Frederick County, Maryland, has long been celebrated for its charming downtown, rich history, and scenic landscapes. However, its economic growth relies on a critical, often underappreciated component: commercial real estate. 

From fostering job creation to bolstering the tax base, commercial real estate plays a pivotal role in shaping a sustainable, thriving local economy.  Commercial real estate initiatives drive Frederick forward, including key developments and policies.

The Economic Impact of Commercial Real Estate

Commercial real estate is more than just buildings and land—it’s the foundation for business activity, innovation, and community connection. Frederick’s economic engine benefits significantly from:

  • Job Creation: Each new commercial project supports construction jobs, long-term employment in tenant businesses, and indirect positions in supporting industries.
  • Tax Revenue: A strong commercial tax base reduces pressure on residential property taxes, funding essential services like schools, roads, and public safety.
  • Business Attraction: Modern, well-equipped facilities attract businesses seeking strategic locations, boosting the county’s appeal.

Currently, about 78% of Frederick County’s tax revenue comes from residential real estate, leaving only 22% from commercial and industrial properties. Increasing the commercial share to just 30% would create a more balanced and resilient tax base, lessening the burden on homeowners.

Key Initiatives Driving Growth

1. Livable Frederick Workplace: Investing in Workers and Workplaces

This comprehensive plan aims to expand land designated for economic opportunity while maintaining Frederick’s distinct character. Developed in partnership with the Division of Economic Opportunity, it emphasizes critical factors such as housing availability, transportation access, and workforce training.

  • Land Optimization: The plan identifies 6,000–10,000 acres of underutilized land for potential rezoning, representing less than 2% of the county’s total area.
  • Strategic Rezoning: Focused on areas near existing municipalities with water, sewer, and utilities infrastructure.
  • High-Paying Jobs: Frederick transitions from a bedroom community to a dynamic employment hub by prioritizing industries offering attractive career opportunities.

This initiative supports businesses and workers alike, ensuring economic development aligns with community values.

2. Frederick’s Mixed-Use Developments

Mixed-use spaces, such as those in Downtown Frederick, have become vibrant centers of economic activity by seamlessly blending residential, retail, office, and entertainment spaces. These developments attract foot traffic and boost local spending while also reducing commute times by integrating workplaces and living spaces. Additionally, they foster a strong sense of place, creating an environment that appeals to both residents and visitors. A prime example is the redevelopment of Carroll Creek Linear Park, which transformed an underutilized area into a thriving hub, spurring business growth and enhancing property values.

Supporting Small Businesses

Small businesses are the backbone of Frederick’s economy, and commercial real estate provides the spaces they need to flourish. Recent projects and programs have included:

    • Flexible Leasing Options: Offering smaller spaces or shared facilities tailored to small businesses.
    • Business Incubators: Initiatives like the Frederick Innovative Technology Center offer startups affordable spaces and resources.
    • Zoning Flexibility: Ensuring new developments meet the needs of diverse industries, from restaurants to tech firms.

As the Investing in Workers and Workplaces advisory group has observed, zoning adjustments in Frederick create opportunities for small businesses to locate and expand, supporting vibrant commercial corridors.

Job Creation and Economic Growth

Attracting new businesses through smart commercial real estate investments creates jobs and keeps workers closer to home, reducing commuting burdens and improving quality of life. This approach ensures that Frederick retains and benefits from its talented workforce. By expanding commercial zones near municipalities, the county provides space for companies offering high-paying, career-oriented roles while maintaining agricultural and conservation areas to ensure a balance between economic growth and environmental priorities. When commercial real estate aligns with the needs of both businesses and residents, it transforms Frederick into a self-sustaining economic powerhouse.

The National Impact of Commercial Real Estate

While Frederick reaps significant benefits from its commercial real estate initiatives, the sector’s impact extends across the U.S., driving substantial contributions to the national economy. According to the NAIOP Research Foundation’s 2024 Economic Impacts of Commercial Real Estate report, the commercial real estate industry remains a powerhouse of economic activity, creating jobs, personal earnings, and contributions to Gross Domestic Product (GDP).

In 2023, the combined economic activities of new commercial building development and operations of existing commercial buildings resulted in the following:

    • $2.5 trillion contributed to U.S. GDP
    • $881.4 billion in personal earnings generated
    • 15 million jobs supported

Sector-Specific Highlights

    1. Office Construction:
      • Average annual expenditures of $49.8 billion (2019–2023).
      • $56.3 billion spent in 2023, up 5.4% from the previous year.
    2. Industrial Construction:
      • Averaged $52.8 billion in annual expenditures over five years.
      • Reached $79.5 billion in 2023, despite a 22.1% decrease from 2022.
    3. Warehouse Construction:
      • Averaged $45.4 billion annually over five years.
      • Totaled $51.8 billion in 2023, down 14% from 2022.
    4. Retail Construction:
      • Averaged $16.6 billion annually over five years.
      • Totaled $19.3 billion in 2023, slightly below 2022 levels.

Employment and Growth Trends

The construction sector supported 7.96 million jobs in 2023, adding over 218,000 jobs—a 2.8% growth rate. While construction activity shows signs of a potential slowdown in 2024 due to cooling economic demand, the sector remains poised for moderate growth in nonresidential construction, particularly in infrastructure projects.

A Resilient Contributor

Marc Selvitelli, president and CEO of NAIOP, noted, “Commercial real estate continues to be a vibrant and important contributor to the nation’s economy.” Though challenges like cooling demand and adjustments in certain subsectors exist, the industry remains robust and essential to sustained economic health.

The national trends mirror Frederick’s local goals: balancing growth with strategic investment to create jobs, support businesses, and strengthen economic resilience.

For more on the national impact of commercial real estate, visit the full NAIOP 2024 Economic Impacts of Commercial Real Estate report at naiop.org/contributions24.

A Vision for Frederick’s Future

Frederick is at a pivotal moment. With visionary plans like Livable Frederick Workplace and thoughtful commercial real estate development, the county can achieve a more balanced economy. Commercial real estate strengthens the tax base and creates local opportunities, benefiting the entire community.

For businesses looking to expand, investors seeking high-potential properties, or municipalities planning growth, Frederick offers unparalleled opportunities. The county ensures a prosperous future for all by fostering collaboration and prioritizing strategic development.

Ready to Invest in Frederick’s Growth?

Verita Commercial Real Estate connects investors, business owners, and municipalities with the right opportunities in Frederick County. Whether you’re looking to expand your portfolio, find the perfect location for your business, or navigate zoning and development challenges, our team is here to help.

Contact us today to explore how we can support your commercial real estate goals.