Office vacancies hit record high for '91

COMMERCIAL REALTY NOTES

January 01, 1992|By Edward Gunts

Downtown Baltimore's commercial real estate market closed out the year with a record vacancy rate of 17.8 percent for new "Class A" buildings, up from a rate of 14.3 percent at the beginning of 1991, according to a report from CB Commercial Real Estate Group Inc.

The vacancy rate for older "Class B" buildings downtown was 22.9 percent at year's end, up from 20.5 percent at the start of 1991, the real estate company said.

By contrast, the national vacancy rate for downtown office space was 18.0 percent for Class A and Class B combined as of Sept. 30, the company said.

According to the year-end report, both the Class A and Class B markets in downtown Baltimore experienced "negative net absorption," which means more space was available at the end of the year than was available at the beginning.

In the downtown Class A market, 44,467 square feet of space was available at the end of the year that wasn't available at the beginning of the year, while 58,843 square feet of additional Class B space was available downtown, the company said.

Gary G. Dewey, senior vice president and managing officer of CB Commercial's Baltimore office, attributed the rising vacancy rate to several factors, including:

* The downsizing of companies.

* Decisions by a number of companies that occupied downtown space to move all or part of their operations to the suburbs.

* Consolidation of companies and government agencies from scattered sites to one "single user" building.

Mr. Dewey said he believed that a large percentage of the downtown tenants who are going to downsize have completed their lease transactions. But many companies that need to expand are cautious about moving ahead and are waiting until the economy improves, he said.

The federal government was the most active player in the downtown office market during 1991, leasing or making commitments to lease more than 300,000 square feet of space for a number of agencies. They include Immigration and Naturalization Department, the Secret Service, the Army Corps of Engineers, the National Labor Relations Board and the Social Security Administration.

One of the largest, single federal leases for downtown office space was a 49,240-square-foot lease by the U.S. Probation Office for space in the office tower at 250 W. Pratt St., CB Commercial said. One of the largest single private-sector leases was a 40,359-square-foot lease by the law firm of Tydings and Rosenberg for space at 100 E. Pratt St., the company said. The only major downtown office building under construction and scheduled for completion in 1992 is the 450,000-square-foot Commerce Place tower at Baltimore and South streets.

CB Commercial also reported:

* The year-end vacancy rate for Baltimore County was 12.1 percent, far below the national vacancy rate of 20 percent for suburban space. A total of 141,000 square feet of office space was "absorbed" in Baltimore County during 1991.

* South of Baltimore, the office vacancy rate ranges from 11.1 percent in the Annapolis/Parole area to 23.2 percent in Howard County.

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