Hagerstown Effect
Third-tier markets like the Maryland city could become apple of industrial developers’ eye
Nestled between several mountain ranges and with a population of about 44,000, the city of Hagerstown, Maryland, doesn’t come to mind as a hot spot for U.S. logistics warehousing. It probably should, however.
Near Interstates 70 and 81, 71 miles from Washington and 75 miles from Baltimore, Hagerstown fits comfortably within the country’s fourth-largest metropolitan statistical area (MSA), which extends north into Delaware and south into the nation’s capital’s expansive northern Virginia suburbs. Hagerstown is close enough to support the supply chain needs of a high-density regional population but far enough away to avoid the exorbitant rents of bigger markets.
For its small size, Hagerstown, which is located in the western part of the state, has become a busy place. Net absorption — the sum of occupied space minus vacated space — stood at 1.3 million square feet by the end of 2021, according to data from Colliers International Group Inc. (NASDAQ: CIGI), a real estate service firm. About 1.9 million square feet is under construction, the bulk of which being two projects that total 1.55 million square feet.
Hagerstown’s vacancy rate sits at 6.2%, down from 7% at the end of 2020 and way down from 9.5% at the end of 2018, according to Colliers data. The average asking rent at the end of 2021 was $5.21 per square foot, down from $5.47 per square foot in the third quarter. The sequential drop was due to the lack of quality space found in the market, Colliers said. Read On