Baltimore commercial market feels strain from spending cuts

The commercial real estate market in Baltimore may be affected by federal cuts.

With a possibility that spending cuts from the federal government could be implemented, many commercial property managers witnessed a slowdown of the Baltimore commercial real estate market during the third quarter, according to The Baltimore Sun.

Multiple analyst reports showed that the market in the Baltimore area experienced troublesome times from July through September. This was because the legislative branch of the federal government has yet to come to a federal budget agreement with President Barack Obama, the news source reported. Without an agreement, there will be a series of budget cuts due to the expiration of tax cuts applied by former President George W. Bush.

The local market has made significant gains to get back to pre-recession levels, but the uncertainty surrounding the government may affect further improvement this year. Citing a report from Colliers, the news source said that office vacancies have fallen over the past couple years, and are near levels seen in early 2008.

"Though these are signs that the regional market in general is rebounding from the recession, full recovery in this market is not expected to gain much momentum in the last quarter due to lack of government economic leadership and indecision, causing many office users to delay their real-estate decisions until after the election," the report explained, according to the news source.

Still some reasons for market optimism
The news source explained that Kevin Wille, senior vice president of CBRE Group's Baltimore office, felt the commercial market in the downtown area of the city still has some crucial tenants for the business aspect of the market. This was even with an increase in office vacancies during the economic downturn.

Baltimore could see less of an effect in its office market than some other surrounding areas, Paula Munger, regional research director for Cushman & Wakefield, told the news source. The spending cuts may actually affect areas like Northern Virginia more.

This sentiment was supported by Willie, as there are some areas of the greater Baltimore region that could see improvements, the news source explained. The city is surrounded by military spots, such as Fort Meade and the Aberdeen Proving Ground. These may have an increase in tenants, despite the possible issues on the horizon involving government cuts.

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