What two empty floors of a Columbia tower can tell us about Howard County’s office market

In 2017, officials unveiled plans for a sleek and modern 12-story office tower as part of a revitalization effort for downtown Columbia. Tenable, a growing cybersecurity firm, had signed on to be the anchor tenant of a 350,000-square-foot building near Merriweather Post Pavilion.

Construction started, then the pandemic hit. Tenable moved in later than expected, and today the firm no longer needs a third of the space it occupies. For the past 18 months, Tenable has been trying to sublease two of the six floors it occupies — more than 50,000 square feet.

That unused space is part of the more than 578,000 square feet of office space currently available to sublease in Howard County, a historically high number, according to the real estate data analytics firm Costar. Howard County, like local jurisdictions across the country, has seen a significant bump in vacant and unused office space after the pandemic pushed companies to embrace hybrid and remote work.

“The average-size tenant in Columbia, Maryland, has gotten way smaller,” said Adam Nachlas, a broker with MacKenzie Commercial Real Estate.

Commercial real estate leases typically span several years, so firms often try to sublease unused space. Many companies are now locked into leases that reflect their needs before the pandemic changed their approach to office space. Tenable’s lease in Columbia, for example, doesn’t expire until 2032, according to Costar. The tech firm did not respond to a request for comment.

Companies now want smaller spaces with conference rooms and desks for employees who only come into the office two or three days a week, Nachlas said. Smaller spaces, ranging from 3,000 to 7,000 square feet, are much more desirable right now than 25,000 square feet, which is roughly the size of a floor at the Tenable building, he said.

Even metropolitan areas considered hotspots of economic growth are grappling with empty and unused office space. The Wall Street Journal reported that the vacancy rates of Houston, Dallas and Austin are about 25% and being driven largely by suburban office buildings.

Today, Howard County has almost 20 million square feet of office space, of which 2.9 million square feet, or 14.5%, are vacant. That’s not as bad as it was during the Great Recession, but it’s worse than before the pandemic, when Howard County’s vacancy rate was 10.3%.

Baltimore City, which has nearly three times as much office space, currently has a vacancy rate of 13.6%, according to Costar.

Jennifer Jones, CEO of the Howard County Economic Development Authority, said she met with real estate brokers earlier this month to discuss vacant office space.

Jones said that Class A office space — meaning newer buildings with more amenities — still attracts interest from tenants. It’s the older buildings that could need innovative solutions, she said, pointing to the ongoing conversion of an office park in the Long Reach village of Columbia into a medical campus.

While Jones is optimistic about the long term, she does have short-term concerns. Fewer workers going into office parks and buildings means fewer patrons at the shops and stores nearby.

“Restaurants and hospitality are struggling right now,” she said.

The Tenable building is a part of a new development called the Merriweather District. It includes several shops and restaurants, as well as an apartment building.

“You look at the parking lots as you drive around [Howard County] and they’re not as full as they were before. It has a big effect on the economy,” said Chris Bennett, another broker at MacKenzie.

Still, Bennett said he’s seen downturns before, and he thinks any pain today is temporary. Howard County is well-positioned between Washington, D.C., and Baltimore, he said, and the office buildings here are relatively new. Demand for space will increase as Howard County grows and as companies push more employees to return to the office, Bennett said.

“I think it’s in better shape than many other markets,” he said.

giacomo.bologna@thebaltimorebanner.com

Giacomo Bologna

giacomo.bologna@thebaltimorebanner.com

Giacomo "Jack" Bologna covers business and development at The Baltimore Banner.

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