Once thought to be insulated from the economic ills that plague other areas, the Baltimore region is finding itself just as vulnerable as the rest, according to speakers at an economic outlook conference.
The conference, sponsored by the Greater Baltimore Committee, was held yesterday against a backdrop of economic anxiety. Area banks are seeing their assets decline precipitously as commercial real estate firms try to fill growing vacancies in office buildings.
"There was the belief that Texas could not happen here," said Kyle Prechtl Legg, a bank analyst for Alex. Brown & Sons Inc., a Baltimore investment firm.
Referring to the real estate and banking problems of the Southwest, Legg said Baltimoreans used to point to the diverse Maryland economy as a protection against an economic decline.
But they didn't realize that 10 percent of the Baltimore-Washington work force is in the construction industry and that developers were rapidly overbuilding, she said.
As a result of troubled real estate loans and other problems, the near-term outlook for the local banking industry is now "bleak," Legg said. Banking problems will probably continue until late next year, she added. But the downturn will not last. "This is an inherently strong market, and it will come back," she said.
Another factor affecting Maryland is a cutback in federal purchases.
Stephen S. Fuller, chairman of urban planning and real estate development at George Washington University, said federal purchases in Maryland dropped from $6.78 billion in 1986 to $6.19 billion in 1989. While this drop is less than 1 percent of Maryland's gross product, it does translate into a loss of 6,000 jobs, which would have required 1.2 million square feet of business space.
To offset the decline in procurement, Fuller said Maryland businesses that rely on federal dollars are trying to diversify their products and services.