Posts Tagged ‘ commercial real estate ’

Frederick Office Market Posts Modest Gains First Quarter 2014

Buyers snapped up Frederick office condos , while tenants leased four times as much flex space as office.

It’s apparent when viewing the chart reporting square footage of commercial real estate transactions by segment in Frederick Commercial Sales Jump 66% during 1st Quarter, that warehouse properties were the darling of Frederick’s first quarter commercial real estate market.  The office segment, on the other hand, continues to face a difficult climb out of the recession, as office use continues to evolve dramatically and inexpensive flex spaces absorb tenants who would have been class A or B office tenants less than a decade ago.

That said, the office sales market in Frederick appears to be making some modest gains, at least in terms of sales price and volume.

The median price per square foot of Frederick office space increased about 10% compared to Q1 2013, while total square feet sold jumped 135%.  There were no purchases of flex properties by traditional office owner/users during the first quarter of this year, and only one sale of a flex condo during the first quarter of 2013 at a price of $106.12/SF.  Medical office condominiums fetch higher prices; a medical office condominium at Conley Farm sold for $237.51/SF last quarter.

Small businesses and medical practices seeking office condos represented most of the activity in office sales last quarter, as low interest rates and loosening credit markets tipped the scales in favor of owning versus leasing.

But speaking of leasing, flex was the clear winner last quarter with office tenants.   Vacant flex properties like those offered by St. John Properties continue to put pressure on the office leasing market, mainly due to the affordability factor:  compare the median per square foot lease rate for flex of $7/NNN versus $11/NNN for office space during the past quarter.  On a square foot volume basis, flex outpaced office by nearly 4 to 1 during the first quarter of 2014.


St. John Properties, which about 18 months ago had 1/4 million square feet of vacant flex space in Frederick, appears to be leasing that inventory at a brisk pace, which is good news for the traditional office segment in Frederick.

Note: Statistics provided for commercial property sales in this report are based on thorough research of every recorded commercial sales transaction listed in SDAT for the first quarter of 2014, and are deemed reliable.  Lease transactions are not recorded with Frederick county government.  Lease rates for this report were researched in CoStar.  Lease rates, if reported at all, are usually estimated.  Median lease rate calculations for the quarter are based upon available estimates and are meant to be used as a baseline trend versus hard data.  

The author:  Kathy Krach is a commercial sales and leasing agent with MacRo.

MacRo Brokers Lease of Retail Space in Downtown Frederick

MacRo, Ltd. is pleased to announce the leasing of 3,190 square feet of office space at 154 N. Market Street to Smokestack Studios.

Kathy Krach of MacRo represented the tenant in the transaction.  Dee Perry of Noahs’ FMC represented the landlord.

Smokestack Studios is a high-end home furnishings and accessories store; the store owner and operator is a former designer for Restoration Hardware and plans to open for business in June of 2014.

For more information on how MacRo, Ltd. Real Estate Brokerage Services may be able to assist you in the sale or leasing of your commercial or industrial property, contact Kathy Krach at 301-332-7891 or

Positive 2014 Sales Trends

“Time to market” is plummeting for Frederick’s Commercial listings. 

Over the course of the last 5 years, the median time it takes for a commercial property to go under contract in Frederick County, Maryland has dropped dramatically from a high of over twenty months to the current level of just 3 months, according statistics compiled from, the world’s largest and most comprehensive database of commercial real estate information.

The median time on the market dropped from its 2009 peak to a low range of 4 to 7 months in late ’09 and early ’10 and then roller coastered its way back to nearly 16 months in 2012 before it worked its way to the current low of 3 months in March of 2014.

What does this mean for would be sellers of land and commercial real estate in Frederick County? Purchasers (investors, developers, businesses and builders) are actively engaged in the market and they are actually signing contracts. It also means that the majority of new listings that are hitting the market are being shown.

It also happens that the owners of land and commercial real estate are setting asking prices reasonably close to market values.  They have learned that purchasers are armed with more market information than ever before.

Have you been contemplating listing a property for sale?   Please don’t hesitate to call my office to schedule a confidential appointment to discuss how my staff and I may be able to assist you.

Contact Rocky at
301-698-9696 ext. 202 or

Retail Strip Centers as Local Wellness Centers

For the near future, health care real estate decisions, like the medical business, focus on economies of scale to compensate for the lower insurance payments while adjusting to the new medical measuring stick of outcome or wellness care.

Like the old real estate mantra, “location, location, location”, the new medical business model will also have a similar mantra: large, local, and logical.

How do medical practitioners and investors locate large affordable structures that can service the community and make financial sense? If you ask the medical investors/redevelopers, the likely answer is the local retail center. The facility is in place, and the community infrastructure is there. The cost savings between repurposing empty or underutilized space versus ground-up development is considerable. This approach also satisfies sustainability opportunities, and saves the patient time and travel costs because of its local presence.

The upside for retail owners can be noteworthy. First, the owners get to convert their current investment into a brand new business model that comes with the opportunity for long-term economic growth. Second is the strong possibility that instead of several small to medium size tenants, the owner could likely see one or two tenants utilize the entire center. Over time, the medical office building has become the health care facility, which is likely to morph into the Local Wellness Center, conveniently located near you.

To learn more about how your real estate investments are being affected by all the upcoming health care changes, contact Steve. 

Contact Steve Cranford at
301-698-9696 ext. 207 or

Frederick CRE Sales Up 40%

Frederick County posted $275 million worth of commercial real estate sales during 2013 versus a little over $190 million in 2012—a healthy 40% increase in dollar volume.

In addition, the number of CRE sales transactions increased by over 10% from 2012.  While two years is hardly enough data to begin tracking trends, it is encouraging to see sales growth in the short term heading in the right direction—up!

Commercial closings dropped off a bit during the second half of 2013.  Not entirely unexpected, considering our local economy had to dodge sequestration, the fiscal cliff and the rollout of Obamacare.

On the leasing side, prices appear to have hit bottom, as concessions such as free rent and rent freezes are beginning to go away, and business owners are downsizing or subleasing shadow spaces.  Frederick’s office segment is still limping along, as vacancies left by the loss of several large employers continues to put pressure on lease rates.

Anecdotally, the beginning of 2014 is off to a bright start.  We hope the market has reached a tipping point, as we are now seeing more deals consummate than fizzle.  Sellers overall are adapting to a more realistic view of commercial real estate values; buyers are entering the market as commercial credit markets open up again. And much like housing, commercial real estate inventories are quite low in the Frederick area.

Assuming current demand holds—or better yet, improves—conditions are ripe for commercial real estate prices and lease rates to begin a climb up, at long last.

Now is a great time to get off the fence if you’ve been waiting for the market to turn around. Let MacRo help you determine the best pricing and marketing strategy for your assets.

Contact Kathy Krach at
301-9696 ext. 205

*Data used for this article and graph was gathered from Frederick County tax and land records.  The information is deemed to be accurate, although MacRo has not independently verified it and does not guarantee that it is correct.  

1 Simple Leasing Tip for Commercial Real Estate Landlords

Sometimes Landlords feel like they are running a concession stand at the local carnival. 

They say timing is everything, but if you are a landlord who has invested in the commercial real estate market for the long haul, you can expect to see everything the market has to offer.

MacRo, Ltd. is in the business of assisting property owners with making wise investment decisions, such establishing lease terms that will maximize the value of their real estate.

Very often I meet with an investor who has been managing and leasing his own property for many years.  As a matter of policy the owner has offered below market rents to fill vacant units quickly.

Since the rent rolls of properties have a significant impact on the property value, many investors often find themselves held hostage by those leases.

It is important for the owner of a commercial real estate investment properties (be in a retail, office, flex space or industrial space) to practice some basic leasing strategies when marketing vacancies.

Here is one to chew on:

Free Rent is often better than Low Rent

At first glance this may appear to make no sense, but all too often, I find that property owners will negotiate a low base rent with a tenant, just to get a vacant unit filled.  That base rent sometimes may (or may not) have an annual rent escalation clause built into the terms of the lease.  In the Frederick County commercial real estate market the typical escalator is about three percent.

The long term impact of lower than market rent can have a negative impact on the future value of the property.  Sometimes under the right circumstances offering as much as several months or more in Free Rent, and using a base market rate rent, can provide the tenant with the necessary incentive to lock into to a long term lease without giving away future increased cash flows.

The left half of Figure 1, shows a simple example of how this logic works.  Consider a situation where the market rate is $15.00 per square foot and a tenant offers $12.00 for a ten year lease.  In the long run the Landlord makes out better if the tenant will agree sign at $15.00/SF with a concession equivalent to a one year rent abatement verses a $12.00 rate without abatements.

From an appraisal perspective, if one were to value such a property based upon an income approach alone (using a capitalization rate of say 8%), after the first year the $15.00 rate shows the value of the real estate to be worth 25% more than that of the $12.00 lease rate.

The right half of Figure 1 gives an example of the value differential for a 5,000 square foot free standing office building using the above lease terms, showing that the factor 25% carries over from lease rate to value.

Now obviously, other factors will go into a full appraisal, such as consideration of comparable sales, property condition and replacement costs … just to name a few.

Do you have a commercial leasing question for our team at MacRo, Ltd?

We are just a phone call away.

The author: Rocky Mackintosh is President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for

Frederick Commercial Sales Jump 66% during 1st Quarter

The sale of Overlook Manor Apartments and Lafarge North America’s quarry holdings boost 1st quarter commercial real estate sales.

Frederick’s commercial real estate market came out of the gate in 2014 with a strong first quarter.  On a dollar volume basis, commercial real estate sales for the first quarter of 2014 increased over 65% from the same time period of 2013.  The total number of transactions, which is a better measure of overall activity in the market, continues to increase at a slow but steady pace.  The total number of commercial real estate sales transactions increased about 10% over the first quarter of 2013.

There were two large transactions–the sale of Overlook Manor Apartments ($23, 050,000) and Lafarge North America‘s quarry operations ($17,205,000)–that contributed to the large dollar volume increase during the quarter.  Watch for an upcoming MacRo Report post on the top five deals of Q1 2014 to learn more.

Following are some statistics tracking the first quarter performance of Frederick’s commercial real estate market for the past several years.  Given that the number of quarterly transactions occur in the dozens rather than the hundreds, sales per square foot for each different market segment have a pretty wide range between high and low prices.  This small sample size renders a price per square foot average statistically meaningless, so we are reporting median prices per square foot instead.

The author:  Kathy Krach is a commercial sales and leasing agent with MacRo.

MacRo Assists Tenant in Leasing Office/Warehouse Space on Bailes Lane

MacRo is pleased to announce the lease of 19,500 SF office/warehouse space at 295 Bailes Lane, Unit C, Frederick.

This unit is a combination of 1,500 SF of office space and 18,000 SF of high-bay warehouse space, which includes 3 docks and 2 drive-ins.

The tenant, Showtime Sound, is expanding from its current facility in Frederick.  Showtime Sound is a full service event production company providing audio, lighting, video and staging for any size event or venue.

Rocky Mackintosh represented the tenant in this transaction.  Tony Checchia of Frederick Land Company represented the landlord.

For more information on how MacRo, Ltd. Real Estate Brokerage Services may be able to assist you in the sale or leasing of your commercial or industrial property, contact Rocky Mackintosh at 301-748-5655 or

MacRo Brokers Sale of Residential Office Building and Commercial Lot

MacRo is pleased to announce the sale of 611 and 613 West Patrick Street, Frederick, Maryland 21701 for $450,000.

The property included a 2.4 acre commercial lot with a 2,200 square foot residential office on the Golden Mile corridor.  The sale closed on April 1, 2014.

Rocky Mackintosh and Kathy Krach represented the seller in this transaction.  Tom Poss of  Long and Foster represented the buyer.

For more information on how MacRo, Ltd. Real Estate Brokerage Services may be able to assist you in the sale of your commercial or industrial property, contact Rocky Mackintosh at 301-748-5655 or

MacRo’s Commercial Real Estate Field Guide

What does the legalization of marijuana have to do with a commercial real estate glossary?  Just ask the State of Colorado!

MacRo Commercial Real Estate Glossary

A glossary of terms seemed to make sense as a follow up to Property Virgins–Commercial Real Estate Version.  Familiarity with the lingo makes navigating a search for commercial property far more effective and a lot less hazardous, particularly in commercial leasing.

A good glossary should be a living document.  It’s fascinating to watch the English language morph in response to societal zeitgeist.

Take for example the swelling social pressure to legalize marijuana.   Pot, ganja, weed, toke, blunt–there are numerous slang terms for marijuana.  But I recently read a new one directly related to the cultural shift of legalizing pot:  trimmigrants.

The graphic to the left is a screenshot of a definition of the word on Urban Dictionary.

Quick, before you click on Urban Dictionary–teenagers write many of the definitions, so if you click on the link prepare to be extremely offended and/or mildly amused.

(Teens of course are fluent in slang, but since Al Gore handed them the internet they are practically reinventing the English language. Urban Dictionary has posted 7,500,000 new English slang words in just 15 years, receiving an average 2,000 new submissions every day.  Compare this to the 20-volume edition of the Oxford English Dictionary, which currently lists about 175,000 words.  Urban Dictionary is an etymologist’s dream.  And every parent’s friend, as it makes an EXCELLENT resource for decoding teen text messages.  Have fun dropping those terms around the house and ruining them forever for your teen.)

Fun fact:  since Colorado legalized marijuana use, premium warehouse spaces are leasing at as much as $1,000 per square foot!  For those of you who don’t shop regularly for warehouse space, that’s about $993 per square foot MORE than a warehouse in Frederick typically leases for.

But what does any of this have to do with a commercial real estate glossary?  Bear with me…

Every industry regardless of size has its own set of ever-morphing colloquialisms and acronyms, and commercial real estate is no different.  A new business owner seeking commercial space should know the difference between a NNN lease and a modified gross lease.  A gymnastics school or auto repair shop searching for new space needs a clear-span warehouse.

And a marijuana distribution facility needs…well I don’t know much about the warehouse spaces coveted by hemp harvesters…but if Maryland goes the way of Colorado, no doubt a commercial cannabis cottage industry will spring up overnight.  And with it, a whole new vocabulary weaving into Frederick’s CRE lexicon.

High bay, core factor, CAM, flex space, sandwich lease, sunk costs, TI–all of these terms and more are defined in MacRo’s Commercial Real Field Guide, handily downloadable here.

And rest assured…at MacRo, we won’t let the grass grow under our feet…the MacRo Field Guide will be frequently updated to reflect any tectonic cultural shifts that color the language of Frederick’s commercial real estate world.

‘Cause we got your back, bae.

The author:  Kathy Krach is a commercial sales and leasing agent with MacRo, when she is not otherwise occupied trying to figure out what her teens are saying on multiple social media platforms.  

© Copyright MacRo Ltd, Real Estate Services
Web Design by Wood Street