Bavar set to open own investment firmAfter 22 years at the...

COMMERCIAL REAL ESTATE

February 10, 1993|By Timothy J. Mullaney

Bavar set to open own investment firm

After 22 years at the downtown brokerage firm KLNB Realtors, David Bavar is setting out on his own as an investor, looking for salvageable properties amid the real estate bust.

"There's never going to be a better time in my lifetime to be a real estate investor," said Mr. Bavar, 57, an accountant who has spent 30 years in real estate. "It's like Bernard Baruch said, buy when no one else is buying."

What he would like to buy is properties that were good deals in theory but got crushed by the recession. He's betting that some of those deals, which looked so good on paper, will be good in practice as the economy recovers (especially at today's lower prices).

Mr. Bavar will open Bavar Properties Group at the Timonium One building on Greenspring Drive in March. It will be a one-man show at first -- he won't have any associates, and he doesn't have firm plans for other equity investors.

"I'm planning to put my money into deals," he said. "I may seek outside investment capital. I would hope that the deals will be conservative enough that I could finance them" through banks.

Mr. Bavar has worked on some of the most visible commercial real estate projects downtown, including assembling the land for buildings such as 300 E. Lombard St. and the yet-unbuilt One Light Street.

He also is a partner in a number of projects, including Timonium One, which has had a flurry of recent leases after Blue Cross and Blue Shield of Maryland moved to Owings Mills. That created a small but welcome problem for Mr. Bavar: "The space I picked out got leased," he said.

Vacancy rates lower in European market

The U.S. economy is picking up, while Europe's economy lags and central bankers from London to Bonn feel the need to cut interest rates to get things going. So shouldn't the U.S. commercial real estate market be stronger than Europe's?

Well, it isn't, according to a report by Oncor International, a Houston-based network linking local firms in the United States, Canada and Europe (the local affiliate is Casey & Associates). While vacancy rates stagnate around 20 percent and construction evaporates on this side of the pond, European vacancy rates are much lower, and construction is robust.

The lowest regional vacancy rate surveyed in the United States, for example, is San Francisco's 12.5 percent. The lowest European figure comes from Leipzig, Germany, where only 40,000 square feet is available, for a vacancy rate of 0.2 percent.

The average vacancy rate among European cities was 5.8 percent, said Oncor, which put the U.S. rate at 20.5 percent at the end of 1992. Dallas' 31 percent sets the standard of shame. The top 10 vacancy rates in Oncor's 53-city survey are in North America; the lowest 10 are in Europe.

Like many surveys, Oncor's sees the amount of empty office space slowly falling in the United States as construction grinds to a halt. Office construction in the U.S. cities in Oncor's survey is down 87 percent since 1991. In Oncor's 15-city slice of Europe, construction was up 13 percent last year, with more space being built in Hanover, Germany, than in 36 U.S. markets put together.

Price Waterhouse renegotiates lease

Price Waterhouse, the accounting firm, is the latest company to renegotiate its local lease terms, agreeing to stay 10 more years in the 23,500 square feet it calls home in the Signet Tower at 7 St. Paul St. Price Waterhouse has been in the building since its 1986 opening.

The announcement from W.C. Pinkard & Co., which brokered the deal, confirmed that the lease had been renegotiated in the course of a 10-year renewal, apparently continuing a trend toward tenants capitalizing on the real estate glut to lower their rent bills. Pinkard broker David Downey wouldn't say just how good the deal is.

Alex. Brown & Sons Inc. has also been doing business with the partnership, led by Trammell Crow Co., that owns Signet Tower. Alex. Brown agreed to sublease the 19,500-square-foot eighth floor from Signet Bank/Maryland, said Pinkard, which helped put the deal together.

The investment bankers are moving some public finance folks over from smaller digs at the Equitable Bank Building at 100 S. Charles St. Mr. Downey said Alex. Brown was the original tenant in the Signet Tower space but gave it up during the 1989-1990 investment banking slump.

Developer spins off properties into trust

One of Washington's biggest developers, the Oliver T. Carr Co. yesterday spun off its interest in 14 downtown Washington projects into a real estate investment trust, planning to use $150 million from the offering to reduce debt and save $7.4 million in annual interest costs.

Shares of Carr Realty Corp. began trading on the New York Stock Exchange, where the offering was priced at $22 a share. The stock closed yesterday at $24.875 on volume of 3,546,300 shares.

The properties include six that the older Carr company had owned outright and eight others in which it held a stake. The properties are 96.8 percent leased.

The Carr family, Bethesda construction magnate A. James Clark, Equitable Life Assurance Co. and the Texas-based Bass family will remain major stockholders in the REIT.

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