Local office, industrial space goes begging Vacancy rates exceed U.S. average, report says

February 14, 1992|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Baltimore has a far higher percentage of empty industrial space than the nation as a whole, and its market for office space is expected to soften even more dramatically in 1992 than it did last year, according to a report by the Society of Industrial and Office Realtors.

"[Office] market conditions will continue to soften in Baltimore during 1992," said the report, which the Washington-based society prepared with Landauer Real Estate Counselors of New York.

"Rental rates are expected to fall at an even faster pace than in 1991, as landlords replace leasing incentives with lower face rents. . . . The vacancy rate is likely to climb an additional two to four percentage points as absorption declines by approximately 20 percent."

The picture for office developers is also grim nationwide, according to the study, which looked at more than 100 real estate markets in the United States.

It said the industry is in "a period of retreat" and warned that office development will be one of the last sectors of the real estate industry to recover from overbuilding, tight credit and the recession.

"The next construction cycle is therefore at least five years away, in all probability," the report said, adding that its researchers found "virtually universal distress."

"The builders need banks and insurance companies to regain their footing before new deals can enter the pipeline," it said.

The national vacancy rate for office space is 18.9 percent. Metropolitan Baltimore's overall vacancy rate is 19 percent.

In October, local office vacancy rates ranged from 14.5 percent for downtown Class A space -- most of which is found in the shiny towers built during the 1980s and early 1990s -- to 28.4 percent for downtown Class B space -- mostly older buildings, some of which have been renovated.

Some of the rates in the study are lower than those quoted by W. C. Pinkard & Co., a local real estate company, in a December report. Pinkard put the overall vacancy rate at 19.3 percent and singled out Howard County as the area's emptiest office market, with more than 29 percent of its office space vacant.

The biggest buildings affecting downtown Baltimore's Class A vacancy rate are 6 St. Paul Centre, which was repossessed late last year by New York-based Chemical Bank, and the addition to the IBM-T.Rowe Price building at 100 E. Pratt St.

The report said 17.3 percent of industrial and warehouse space in Baltimore's central city is empty, 18 percent in suburban Baltimore. The national average is 10.2 percent.

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