Earl Mackintosh, owner of MacRo Ltd., said he was overall optimistic about the future of commercial real estate locally .

"I see it leveling off in the next 12 to 18 months, but not souring as the residential market did. I think in late 2009 to early 2010 we will see growth again," Mackintosh said.

Mackintosh said factors such as an uncertain economy and soaring construction costs may sway the market.

"Right now the office condo market is still doing good, but more competitive with less buyers," Mackintosh said.

With banks tightening lending rules, commercial developers are finding it harder to find financing for projects.

"It is no longer a question of just having good credit -- the banks want to know the commitment of tenants or condo buyers," Mackintosh said. "It is getting a lot harder on (speculative) building."

Robert F. Millikan, a senior vice president with BB&T Asset Management, told local chamber of commerce members recently that he expects to see commercial loan defaults about a year behind the residential market.

But Mackintosh still anticipates a vibrant market, clouded only by the weak U.S. dollar, and energy and other costs rising, especially building materials such as steel and concrete.

He said it is more difficult to find a lease rate both amenable to a tenant and enough for a return on the investment for the developer.

The city and county have created so many regulations on building -- both for residential and commercial development -- "I think it will come back to bite them with the impact on property taxes," Mackintosh said. "I know someone who is thinking about a project who decided on the county instead of the city because of what they would have to pass on to tenants from the extra costs."

Billy Shreve, an agent with Real Estate Teams, expects the commercial market to slow down, but only due to a lack of available land.

With Frederick 's Fort Detrick expanding and the county's proximity to Washington, Frederick has a microeconomy that will help buoy the market, Shreve said.

With many small businesses unable to find small spaces at prices they can afford, office buildings are taking longer to fill up, Shreve said.

Mackintosh said the area has been spoiled by a really good market in the past few years. But he expects the residential market to bounce back quicker than in the past.

"In the late 1980s we had problems and into the early 1990s," Macintosh said. "It took 10 years to get those values back, but it won't take that long this time."

Flatter growth

Brian Duncan, director of Marketing & Business Development with Tyler-Donegan Real Estate, said he expects flatter growth in the commercial sector, but not to the extent of the residential drop.

"You have to look at Fort Detrick, Wells Fargo, other big commercial users. People still need business-to-business and business-to-government," said Duncan, adding that lending is getting difficult.

"You won't see deals happening as quickly, but they will still occur," Duncan said.

Echoing Shreve, Duncan noted the lack of available land and zoning for light industrial and other commercial enterprises.

"We are getting a lot of out-of-state investors looking at shopping centers as a way to create wealth," Duncan said.

Asked how he saw the outlook for commercial development, Frederick County Commissioner John L. Thompson Jr. said residential and commercial markets are in "different cycles. They both will go up and down."

Price competition

One other factor that could affect the future of commercial development in Frederick is the shrinking gap between costs with surrounding areas.

Businesses thinking of moving further north on the high-tech corridor are finding pricing could be a deterrent.

"The price for class A office space in Frederick is nearly the same as in Montgomery County," said Jim Mackintosh, co-owner of Mackintosh Inc. Realtors.

"I've had clients who were thinking of moving to Frederick , but decided to stay in Montgomery County because of the small price difference," he said.

Overall, Mackintosh said, he expects the commercial market to stay level, but not decline as did the residential market.

"Commercial didn't have the (same) subprime market (problems) as residential," he said.

"There is no new industrial ground available, so there is no oversupply of space," he said.

But like his colleagues in the commercial field, Mackintosh said the uncertain economy will always be an issue.

"Interest rates are down, it's a good time to buy," he said.

Buying, not leasing

"During a 10-year period, it is cheaper to buy than to lease," said Thomas Clagett, vice president of Clagett Enterprises.

His company just completed a large office condo building off New Design Road that already has been sold out.

"For Frederick County, there's not a whole lot out there and what's left will sell OK," he said of the office-condo market.

"We are about to pull the permit for the second building (next to the just-completed one)," he said.

The leasing market for commercial space is not so good, but not a crisis, he said.

"Some say that the commercial market follows the residential after a few years," Clagett said. "If I had a crystal ball, I'd be able to tell that.

SUBPRIME LENDING & FORECLOSURES Homeowners around the nation are struggling to make mortgage payments, and Frederick County is no exception. The map below show the area with the lowest and highest concentration of subprime mortgage loans. Click the map for a larger image. SEARCHABLE DATABASE Search the list of foreclosures filed in Frederick County Circuit Court from Jan. 1 to March 18, 2008. BIZ BLOG Business editor Cliff Cumber blogs about the project. Click here to check out his blog. THE ECONOMY & ME This new online-only section houses all sorts of stories that come our way on the economy, as well as tips consumers can use to stretch their dollar a little bit further. Click the graphic to go to the section. RELATED STORIES Foreclosure: A far-reaching problem Published on May 04, 2008 Ellen Scrivens reminisces about the house that she lost due to foreclosure last August that is located off Burning Bush Drive.more » Getting hit from all sides Published on May 04, 2008 In 2006, 455 foreclosures were filed in Frederick County Circuit Court. In 2007, that number more than doubled to 1,025. more » Officials seek to help foreclosure victims Published on May 04, 2008 People facing foreclosure, or who know someone who is, will have the opportunity Monday night to hear from someone who can help. more » Comptroller: state efforts to stem Published on May 04, 2008 The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official. more » Borrowers' euphoria clouded subprime risks Published on May 04, 2008 People were so happy to be in a home that the risks of the subprime loans they signed up for went right over their heads. more » Budgeting measures may protect county from foreclosure trouble Published on May 04, 2008 With conservative budgeting, Frederick County is prepared financially for effect from the local economy caused by the foreclosure crisis. more » Signs of trouble Auctioneers saw dangers of subprime loans coming Published on May 04, 2008 Auctioneers saw it coming. They knew the subprime loan frenzy would cause many homeowners to mortgage their futures. more » Commercial real estate market ‘cautious’ Deputies notice rise in evictions and foreclosures Published on May 05, 2008 Deputies notice rise in evictions and foreclosures Frederick County Sheriff's Deputy First Class Kevin Eyler posts a final eviction notice on a residence door shortly before the door is opened and the contents are carried to the street. more » Commercial real estate market ‘cautious’ Minimal subprime impact expected Published on May 05, 2008 Frederick County's commercial real estate market remains strong, but cautious, and experts predict that the foreclosure crisis rocking residential real estate will have a limited impact. more » Foreclosure: Taking a wider look Published on May 05, 2008 The foreclosure problem is having an impact on the Frederick community -- to what extent, and what may lie ahead for Frederick County, is still up in the air. more » Bargain bus offers tours of foreclosed homes Published on May 05, 2008 Anyone interested in buying a home facing foreclosure can save time and gas by boarding the Bargain Bus. more » Tips on buying a new or foreclosed home Published on May 05, 2008 Tips for buying a new home: be approved by a reliable lender; make sure you get enough of a price cut to cover unnoticed damage or deferred maintenance and repairs; look for the homes on the market the longest (90 to 120 days) for the best deals; pay for your own inspection and, real estate agents advise, be patient. more » How and where to get help Published on May 05, 2008 HUD foreclosure prevention. more »