State board OKs buying Baltimore office building

March 25, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

The Board of Public Works approved yesterday the $12. million purchase of 6 St. Paul Centre to be a state office building, and state officials served notice that they intend to use the building to leverage cheaper rents out of the state's landlords elsewhere.

Martin W. Walsh Jr., secretary of the Department of General Services, said the state hasn't yet decided which agencies would move to 6 St. Paul, a 28-story tower at the corner of Baltimore and St. Paul streets, which was built by now-failed Merritt Commercial Savings & Loan.

Part of deciding which agencies would move to 6 St. Paul will involve asking landlords holding what Mr. Walsh called "high-dollar" leases on state offices elsewhere to renegotiate those leases downward. That is possible, in part, because the state's leases in the Baltimore area all expire by 1998. Mr. Walsh said many of them contain few penalties if the state wants to move out earlier.

"Ideally, we don't want to pay any" penalties for breaking leases early, he said.

The plan to buy 6 St. Paul and other office buildings could help the state save money two ways, Mr. Walsh said.

Some agencies would save money by moving into space the state can buy for less than the cost of current leases, while others save by applying the leverage of a threatened move to their landlords and stay put at a lower rent.

"We can make twice the money this way," Mr. Walsh said.

The strategy of renegotiating its leases is a shift in emphasis for the state, which had indicated that a major goal of buying 6 St. Paul was to provide better quarters for state agencies while saving money.

Mr. Walsh said moving agencies out of decrepit buildings remains a goal, and he was willing to move some agencies into 6 St. Paul even if the move increased their costs. The extra money could be made up by other agencies' savings, he said.

Mr. Walsh said about 80 percent of the slightly more than 1 million square feet the state leases for central offices is more expensive than the cost of buying 6 St. Paul Centre or other buildings.

The state is looking to buy and renovate between 450,000 and 500,000 square feet of space in the city, Mr. Walsh said. The 6 St. Paul building has about 260,000 square feet of usable office space, he said.

The state is also negotiating with owners of a second building, Mr. Walsh said. Legislators have identified that building as the Shillman building at 500 N. Calvert St., which has about 100,000 square feet.

Agencies would move into 6 St. Paul beginning in late spring or early summer, the state said. Much of the building's interior is not completed, however, even though the exterior was built by 1985. Other agencies will move in through next year, as construction is completed.

Contracts for the construction work will be advertised next month and are likely to be awarded in May.

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