retail/restaurant, office/medical, warehouse/flex, and land in the Baltimore-Washington corridor. Our background and experience allows us to readily interact with state and local government. We have established an excellent network of contacts and client relationships throughout the region. Serving clients since 1999, our goal is to consistently exceed your expectations.
For more information on how we can assist in your commercial real estate needs, contact us today.
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