Following a robust performance in 2024, Baltimore, Maryland's multifamily sector is anticipated to experience a slight slowdown.
A report from Marcus & Millichap projected that vacancies will tick up by 10 basis points to 5.7 percent in 2025. Still, that figure would fall below the national average and under Baltimore's mean in 2023.
While rents are expected to rise by 2.7 percent to $1,768, the rate would be slower than last year. According to Marcus, the city would average less than other major metros, including Washington D.C. and Philadelphia, by at least $100.
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The slowdown with the categories comes as inventory is projected to rise by 30 basis points to 1.3 percent, which is slightly above Baltimore's 10-year average of 1.1 percent. However, it's not all bad news for the city's asset class. Half the more than 3,000 units will be delivered this year in the central business district, which could trend well for suburban areas.
"Aiming to refurbish disused commercial spaces and infrastructure, the state is providing grants to improve facades, restore public parks, and demolish vacant public buildings for green spaces to bring foot traffic downtown," Marcus noted.
"Meanwhile, with construction focused in the core, a dearth of apartments are being built in the suburbs. This bodes well for areas like Columbia-North Laurel, which saw no notable deliveries last year despite demand from renters stoking rent gains above the market average."
Also, Marcus noted that deal flow is starting to improve, with middle—and lower-tier assets dominating the share of the trades. In fact, more than two-thirds of the deals involved Class C properties.
"Baltimore’s affordability compared with other East Coast metros underscores the market’s budget-friendly housing," the CRE firm wrote.
"Outside of key cultural and employment hubs, submarkets that saw little construction and reported improved fundamentals will likely remain attractive for investors."
Additionally, Marcus singled out one hot investment area, West Baltimore County, whose vacancy tumbled by 100 basis points in 2024.
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