Auction shows interest among speculatorsAuctioneers have...

COMMERCIAL REAL ESTATE

January 13, 1993|By Timothy J. Mullaney

Auction shows interest among speculators

Auctioneers have been saying for a couple of months that while speculative investors are still avoiding their offerings, the market for selling properties to owner-occupants is picking up.

The latest auction by A. J. Billig & Co. doesn't support the theory.

But that's the good news.

The Baltimore auctioneer sold the Stevensville Village Center in Queen Anne's County to two buyers. One will take over a part of the mixed-use complex for its own operation, but the other buyer was an investor, auctioneer Jack Billig said.

A parcel that includes four commercial buildings and 16 apartment units was purchased by Ellicott City-based Boender Inc., which will use the property as an investment, for $450,000. A group of Stevensville attorneys agreed to pay $515,000 for a second parcel, which includes an office building, three stores and five apartment units.

The auction followed the failure of the former owners' plan to transform the area into a regional antiques shopping area.

"That was the best-attended, most active bidding I've seen since 1989," said Jack Billig, head of the family-owned auction firm. "It was very encouraging."

The attorneys plan to move their practice into the roughly 30 percent of the 14,000-square-foot office building that remains vacant, Mr. Billig said.

Investors were more interested in the apartments and office building than the mostly empty retail space, he said. "There was a big demand for the apartments."

Commercial building lags in November

Despite an uptick in housing construction and even some encouraging signs from the commercial leasing market, the pace of commercial construction remains slow, according to new figures from the Baltimore Metropolitan Council.

The council reports that the value of commercial construction permits fell 27 percent in November compared to November 1991. For the January-November period, the 1992 pace was 38 percent lower than the previous year.

"The important thing to keep in mind is that this sector might not have bottomed out yet," said Michael A. Conte, senior fellow at the University of Baltimore's Regional Economic Studies Program. "In this day and age, it's an especially lagging indicator because of its overbuilt status and the workout stage we're in."

As in previous months, the biggest chunks of non-residential construction business came from non-profit institutions such as colleges and hospitals. The two biggest projects to win building permits in November were both institutional jobs in Baltimore -- namely, an estimated $5 million addition to Bon Secours Hospital in West Baltimore and $3.5 million in renovations at Loyola College's campus off Cold Spring Lane.

Commercial construction normally lags in economic recoveries, but Mr. Conte and others have predicted that the lag time could be particularly long in this recovery.

The theory is that construction snapped back sharply after the 1982 recession because there was little backlog of empty space, in sharp contrast to the 20 percent-plus vacancy rates plaguing much of the nation now. The extra time needed to fill existing vacancies will delay significant new construction, the theory goes.

Japan bestows honor on RTKL's Adams

RTKL Associates Inc. chief Harold Adams has won an unusual recognition from the government of Japan, which has made him one of only four architects to be granted that nation's most prestigious architecture registration for foreigners.

Mr. Adams was recently recognized by the Japanese Ministry of Construction as an architect of "world renown" and granted a registration under Japan's "Strict B criterion" for foreign architects, RTKL said. Other foreign architects have been granted a Criterion A designation after a less rigorous process.

The firm said Mr. Adams' new designation isn't necessary for RTKL to land work in Japan, but said it will give the firm added prestige in the Japanese market.

RTKL opened its Tokyo office in 1990 after jumping into the Japanese market in 1988. The firm gets about 25 percent of its international billings from projects in Japan.

City to rule on bonds for South St. project

The city planning commission is set to rule tomorrow on developer David Cordish's plan to finance his renovation of the Furness House at 19-21 South St., an 18,000-square-foot building that is pre-leased to Alex. Brown Inc., through economic development revenue bonds.

"It's one of the great historic buildings left in Baltimore," Mr. Cordish said. He said the plan calls for a complete interior renovation and will keep the historic detail of the exterior intact.

Alex. Brown will move about 55 people from its asset management operation into the building in March, said Stuart Janney, a managing director at Alex. Brown.

The commission also will vote on a plan to allow a partnership led by Mr. Cordish to refinance $1.1 million of debt on the Canton House building next door to the Furness House on South Street.

Like many developers, the partnership borrowed its money via economic development revenue bonds, which allow the developers to make their bonds tax-exempt. That allows the borrowers to offer bond buyers a lower interest rate and remain ** competitive.

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