Intense Interest in Anne Arundel’s Industrial Sector Showing in Boosted Rents and Sale Prices
One of the more active segments of Anne Arundel County’s economy is the industrial sector in the county’s northern region. With over 24 million square feet of industrial space, the county has a low 9.3 percent vacancy rate. It is no surprise that businesses have been investing in the area due to the region’s function has a multi-model hub. With close access to the Port of Baltimore and BWI-Thurgood Marshall Airport, companies in northern Anne Arundel County are able to connect the east coast of the United States to global markets.
The last year has seen a flurry of activity. In 2018, international brand Fila expanded its footprint in Marley Neck, which started the recent trend of high profile industrial transactions. The company renewed its lease and added an adjacent space for a total of 372,000 square feet. The expansion allows Fila to double its shipping capacity.
Around the same time Amazon announced its plan to lease 157,000 square feet of warehouse space in Hanover. The location, will be used as a last mile fulfillment center.
Anne Arundel County is also the beneficiary of a consolidation by Best Buy. The retailer leased more than half a million square feet at Brandon Woods III, a 259-acre site located near Fort Smallwood Road. It is the first significant lease for the property where developers intend to build up to a million square feet of industrial development. The move is part of Best Buy’s plans to consolidate three existing locations in the Baltimore-Washington, D.C. area. The company expects about 200 jobs at the location, which will support Best Buy’s e-commerce, warehouse and distribution operations throughout the Mid-Atlantic region.
The growing demands of e-commerce is also the reason for DHL’s recent expansion in Anne Arundel County. The shipping company moved from a facility on the perimeter of the airport to a larger warehouse space of more than 48,000 square feet on Charwood Road in Hanover. The new center will allow the company to triple the size of its local office and, along with the installation of a high speed conveyer, increase its distribution operations. DHL employs about 60 workers at the new site.
San Francisco-based Imperfect Produce is now operating a regional distribution center in the former US Foods facility in Severn. Through a subscription, the company offers customers a box of fruits or vegetables that are deemed too aesthetically imperfect to sell in supermarkets but are otherwise fresh and edible. The company plans to quadruple their team of 25 employees within a year.
Close by in Harmans, Paragon Bioservices, a manufacturer of drugs and drug delivery technologies, continues to develop a state-of-the-art 290,000 square-foot facility to carry out its commercial manufacturing capabilities. The company expect to hire more than 500 employees by the end of 2019. Fresh from the grand opening, Paragon announced its acquisition by New Jersey-based Catalent for $1.2 billion.
In October of 2018, Liberty Property Trust completed construction of a 220,000 square foot industrial building in Hanover. The building was preleased to Intralox, a manufacturer headquartered in New Orleans that produces modular plastic conveyer belts.
These transactions have impacted rent in the area. According to CoStar, asking rent per square foot has increased in Anne Arundel County from $6.09 per square foot in the third quarter of 2017 to $6.97 per square foot in the second quarter of 2019.
Investors are also reacting to the county’s booming industrial market. In June of 2018, the Blackstone Group acquired four buildings totaling about 504,828 square feet at Hillside Business Park in Hanover for $117,400,000. In January of this year, Kohlberg Kravis Roberts & Company purchased a three building portfolio also in Hanover totaling 357,706 square feet for about $37.7 million.
Growing interest by investors has boosted sale prices. The average sale price per square foot increased from $32.54 in the second quarter of 2017 to $149.89 in the same quarter of 2019, according to CoStar.