Small businesses are back, and Frederick is poised with a healthy inventory of small office space!

Costar Group, the nation’s leading provider of commercial real estate trends and intelligence, recently reported 1st quarter 2012 statistics for the nation’s office market.  For the most part, the news was good:

• The U.S. saw significant conversions of temporary employees to permanent ones
• Corporate profits are still at record high levels
• Job growth was primarily in office jobs, versus manufacturing jobs
• Overall office vacancies are declining nationwide, currently standing at 12.7%
• Short supply of new commercial office space in the development pipeline indicates that vacancies will continue to decline
• The office market is nearing a tipping point for rent growth

CoStar also noted some interesting trends in commercial office space rental during the first quarter of 2012:

Small businesses are back!  Leasing of small spaces (less than 2,000 square feet) dominated activity during the first quarter.  In fact, there is currently a SEVERE shortage of office spaces less than 10,000 square feet in size in the Washington D.C./Northern Virginia/Montgomery County market. Rents on those spaces are starting to rise.

Best liquidity is in the mid-range of office space size.  Nearly half of the U.S. commercial tenant base is working in spaces 2,000-20,000 square feet in size.  So developers and investors take note:  buildings offering space in this size range are currently experiencing the highest overall demand.

Overall, tenant square footage is shrinking.  For Class B and C office spaces, tenants decreased the amount of square footage they leased.  Class A spaces, however, saw an increase in overall square footage leased during the past quarter.  (Good news for prime commercial buildings like South Market Center on Carroll Creek!)

After hearing all of that good news, we at MacRo eagerly dug into CoStar’s 1Q 2012 Office Market report for Frederick, and ran some reports using the CoStar database to analyze Frederick vacancies:

• Office vacancy rates in Frederick have declined to 15.4%, from a peak of 16.2% in 2011.  This compares to 13.5% in Washington, D.C. and 15.5% in Rockville/Germantown.  Bethesda’s office market is red hot, with a vacancy rate of just 9.4%!
• Nearly 80% of Frederick’s office vacancies are less than 10,000 square feet in size.  The D.C. metro area may be experiencing a shortage of office space under 10,000 sq. ft., but Frederick still has a healthy (ahem) inventory.
• Over 55% of the lease transactions in Frederick during the first quarter of 2012 and all of 2011 were for office spaces under 2,000 sq. ft.  When you take into account that 92% of all transactions for 2011 were for space less than 10,000 sq. ft., it does appear that most of Frederick’s office lease transactions for the past year have been for small to moderately-sized spaces.
• The top two office lease transactions year to date:
  • 15 Worman’s Mill Court   Pathology Associates renewed a lease for 35,000 sq. ft.
  • 7211 Bank Court Drive  Frederick Memorial Hospital signed a lease for 30,000 sq. ft. with a move-in date set for June of 2012

So what is the near-term outlook for the improvement of Frederick’s office market?

Well, if your business has outgrown its current space, or you need to trade that basement office for something more professional, now is the time.  On Thursday we’ll share our conversations with local Frederick commercial real estate brokers and investors, who report that the pressure of high office inventories and the prolonged recession has created a buyer’s (and leaser’s) market for Frederick office space.

Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He is an appointed member of the Frederick County Charter Board. He also writes forTheTentacle.com and Want2Dish.com.

MacRo is pleased to have developed an informational website for The Manor at Holly Hills, a future luxury residential community of 21 estate lots east of Frederick City. Visitors to the new site can learn more about this future community and follow along with each stop of its development. The lots are scheduled to be recorded in July 2012.

Visit www.manorathollyhills.com for sitemaps, amenities and frequent updates on the project status.

To arrange a personal tour of the lots and for additional information, contact Rocky Mackintosh at 301-698-9696 ext. 202 or rocky@macroltd.com.

 “Potomac Gap” offers further proof that Maryland legislation is slowing our region’s economic recovery.

Well folks, spring is in full swing, which means that all eyes turn once again to the housing market with fervent hopes that 2012 will mark the beginning of a sustained recovery in real estate.

There is some good news.

Foreclosures continue to fall in Frederick County, down to 55 in February from 65 in December. More importantly, the difference between the average home sales prices and average foreclosed home prices declined significantly. In February the average difference was $27,677, versus $91,614 last March!

Unfortunately, the housing market soothsayers are pointing to another surge in foreclosures this year, and all indications are that the Maryland (and by extension Frederick County) real estate market is going to be caught in the cross hairs.

As one expert noted, “The pig is starting to move through the python.”

Bloomberg News published an article in February pointing out that the housing markets of Fairfax County, Virginia and Montgomery County, Maryland are heading in opposite directions.

Both of these counties serve the same job market and have a nearly identical population size and demographic. So why has this so-called “Potomac Gap” developed between the performance of their respective housing markets? According to housing economists, this has happened because Virginia doesn’t require court approval to foreclose on delinquent home buyers.

This trend is not unique to this region. Economists are noting that throughout the U.S., the housing market recovery of the 24 states that require court mediated foreclosure is significantly lagging behind those states that do not.

In 2008, and then again in 2010, Maryland lawmakers passed legislation that gave homeowners more time to stay in their homes and required a court mediation process. This resulted in significant delays to Maryland’s foreclosure process.

Add to that the voluntary halt in foreclosures by major lenders as the “robosigning” settlement was finalized, and Frederick now has a foreclosure backlog of approximately 575 homes (about 60% of these are “pre-foreclosure” and are not listed yet). That may not sound like a lot–until you realize there are only 850 active home listings total in the county right now!

Once again, Maryland’s economy feels the effects of too much government intervention.

Maryland’s housing market will recover much faster if our lawmakers roll back some of that foreclosure legislation.

Maryland’s foreclosure process was once known as “the rocket docket” because it was so streamlined (as little as 15 days from borrower default to foreclosure sale). Court involvement was required to protect the homeowner and insure no lender improprieties, but deadlines were much tighter to move the process along faster.

There is no good argument NOT to pursue re-streamlining Maryland’s foreclosure process.  In fact, studies show that the longer process does not result in borrowers finding ways to make their mortgage work. Instead, an increased number choose strategic defaults, live in their homes without making payments, and ultimately delay the housing recovery.

We’ve written in the MacRo Report about a terrific collaboration between Frederick County government and local Frederick nonprofits to utilize our foreclosure inventory for affordable housing. This is a brilliant idea that solves two problems at once with very little taxpayer funding required to make it happen.

We are in desperate need of that kind of smart thinking at the state level, and soon, or Maryland’s economy will lag for years.

Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He is an appointed member of the Frederick County Charter Board. He also writes for TheTentacle.com and Want2Dish.com.

Here’s the latest news…

The Manor at Holly Hills Website has Launched

MacRo has developed an informational website for the Manor at Holly Hills, a future luxury residential community of 21 estate lots east of Frederick City. Visitors to the new site can learn more about this future community and follow along with each step of its development. The lots are scheduled to be recorded in July 2012.

Visit www.manorathollyhills.com for sitemaps, amenities, and frequent updates on the project status.

To arrange a personal tour of the lots and for additional information, contact Rocky Mackintosh at 301-698-9696 ext. 202 or rocky@macroltd.com.

MacRo Sells “Golden Mile” Commercial Building Lot to FAY

MacRo, Ltd. recently closed the sale of a commercial building lot off Hillcrest Drive to the nonprofit organization Frederick Alliance for Youth (FAY). FAY plans to build and operate a community center on the property that will provide much-needed support, encouragement and positive diversions for young people and families who live in the Hillcrest and Waverly areas. Within the next 30 months, the organization hopes to open the proposed 44,000 SF facility that will house a public charter school and will provide additional space for neighborhood before and after-school activities.

New Addition to the MacRo Team

Kathy Krach joined the MacRo, Ltd. team as Strategic Marketing Analyst in November 2011. Her strong analytical talents help develop cutting edge marketing programs designed to deliver the best results for MacRo clients. She will also handle editing, research, and some writing for the MacRo Report blog. Kathy has significant experience in writing and marketing, including 7 years spent working for publicly-traded real estate companies including the Ryland Group and Resource Mortgage Capital (now Dynex Capital Inc.), where she held positions in marketing, corporate communications, and investor relations. She graduated McDaniel College with a  B.A. in Economics and Business Administration. Kathy lives in Frederick County with her husband and three children.

Click here to download the complete PDF version of this spring’s MacRo Report!

MacRo, Ltd. Real Estate Brokerage Services sells commercial building lot in convenient “Golden Mile” location to non-profit.

Legal Description: Lot 1, Hillcrest Commons, Tax Map 412, Part of Parcel 119

Listing Price: $785,000

Sale Price:  $680,000

Zoning:  GC – General Commercial

Closing Date:  December 29, 2011

This property is 2.42 acres of commercial land with an unconditional site plan approval for a 25,600 SF two-story building and conveniently located right off the “Golden Mile”.

MacRo, Ltd. is pleased to have sold a Frederick land property to the non-profit organization Frederick Alliance for Youth and made a long-term commitment to making their building goals a reality! The property was initially placed on the market in early 2006.

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 rocky@macroltd.com

This current issue of the MacRo Report was released today to over 20,000 residents and others who are interested in Frederick County, Maryland land and commercial real estate news and information.

Decisions, Decisions

The following MacRo Report entry is written by Rocky Mackintosh, President of MacRo, Ltd. regarding the importance of wise choices.

When one peels away the layers of the real estate onion, what is found at its core is the human element. It’s the decisions that people make that impact everything having to do with real estate.

Very obvious, you might say, but it is the collective decision making of people that impacts the peaks and valleys of business and economic cycles.

Like a flock of birds, it starts with one and others often follow.

The real estate boom of the last decade followed a similar pattern. It seemed that “incredible”opportunities just kept coming, so many decided to follow suit. When the merry–go-round stopped, the decision for those who could afford to was to“wait and see.”

The real estate market is now five years into its downturn, and many of those sideline observers have decided to sell. Their independent decisions are based upon their personal or business circumstances.

After nearly 40 years in the land and commercial real estate business in Frederick and its surrounding counties, MacRo, Ltd., has been there to assist our friends and clients in providing each with the information necessary to make wise real estate decisions.

How may we help you?

Market Conditions Continue to Improve!

Some sectors of the economy are showing promise even as the stock market continues its wild roller coaster ride of the last few months. The National Association of Realtors reports that existing home sales increased in August, with monthly gains seen in all regions. Projections for commercial vacancy rates from the third quarter of 2011 to the third quarter of 2012 are expected to decline, and Kiplinger’s Personal Finance namedWashington D.C., as third on its list of the nation’s top 10 innovative cities that have potential for growth over the next decade. These numbers reflect the momentum we’ve experienced in Frederick County over the last few months. MacRo has continued to see lots of movement in various sectors of the market, including the properties pictured here.

Whether you are looking for retail, office or general commercial space, check out some of our new or current listings or give us a call at 301-698-9696.

Click here to download the complete PDF version of this fall’s MacRo Report!

Middletown Valley Farm

If you are looking for land that will allow you to escape the hustle and bustle of city life, MacRo has many choice farm properties worth considering. Located just north of Middletown, Md., this 210 acre working farm offers highly productive land, with more than 65 percent designated Class I, II or III agriculture soils. The farm also comes with a huge Butler machine shed, bank barn and dairy barn. A picturesque creek meanders through portions of the property, which features breathtaking views of the nearby Catoctin Mountains. The existing residence offers plenty of living space with three bedrooms, two baths and three fireplaces. Under the property’s existing Ag zoning, one conventional subdivision right and several agricultural cluster subdivision rights remain. Several tenant houses are allowed by zoning rights as well. Offered at $2,080,000.

Comus Farm

Located in the heart of western Montgomery horse country, this 158-acre farm in Dickerson is near the foot of Sugarloaf Mountain and just down the road from the famous Comus Inn. Enjoy the best of what life in the country offers, including the property’s rolling hills, peaceful pond and long, welcoming driveway that is flanked by white board fencing. The existing farm house offers loads of charming features and architectural details, and there are numerous outbuildings as well. This farm offers the solitude and privacy of rural living—all within minutes of I-270. For sale at $1,649,000.

Click here to download the complete PDF version of this fall’s MacRo Report!

The following excerpt is from a CoStar Group news article by Mark Heschmeyer.

Cautions investors have made single-tenant properties country’s current top buy.

“For the last quarter of 2010 and first two quarters of this year, CoStar Group shows that sales of single-tenant properties have averaged more than 10,000 transactions per quarter – the highest quarterly totals on record. And for third quarter comparable sales CoStar is showing that pace is continuing.”

Click Here to read the complete article.

Our Fall 2011 edition of the MacRo Report is hitting mailboxes early next week!

This edition is full of great information, our latest listings and exclusive articles.

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