Office vacancy rates in BWI area decline in '92 Survey indicates slow recovery is on ANNE ARUNDEL BUSINESS

January 07, 1993|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

Vacancy rates in office buildings near Baltimore-Washington International Airport dropped slightly in 1992, but still remained the highest in the northern Baltimore-Washington corridor, a commercial real estate company reports.

CB Commercial Real Estate Group Inc., the nation's largest commercial real estate company, surveyed 55 office buildings, from single-story to high-rise, along Baltimore-Washington Parkway and Routes 175, 176 and 97.

The company tracks the office market in Anne Arundel, Baltimore and Howard counties and Baltimore twice a year, with quarterly updates.

In the airport area, which contains 4.2 million square feet of office space in buildings not occupied by government agencies or one tenant, the vacancy rate dropped to 23.8 percent from last year's 25.29 percent.

"The year started out terrible, but it's going in the right direction," said Gary Dewey, CB senior vice president. "We're in a slow recovery, and the numbers bear out that there has been improvement. As an office, we did more deals in 1992, significantly more."

Still, because of the large number of speculative office buildings -- those built without guaranteed tenants -- near the airport, that area had the highest vacancy rate in the northern portion of the Baltimore-Washington corridor. The area includes Annapolis and parts of Howard County.

The 105 office buildings in Columbia and other areas of Howard County had a 21.1 percent vacancy rate. Sections of Baltimore County, including Towson, Hunt Valley and White Marsh, had a 15 percent vacancy rate, CB reported.

The airport area "was the hottest market in the '80s and the momentum continued as far as construction," Mr. Dewey said.

The report also showed that space for tenants requiring more than 25,000 square feet is rapidly dwindling. Because no office buildings have been constructed in two years, property owners anxious to make deals have been willing to divide their space rather than reserve it for larger tenants, Mr. Dewey said.

The year's biggest rental deal in the Baltimore metropolitan region came in July in Anne Arundel County. The U.S. Army Corps of Engineers leased the 250,000-square-foot formerly vacant National Business Park at Baltimore-Washington Parkway and Route 32 on behalf of the National Security Agency.

Building owner Constellation Real Estate Inc., formerly The KMS Group Inc. of Columbia, has been preparing the building for the new tenant, who will move in in phases from spring through the end of the year, said Larry Lichtenauer, Constellation spokesman.

Because of that deal and others, the company had its best year. It leased 88 percent of its office buildings and shopping centers, which were only half-leased in 1991. And it sold 400 homes during the past two years in Piney Orchard, the 4,200-unit planned community in Odenton, said J. Richard O'Connell, Constellation's president.

"This was just the culmination of a couple of years of pretty hard work by people who work here," said Mr. O'Connell, who said the company had shifted its focus from developing new buildings to leasing existing space.

"We believe we have quality projects in good locations."

But the lease of the 12-story tower did little to lower the airport area's vacancy rate, the report noted. Westinghouse Electronic Systems Group, for instance, moved out of more than 300,000 square feet at Airport Square Cos. office complex, and moved into its own buildings at Nursery and Winterson roads.

The report also noted that space remains tight in Annapolis. Office buildings in the state capital have a 12 percent vacancy rate and little space available for tenants needing more than 10,000 square feet.

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