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Maryland's apartment market is thriving, more construction ahead

For those of us who remember the frenetic conversion of apartment buildings into condominiums during the real estate boom, it may feel strange to see so much apartment construction activity these days. According to the Maryland Department of Housing and Development, permits for multifamily projects rose an impressive 63.7 percent from January to February. From 2013, the increase of 394.5 percent was mindboggling. The national numbers were good, but they did not come near Maryland's: 28.6 percent month-over-month and 23.8 percent year-over-year.

The trend is illustrated by recent headlines from Baltimore. After a wave of construction last year, development of new projects will slow. As those apartments are leased, though, demand will increase; construction should pick up again soon.

It's important to remember that any slowdown in construction is likely a lull rather than a sign of stagnancy. Developers are planning another 1,800 units at least for Baltimore, with more than half of those downtown.

For example, two apartment buildings have been announced for the Inner Harbor. Together, they will add 700 units to the area.

The first is on the site of the University of Maryland Specialty Hospital. That building will come down, and a six-story, 350- to 370-unit apartment building will take its place. Granted, the project is still in its infancy -- the developer has yet to purchase the property.

The second project is a 40- to 45-story luxury apartment building planned for the former McCormick & Co. spice factory. The tower will feature retail on the ground floor and several levels of parking. It will be among the tallest buildings in the city.

It takes longer to build a 40-story tower than a six-story building, so these apartments will take a little more time to hit the market. Construction should start by the end of this year to make a 2017 anticipated opening date.

Sources: 

Commercial Property Executive, "Developers Plan 700 New Apartments in Baltimore's Inner Harbor," Adrian Maties, April 14, 2014

Maryland Housing Beat, "Residential building permits Increased in February," Maryland Department of Housing and Development, Vol. 3 Iss. 3, March 2014

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