AAEDC COO Wes MacQuilliam Discusses Anne Arundel County Development Landscape in NAIOP-MD INSITES

February 10, 2025

AAEDC Chief Operating Officer Wes MacQuilliam was recently featured in the cover story of the January/February 2025 issue of NAIOP Maryland INSITES:

Five CRE stories to watch in 2025

Opening by stating that “the commercial real estate industry may face a dizzying array of challenges and opportunities in 2025,” the in-depth article discusses five topics:

• Anticipating Trump, on the potential impact of policy reforms on the commercial real estate sector.
• Filling & Financing Offices, on the impact of shifting work patterns on the office market.
• Flex & Industrial Strengths, on ongoing demand and growth in the flex and industrial markets.
• Selective Growth, Distant Opportunities, on the prospects for development project investments and opportunities in Maryland.
• Energy Crunch, on future energy regulations and their implications.

MacQuilliam was featured in the fourth section, which concluded with the following:

In Anne Arundel County, “the development landscape is evolving in exciting ways given most remaining development sites are not the most ideal. This situation challenges developers to think creatively and innovatively,” said Wesley MacQuilliam, Chief Operating Officer of Anne Arundel Economic Development Corporation (AAEDC).

That shift, however, is paving the way for transformative redevelopment opportunities, MacQuilliam said.

“Along the Riva Road corridor, numerous development projects and mixed-use developments are taking shape,” he said. “Additionally, the county is actively pursuing grants and funding to advance the revitalization of the Glen Burnie Town Center… And the county council just passed legislation to streamline mixed-use projects and provide incentives, fostering continued growth and modernization.”

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Read the full article here:

Despite challenges with financing, land availability and moderate growth in the economy, 2025 is presenting CRE developers and investors with some interesting opportunities.

“Within the Mid-Atlantic region, I am optimistic on continued forward momentum in transaction volume,” Gilligan said. “2023 was a challenging year. We saw volume increase in 2024 and feel that will continue in 2025. What is still missing is the velocity that we saw in ’19, ’20 and ’21… It will be 2026 where we see velocity back in CRE. Areas of growth will continue to be industrial/flex, data centers, energy and healthcare.”

Interest rates will be key to transaction momentum, Gilligan said.

“We have had a couple of interest rate cuts in 2024 and feel that we will have a couple more reasonable cuts in 2025,” he said. “I think that large commercial banks will return to provide debt financing, which is desperately needed in CRE.”

MAG Partners sees signs that the CRE market will recover in 2025, said Jennifer Hearn, Director of Development.

“We’re seeing healthy signs across sectors, with supply and demand balance returning to multi-family, transaction volume increasing across the board and early indicators that cap rates will plateau,” Hearn said.

Those positive trends are based partly on increasing stability in the economy and the CRE market as the country settles into post-pandemic norms, she said. “People now feel that they understand the new layout of the market that’s emerged from the pandemic, and that’s a recipe for renewed growth and strategic investment.”

MAG Partners anticipate that Baltimore Peninsula will benefit from that improving climate. Total leasing of new buildings onsite surpassed 50 percent in 2024 and the company plans to open an additional 190,000 square feet of office and 75,000 square of retail space this year. Baltimore Peninsula’s two dedicated residential buildings are fully stabilized and the Locke Landing development is currently adding townhomes and two multi-family buildings to the area.

“Baltimore City’s economy is on a strong footing and that’s an ideal scenario for continued real estate investment,” Hearn said.

MCB Real Estate describes its 2025 growth opportunities as exciting. Those include optimizing 15 million square feet of existing properties, advancing 4 million square feet of transformational projects and delivering 700,000 square feet of new product. But that growth will not be easy.

“The biggest challenges include managing high construction and financing costs due to elevated interest rates and inflation. Those factors make underwriting to acceptable risk-adjusted terms more difficult,” said Michael Trail, Chief Investment Officer. “Rising operational expenses – like real estate taxes, payroll and insurance — are also outpacing rent growth, further straining margins.”

To meet those challenges, MCB has committed to attracting diverse capital and forging partnerships with local governments and other organizations.

“Flexibility is everything,” Trail said. “The past year reinforced the importance of being able to pivot when circumstances change. We’ve also leaned heavily into longer-term financing strategies, which proved invaluable on several projects.”

In its annual projections, Prologis predicted that groundbreakings for new logistics buildings will decrease in 2025 and remain 15 percent below normal construction levels globally.

“For Prologis in 2025, speculative development will remain selective, targeting high-demand locations with minimal availabilities and competition,” Schline said.

For some Maryland-based CRE companies, the majority of attractive development options in 2025 may lay beyond the state line.

Although the bulk of St. John Properties’ portfolio remains in Maryland, much of its growth strategy is focused elsewhere.

“Our growth as a company is coming and will continue to come more so from outside of Maryland,” Doordan said.

The shortage of land along with the cost and complexity of doing new developments in central Maryland is contributing to out-of-state expansions by St. John, Merritt and other companies.

“In markets where there is more available land — like Richmond, Virginia, Raleigh-Durham, North Carolina, Jacksonville, Florida — we can buy land for maybe $15 a square foot,” Dorsey said. “For our development in White Marsh, we effectively paid $50 a foot.”

In those states, he added, “people understand they need to have economic growth, they need to grow their tax base and they need to support opportunities for businesses.”

“When we pick markets proactively to move to, we absolutely take into account the business-friendly nature which typically impacts our ability to deliver our product,” Doordan said.

St. John Properties also carefully trains professionals to open up new offices in new markets for the company through its Partner in Training program.

In Anne Arundel County, “the development landscape is evolving in exciting ways given most remaining development sites are not the most ideal. This situation challenges developers to think creatively and innovatively,” said Wesley MacQuilliam, Chief Operating Officer of Anne Arundel Economic Development Corporation (AAEDC).

That shift, however, is paving the way for transformative redevelopment opportunities, MacQuilliam said.

“Along the Riva Road corridor, numerous development projects and mixed-use developments are taking shape,” he said. “Additionally, the county is actively pursuing grants and funding to advance the revitalization of the Glen Burnie Town Center… And the county council just passed legislation to streamline mixed-use projects and provide incentives, fostering continued growth and modernization.”

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