Defense Spending Fuels Demand for Space

Howard County's office vacancy rate dropped to 13.8 percent in the second quarter from 16.3 percent a year ago, nudged down by growth in the defense industry, brokers said.

With demand rising, landlords were comfortable raising rents -- the average rose to $20.98 per square foot from $20.66.

But office construction jumped to 395,000 square feet from 59,000 square feet, which could push up vacancy rates.

"There is suddenly a lot of activity in this market," said Edward A. Ely, director of land sales for the Columbia-based developer Rouse Co.

More defense spending has increased demand for space near the National Security Agency in nearby Anne Arundel County. But with buildings near the NSA already crowded, companies are turning to Howard, said E. Hayes Merkert, vice president of leasing at the Columbia real estate company Manekin LLC.

Science Applications International Corp. leased 50,000 square feet and EVI Inc. took 30,000 square feet in Columbia Gateway Park, Merkert said.

In the past year, several tenants not in the defense business have also leased space: AT&T Corp., 30,000 square feet; Motorola Inc., 50,000 square feet; and American Healthways Inc., 30,000 square feet.

On the horizon is Maple Lawn Farms, a mixed-use development in southern Howard County expected to include more than 1 million square feet of office space. The builder, Greenebaum and Rose Associates, broke ground in May.

-- Michael Barbaro