February 16th - March 1st, 2013

Report Reveals Why Va. Typically Outranks Md. In Business Climate Surveys
2/18/2013, MarylandReporter, Ilana Kowarski The Greater Baltimore Committee's latest report reveals that Maryland's tax structure and other corporate regulations are a driving force behind the state's spotty performance on U.S. business climate rankings, which typically rate Virginia as a better place to do business than Maryland. On average, Maryland placed 27th out of 50 states in national rankings published between 2012 and 2013. But each of the 10 rankings are based on different criteria, so Maryland receives better grades from some ranking groups than others. Generally speaking, Maryland gets high marks for its highly educated workforce and gets demerits for its business regulations and its 8.25% corporate tax rate, which is 2.25% higher than that of Virginia. Click here for more...

As Construction Begins Rebound, Looming Labor Shortages Raise Concern

2/20/2013, Forbes, Morgan Brennan

After a year of persistent gains, home builder confidence is leveling out. The National Association of Home Builders/Wells Fargo Housing Market Index clocked a reading of 46 for February, one point lower than January, for several reasons including tight mortgage lending and rising construction supply costs. But in some markets, builders have an additional obstacle to worry about: a lack of skilled labor. Still, there's a growing divide manifesting between demand related to burgeoning construction activity and the number of folks equipped to fill certain spots. Hundreds of thousands of workers left the field in the downturn, changing career paths or retiring altogether. Young adults haven't clamored to enter the field and even for the ones that have, training programs have shrunk or evaporated altogether. Looming labor woes or no, the fact is construction workers are finally starting to find work, albeit unevenly. Total construction employment rose 2% in 2012, according to McGraw-Hill Construction, compared to a tiny

0.3% pickup in 2011 and four consecutive years of decline before that. General contractors of multifamily projects increased hiring by 3%. Hiring by single-family general contractors was surprisingly flat. Employment related to the residential remodeling industry climbed 2%. Click here for more...

Landlords Prefer Deals Like OfficeMax to Liquidations

2/20/2013, The Wall Street Journal, Kris Hudson

Office

Depot-

Better Business Decisions

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The U.S. shopping-center industry doesn't love the idea of an Office Depot merger with OfficeMax Inc., but landlords see it as preferable to the risks if the chains don't do something to bulk up. Research firm International Strategy & Investment Group LLC estimated the combined company could close 300 to 400 stores. That would be painful for landlords but nothing like the hit they took when bookseller Borders Group and electronics chain Circuit City liquidated. Landlords see the benefits of a deal that would produce a stronger combined company. Some landlords expressed optimism about finding new tenants for closed office-supply stores. Even though big-box centers across the U.S. still are struggling with vacancies lingering from the liquidation of retailers such as Borders, Circuit City and Linens N' Things, the industry's average vacancy rate has declined in recent years. Click here for more...

Exclusive: Baltimore Should Sell or Lease 17 Landmarks, Report Says

2/21/2013, Baltimore Business Journal, Jack Lambert

Baltimore should offer long-term retail and residential leases for 15 city properties and outright sell another two, according to a new report, in an effort which could raise revenues and make certain landmarks selfsufficient. The city says no final decisions have been made based on the $46,500 report prepared by Annapolis-based consulting firm Westholm & Associates and obtained by the Baltimore Business Journal through a federal Freedom of Information Act request. Some of the structures, the report says, could offer opportunities for new retail, hotels and offices in the city while also bringing more revenue to Baltimore. But the report's recommendations is reigniting claims that the city is looking to sell its history. The landmarks could possibly be sold once the city signs leases with tenants, according to the report. Some potential uses include law offices at Carroll Mansion, a hotel at Cylburn Mansion, a coffee shop at Shot Tower and the use of the War Memorial building across from City Hall for weddings, banquets or concerts. Click here for more...

Architects See Greatest Demand Uptick since 2007

2/22/2013, Baltimore Business Journal, James Briggs

U.S. architects in January experienced a surge of demand, marking the

greatest one-month billings increase since November 2007, according to the American Institute of Architects. The organization released its monthly Architecture Billings Index, which indicated a 54.2 score for the U.S. in January. Any score higher than 50 means there was an increase in demand for design services from the previous month. Architects in the South region, which includes Maryland, scored 51.7 - a worse performance than the nation as a whole, yet still an improvement from the end of 2012. Click here for more...

By-the-Numbers Look at Sequestration

2/25/2013, GlobeSt.com, Erika Morphy

WASHINGTON, DC-As Monday wears on, there is little sign that sequestration will be averted at the end of the week. While this failure to act will result in straight-across-the-board cuts to virtually all government agencies, for the commercial real estate industry the cuts will mean a $4 billion reduction this year in federal construction spending. That is according to a recently released report by the Associated General Contractors of America, "Sequestration and Its Possible Impacts on Construction." The General Services Administration is exempt from sequestration--but that doesn't mean the commercial real estate industry won't be impacted if the cuts go into force at the end of this week, as many people expect that they will. The projects span the spectrum of government agencies, according to AGCA, from military housing ($1.5 billion) to a $135 million reduction in drinking water and wastewater facilities and infrastructure investment. Click here for more...

Congress to Probe Federal Real Estate Problems

2/26/2013, Baltimore Business Journal, Daniel J. Sernovitz A congressional subcommittee is slated to meet today to probe the federal government's use of real estate after a recent report highlighted billions of dollars in lost money tied to those properties. The House Oversight and Government Reform Committee announced Monday that its Government Operations Subcommittee will look into what it calls "the longstanding and ongoing issues relating to the mismanagement of excess, underused, or dilapidated property owned by the federal government." The Government Accountability Office raised the issue in its biennial High Risk report released earlier this month. The watchdog agency estimated the feds have wasted $200 million since 2005 on unnecessary leasing deals and are holding on to too much excess property. Click here for more...

Prince George's County Endorses Greenbelt for

New FBI Headquarters

2/26/2013, The Examiner, Matt Connolly Prince George's County finally has a horse in the race for the new FBI headquarters. The proposed location is just off the Capital Beltway and next to a MARC station as well as Metro's Green Line. Greenbelt is also home to one of Maryland's two federal courts. The county is going up against Virginia and D.C. for the headquarters. The former has proposed seven sites, including a federally owned warehouse in Springfield, while the latter is pitching Poplar Point, a site on the Anacostia River currently used by the U.S. National Park Service and the U.S. Park Police. The new location must be within two miles of a Metro station, within 2.5 miles of the Beltway, and between 40 and 55 acres, according to U.S. Senate requirements. The FBI is looking to consolidate as it outgrows the Hoover Building, which would take 14 years and cost nearly $2 billion to renovate.Click here for more...

Congress to Consider New Real Estate Lease Prospectuses

2/27/2013, Baltimore Business Journal, Daniel J. Sernovitz

A House committee is slated to take up its first batch of real estate prospectuses of the 113th Congress, a step federal leasing experts say is an encouraging sign the federal government will be taking a more active role in the Washington region's office market. The committee is also scheduled to authorize $122.9 million for what it calls critical-needs projects for federal buildings and another measure that will let the federal government consolidate several undisclosed agencies from leased space in New York and Atlanta into federally owned properties at a cost of $16.1 million. A full list of the prospectuses can be found at the committee's website. Many of the leases are for up to 15 years and allow agencies to set aside up to 200 square feet per worker, a shift from closer to 100 square feet during the 112th Congress. Another obvious difference is that Pennsylvania Republican Rep. Bill Shuster has taken over the chairmanship of the committee from Florida Republican Rep. John Mica, who was term-limited and forced to step down. Click here for more... Click here to download a printable version

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This newsletter is a summary of articles related to commercial real estate finance news in the Baltimore/Washington market, collected from local publications as noted above. Should you require specific information, please refer to the publication source or call one of our professionals at 410.821.8585. All information furnished regarding property for sale, rent, exchange or financing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions, or changes in conditions, prior sale, lease or withdrawal without notice. All information should be verified to the satisfaction of the person relying thereon.