For the past three years Silver Spring has led the primary submarkets in Montgomery County with the lowest office vacancy rate.

According to Transwestern Commercial Services, Silver Spring’s direct vacancy stood at a respectable 5.7% although higher compared to 4.8% in the 3rd quarter of 2007. 10% is commonly known as a healthy equilibrium in a market.

This places the primary submarket at second lowest in the County with the Bethesda/Chevy Chase submarket claiming the lowest at 4.9%

It’s said that businesses are having a hard time finding space in downcounty because of the lack of large contiguous floor plates, so they are looking north of the Beltway in Gaithersburg and Germantown. The timing couldn’t be better as Gaithersburg’s direct vacancy stands at 14.5%.

The overall County absorption is the lowest in the past three years with only 150,000 taken off the market. Part of this is due to a slowing economy nationwide but it can also be attributed to a less than friendly business climate that has manifested itself in recent months.

The special session in Annapolis passed a corporate income tax increase from 7% to 8.25%. The sales tax has also sprouted from 5% to 6% and computer service companies are now included to pay up. The increases were called upon by Governor Martin O’Malley. This is compared to 6% corporate income tax and 5% sales tax in Virgina.

This puts the state of Maryland and Montgomery County at a further disadvantage, simply reinforcing what in and outsiders call an unfriendly business climate. For now Montgomery County’s direct vacancy is still a healthy 7.6% up from 7.1% in the 3rd quarter of 2007.

The research department of the Montgomery County Planning released a report labeling the County’s economy “relatively stable”. Relative to what was unclear but past history always emphasizes a comparison of Montgomery County’s economy to the national level while a local emphasis would have given a clearer picture.

It’s unclear how Montgomery County stacks up against Fairfax County,Va and Washington, D.C. for example, particularly in high-wage, private jobs from the planning research department’s report. The report emphasizes Montgomery County as a place for housing and living.

Montgomery attributed about a quarter of its economy to biotechnology and telecommunications but the federal government is currently the largest renter of office space and isn’t taxed for revenue.

The somewhat good news is that the Nuclear Regulatory Commission (NRC) just leased 75,000 square feet in Rockville and is looking for an additional 200,000 to 300,000 square feet of office space.

In a rare occurrence in recent times, developers of the Gaithersburg Aventine/Crown Farm project are expected to replace 400 residential units with 400,000 square feet of office space in a project that is currently planned to be predominantly residential with retail on the side but zero office space for a supposedly Live, Play and Work environment.

Silver Spring had a negative absorption total of 147,000 square feet but asking rents per square foot crept up 4.9% according to Transwestern. CB Richard Ellis places the amount at $28.34.

Atlantic Realty sold 801 Roeder Road to Colony Captial for $21 million or $228 per square foot. The sale of the 91,715 sq/ft, 32 year old building which was recently updated was one of the largest sales in the County in the 4th Qtr.