United States -  Baltimore

Overview:

Baltimore, the largest city in Maryland, is driven by strong healthcare, education, and government entities. Despite government uncertainties during the last several years, the presence of the National Security Agency (NSA) and other defense-related enterprises should continue to brace the greater Baltimore area’s government and military sector. The healthcare and education sectors are cornerstones in Baltimore and are anticipated to help support market demand growth in the near future. Aside from the prestigious Johns Hopkins Hospital system, which continues to help support the city’s strength and stability, The University of Maryland Medical System (UMMS) is another premier medical institution that has been expanding over the years in the downtown area. Recent developments in the area include the $304.5-million Health Sciences facility and the $270-million Maryland Proton Treatment Center. New commercial development continues across the city, and older buildings are being rehabilitated into new uses. City officials continue to market the city as a live-work community, and residential communities are among the fastest-growing segments of new development. While portions of the city, such as Harbor East, have already undergone significant revitalization efforts, the city as a whole continues to combat a negative perception stemming from unfavorable crime and safety statistics. Nonetheless, the outlook for the market area is positive.

Demand has illustrated positive trends since 2009, although registering a slight decrease in 2013, largely caused by the government shutdown and sequestration during that time. We expect average rate to continue to strengthen with forecasted increases in demand in the coming years, albeit modestly given the price sensitivities associated with Baltimore’s dependence on the government sector. Market participants reported that the entrance of new supply in the coming years should be quickly absorbed given the strength of the healthcare and education sectors. Overall occupancy is anticipated to remain relatively flat, but positive change in hotel values is forecast through 2017.

The transaction history for hotels in Baltimore has been limited during the last few years, with only six hotels that have sold at an average price per key of $160,000 since 2014. The most recent transaction was the Fairfield Inn & Suites by Marriott Inner Harbor for roughly $18.4 million ($119,000 per key).

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Baltimore United States
Previous Year +1% (36 of 71) +1% (49 of 71)
Growth in 2017 +3% (8 of 71) +2% (36 of 71)
Growth in next 3 years +11% (27 of 71) +10% (36 of 71)

Change In Value For Market:

Baltimore RevPAR % Change

For more information, please contact:

Jerod Byrd, MAI
jbyrd@hvs.com
  • +1 901 481-3058 (w)
Chelsey Leffet
cleffet@hvs.com
  • +1 202 434-8793 (w)
  • +1 302 740-2772 (m)