Md. may buy Baltimore office space State move would benefit tenant-starved downtown

January 16, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Maryland is expected to announce within weeks a decision to buy up to 300,000 square feet of office space in downtown Baltimore, a move that is looking like manna from heaven to tenant-starved owners of big, largely empty office buildings.

"The governor and the legislature have given the message any homeowner knows -- at the end of the year, it's better to own than rent," said Martin W. Walsh, Jr., secretary of the Department of General Services.

Mr. Walsh will say only that he is working with a short list of fewer than half a dozen buildings. But real estate sources said the finalists were the Shillman Building, at 500 N. Calvert St.; the Munsey Building, at 7 N. Calvert St.; and 6 St. Paul Centre, at 6 St. Paul St.

"I'm hoping in the next two weeks to get the necessary clearances from the legislature, the governor and the Board of Public Works to bring the appropriate contracts to the Board of Public Works," Mr. Walsh said.

Lost in the struggle to ease Maryland's fiscal problems is a $13 million appropriation made last year to allow the state to buy office space in downtown Baltimore.

Mr. Walsh said the department wants to get money in the fiscal 1994 budget to buy even more office space.

"There's a real valid requirement for two or three years of acquisition," Mr. Walsh said. Any deal "is not the end of the trail. Fiscal 1994 is only 5 1/2 months away."

The long-term theoretical limit is to buy up to 1 million square feet of office space in metropolitan Baltimore. If the state bought that much, it would have enough to replace all the local leased space it uses for operations that do not have personal contact with the public regularly.

The state leases about an additional 1 million square feet of offices for service operations that need to be in the community to provide direct services, Mr. Walsh said. Those offices are not going to move to central tower-style buildings, he said.

The first agencies likely to move to a state-owned building include the Baltimore branch of the Office of Child Support Enforcement, now in a building on Eutaw Street, and the headquarters of the Department of Juvenile Services, Mr. Walsh said.

Of the buildings under consideration, only 6 St. Paul Centre has as much as 300,000 square feet of space. Appraised last year for tax purposes at $18 million, it is also the only building likely to eat up all of this year's $13 million appropriation to buy and renovate space.

The 305,000-square-foot 6 St. Paul Centre is the former would-be headquarters of Merritt Commercial Savings & Loan, which failed before it could move into the building. The building was taken back by its former owners' lender, Chemical Bank of New York, in late 1991. It is 85 percent vacant.

"Our understanding is that the state reviewed a large number of properties, and they have had discussions with a number of property owners, including ourselves," Chemical spokesman John Meyers said. "We're awaiting the final decision."

The 108,000-square-foot Shillman Building, which was the operations center for Baltimore Federal Financial, another failed savings and loan association, went for less than $2 million the last time it was sold, in 1991. Almost 90 percent of the building is empty.

Until this summer, its owners were hoping that the building would become the new home of the international relief agency CARE, but those hopes were --ed when New York-based CARE decided to move to Atlanta rather than to Baltimore.

The 180,000-square-foot Munsey Building has never really recovered after the state attorney general's office moved out in 1989. More than 105,000 square feet are vacant.

Though the state's dealings would directly benefit sellers of the buildings it is considering, an acquisition campaign could also help building owners not selected, said Thomas C. "Tim" Jackson, director of market research at Casey & Associates.

The sale of 6 St. Paul Centre alone would cut the vacancy rate in downtown Class A space to 19.9 percent, from 22.4 percent, Mr. Jackson said. The sale of other, Class B buildings, like Shillman and Munsey, would also help the market, but less dramatically, he said.

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