Office parks report high vacancy rates


February 11, 1991|By Michael Enright | Michael Enright,Special to The Sun

After years of explosive growth, office park development in the Baltimore-Washington corridor is stagnant as developers and real estate brokers await a break in the current economic slump that will put this stretch of land back in business.

"Most of my time is spent in workout sessions and bankruptcy meetings," said Thomas Shaner, executive director of the National Association of Industrial and Office Parks in Baltimore.

"The question today is not how to cut a lease," he said, "but how to survive."

Survival, it seems, is no longer found in new buildings or more land acquisition, but in aggressively pursuing new tenants and keeping the current ones satisfied, real estate executives say.

The 578-square-mile Baltimore-Washington corridor is roughly bounded by the Baltimore Beltway to the north, the Capital Beltway to the south, Columbia to the west and U.S 301 to the east.

There is approximately 26.2 million square feet of existing office space and another 70 million square feet planned, according to the Baltimore-Washington Corridor Chamber of Commerce.

When those plans for more office space will be put into effect is anyone's guess, given the current recessionary climate.

Vacancy rates along the corridor vary, as the Baltimore-Washington area encompasses parts of Baltimore, Anne Arundel, Howard, Prince George's and Montgomery counties. But local real estate experts say vacancy rates in some areas are as high as 25 percent.

Along the Howard County stretch of the corridor, for example, there are 18 million square feet of office space, and 2 million square feet of that is vacant, according to L. Jamie Smith, a vice president at Baltimore-based W. C. Pinkard and Colliers International.

Figures from the Manekin Corp. of Baltimore show that the Howard County vacancy rate has jumped from 15 percent last year to 25 percent now, making it the subdivision along the corridor with the most empty space.

"I think everyone has recognized that in the cyclical nature of our economy, we are now at a point where there is too much building space," Mr. Smith said. "Now we have to wait for the demand and the infrastructure to catch up."

There is almost no new building activity along the corridor and real estate professionals say they don't expect much to begin in 1991. The current office leasing slump has forced many real estate ventures to cut back their staff and put all their efforts into keeping their tenants happy.

Keeping new tenants satisfied can entail a few months of free rent or agreeing to make changes to the building's interior design at no charge, real estate professionals say.

"There is no doubt that most efforts are being made in the day-to-day managerial and operational tasks," said Mr. Shaner.

"The office real estate people are learning about how to keep their clients satisfied, which isn't to say they weren't happy before but that they are spending a lot more time on it."

Walter Townshend, president of the Baltimore-Washington Corridor Chamber of Commerce, says the "frenetic pace" that was once the hallmark of business activity along the corridor has slowed dramatically but that the area still provides good locations for those businesses trying to get away from the high rents and crowded streets of Baltimore and Washington.

Not all the news along the corridor is bad. Those companies looking for new locations can find some good deals these days, real estate officials say.

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