Future Cities
2023 North America Industrial Big Box Review & Outlook: Baltimore
April 4, 2023 5 Minute Read
The explosive growth of Baltimore’s big-box sector is attributable to its deep-water port and access to strategic markets along I-95. This allows occupiers to reach 34% of the U.S. population in a one-day truck trip and provides same-day service to Baltimore-Washington MSA’s approximately 10 million people. This population density—the fourth-largest in the U.S.—and solid workforce fundamentals will continue to attract both e-commerce and traditional retailers.
Demographics
More than 18 million people—23% aged 18-34—live within 100 miles of downtown Baltimore, with a 1.0% projected five-year growth rate. Baltimore has a high population concentration within a 100-mile radius, like Inland Empire, Dallas and Chicago. It is also ideal for distributors serving Washington D.C.’s large population.
Figure 1: Baltimore Population Analysis
Source: CBRE Location Intelligence, Q4 2022.
The local warehouse labor force of 39,954 is expected to grow by 11% by 2032, according to CBRE Labor Analytics. The average salary for non-supervisory warehouse workers is $18.55 per hour, 9.8% above the national average.
Figure 2: Baltimore Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics, Q4 2022.
*Median wage (1 year experience); non-supervisory warehouse material handlers.
Location Incentives
Over the past five years, there have been 159 publicly known economic incentives deals totaling over $140 million at an average of $7,099 per new job in metro Baltimore, according to Wavteq.
CBRE’s Location Incentives Group, reports that top incentive programs offered in metro Baltimore include Advantage Maryland, a program providing grants and loans to support job creation and capital investment. To qualify, businesses must be in a priority funding area and an eligible industry sector.
Another program available in Baltimore is the Job Creation Tax Credit (JCTC). It provides eligible companies with income tax credits for creating at least 60 new jobs for Maryland residents or 25 new jobs if in a designated revitalization area.
Figure 3: Baltimore Top Incentive Programs
Source: CBRE Location Incentives Group, Q4 2022.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.
Logistics Driver
Baltimore’s strategic location on the East Coast has attracted dozens of major e-commerce and bulk goods distributors. The region has access to CSX and Norfolk Southern rail lines, and every terminal at the Port of Baltimore is within one stoplight of an interstate highway. Baltimore has one of a few East Coast ports capable of handling ships carrying 14,000 twenty-equivalent units (TEUs) or larger. Construction is underway for a second, 50-foot-deep berth at the Seagirt Chesapeake Marine Terminal, which will allow the port to simultaneously handle two supersized ships. Four additional neo-Panamax cranes are scheduled for operation in 2023.
The I-95 Corridor gives Baltimore direct highway access to the entire eastern U.S. BWI Airport’s freight transportation business provides an additional mode of transport easily accessible to the region’s manufacturers and distributors.
The I-95 Corridor gives Baltimore direct highway access to the entire eastern U.S.
Capital Markets
Despite a drop in industrial investment sales volume in the Mid-Atlantic region in 2022, industrial leasing fundamentals outperformed expectations again. The Port of Baltimore continues to be the nation’s top port for roll-on/roll-off cargo. Land scarcity has resulted in historically low vacancy rates and no active construction in the Baltimore-Washington corridor. CBRE projects sales volume to recover and competition among investors to intensify as pricing resets based on changes in the capital markets.
Supply & Demand
Despite only 84 million sq. ft of existing inventory, Baltimore is garnering significant interest from big-box occupiers because of its central location and nearby port. Like most markets, transaction volume declined in 2022 to 4.5 million sq. ft., most affecting the 500,000-749,999 sq. ft. size range. Net absorption decreased to 2.1 million sq. ft. due to a decline in transaction volume. 4.1 million sq. ft. of construction completions led to a 1% higher vacancy rate, to 4.5%. Despite lower leasing activity, rent growth was robust at 34.1%, the fifth-highest in North America.
While 2023 transaction volume will decline in most markets, occupiers prioritizing supply chain resiliency will keep demand strong near major seaports, potentially leading to higher lease volume this year. Strong demand, only 3.3 million sq. ft. under construction, and a projected decline in construction starts will reverse vacancy rate growth, for another year of double-digit rent growth.
Figure 4: Share of 2022 Leasing Activity by Occupier Type
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 5: Lease Transaction Volume by Size Range
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 6: 2022 Construction Completions vs. Overall Net Absorption by Size Range
Source: CBRE Research, 2022.
Figure 7: Direct Vacancy Rate by Size Range
Source: CBRE Research, 2022.
Figure 8: Under Construction & Percentage Preleased
Source: CBRE Research, 2022.
Figure 9: First Year Taking Rents (psf/yr)
Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Explore Big Box Insights by Market
More than 2.6 million people live within 50 miles of the market core, with a projected five-year growth rate of 2.1%.
The Northern/Central New Jersey market serves the largest population in the U.S. within 50-, 100- and 250-mile radius areas.
More than 8.7 million people live within 50 miles of the market core, the highest population concentration in Canada.
Contacts
Jonathan Beard
Executive Vice President
John Morris
President, Americas Industrial & Logistics, Advisory Services
