Office developers optimistic 30-story Commerce Place sees plus in recession

May 01, 1991|By Edward Gunts

As construction crews hammered and sawed and poured concrete overhead, New York developer Leonard Harlan joined with Baltimore officials yesterday to show off the latest weapon in the office leasing war with the suburbs: the 30-story Commerce Place office tower at 1 South St.

"We think we may be part of reversing the trend" in which companies have been moving from the center city to the suburbs, said Mr. Harlan, whose development company is working in a joint venture with Kajima Development Corp., the U.S. subsidiary of Japan's largest construction company.

"We see this as the next step up in Baltimore," he added.

During a midmorning news conference and walk-through, Mr. Harlan unveiled a slightly revised design for the 450,000-square-foot building, which is at the 12th floor and rising one story a week.

If the weather cooperates, he said, it should be "topped off" in late October and ready for occupancy by May 1992.

The project is going so well that even the recession seems to be helping. With subcontractors willing to work for less, the developer said, the team will be able to complete the building for 5 percent to 10 percent less than its $100 million-plus construction budget.

At the same, they said, there will be no scrimping on the quality of materials and finishes, including polished granite on the exterior and rich cherry wood paneling in the 40-foot-high lobby.

The plans drew the admiration of David Gillece, president of Center City-Inner Harbor Development Inc., the agency that oversees downtown development.

"Buildings such as this aren't being built in the suburbs," Mr. Gillece said. "This is a building of uniquely urban quality that you only see in the cities.

"That's why we're bullish that we're going to see 100 percent occupancy."

Commerce Place's only announced tenant is RTKL Associates Inc., the architect of the building, which is leasing 100,000 square feet.

But the developers said they are talking with others and are optimistic Commerce Place will lease well.

Mr. Harlan said the construction bidding climate is such that his team expects to be able to finish the building and lease it at rates comparable to those of four or five years ago, even though Commerce Place will have amenities no other building in town has.

While the uppermost floors will command rents in excess of $30 per square foot, he said, the majority of the rates will be about $25 per square foot -- "and that's a tremendous savings for our tenants."

Only two other office buildings are under construction or definitely scheduled to get under way downtown. They are the 28-story addition to the IBM Building at 100 E. Pratt St., slated for completion this year and substantially preleased, and the 11-story City Crescent building planned for Baltimore and Howard streets.

Mr. Harlan said one of the reasons for his optimism is that Commerce Place is the only speculative office building that will be completed downtown in 1992, and that, because of the recession, no other office tower is likely to be finished for a long time. As a result, he said, his leasing agents have been talking seriously to a number of prospects that were previously considered long shots.

"It's the quality, the prestige and the realization that nothing else is going to happen," he said. "We probably have a minimum of a three-year window in which we will be the only building completed."

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