Latest reports: good news, bad newsOne month doesn't make...

COMMERCIAL REAL ESTATE

March 31, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Latest reports: good news, bad news

One month doesn't make a trend -- especially when you're talking about winter months in the construction business.

But January really was a good month, according to new figures from the Baltimore Metropolitan Council. Commercial building permits in January rose more than 1,000 percent from the previous January, measured by the projected value, the figures show.

Still, just in case the last three years didn't condition people to take good news with a grain of salt, the latest figures from the F.W. Dodge division of McGraw-Hill Inc. are pretty ugly.

Contracts put out during February for future construction in Maryland were weak, Dodge said. A 26 percent drop in nonresidential building construction and a 25 percent drop in "nonbuilding" construction -- roads, bridges and the like -- led a 16 percent overall decline.

"There's not necessarily a contradiction between those two sets of numbers," said Michael A. Conte, director of the regional economic studies program at the University of Baltimore. "Permit activity occurs in advance of starts. The combination says that right now we're not breaking a lot of new ground, but in the summer we will."

Mr. Conte says the spike in permits for nonresidential construction is good news because that sector has been so depressed. He also notes that the increase was spread over a number of projects rather than being concentrated on one big building.

"You have to see something three months in a row, or three out of four. But those are pretty convincing numbers." he said.

The push in commercial construction continues to be concentrated in the government and nonprofit sector, as it was through the second half of 1992. Large private projects include a $10 million addition to Annapolis Mall, a $2 million BJ's Wholesale Club store in Pikesville and million-dollar-plus projects by Baltimore Gas and Electric Co. and Bethlehem Steel Corp.

Towson developer scores with deal

Just as no one has been building many commercial projects recently, it's been next to impossible to sell commercial buildings for a decent price. But a new deal in Towson may be an exception.

Developer Arthur Wood has bought a 22,000-square-foot building at 22 W. Allegheny Ave. for $2.2 million. That works out to $100 a square foot, which a broker not involved in the deal calls "a home run."

The building, half office space, half retail and 100 percent leased, is anchored by a fur shop and a bakery, said Patricia B. Farrell, a spokeswoman for MacKenzie/O'Conor, Piper & Flynn Commercial Real Estate Services, which represented the seller, 22 W. Allegheny L.P.

The deal was a complicated, three-way transaction in which Shelley Construction Co. bought the building and then swapped it to Mr. Wood as partial payment for a 50-lot residential subdivision near the corner of York Road and Mount Carmel Road in Hereford.

The swap helped Mr. Wood defer capital gains taxes on the sale of the subdivision, said Timothy Hearn, vice president at MacKenzie/O'Conor, Piper & Flynn.

"He knew he was selling the subdivision and he searched the entire market for investment opportunities," Mr. Hearn said. "He obviously had his pick."

Metropolitan Life makes 5-year deal

Metropolitan Life Insurance Co. has taken a step toward stabilizing its new building at 814 Light St., signing Chesapeake Health Plan Inc. to an expanded lease at the 38,000-square-foot building after buying it at an auction March 16.

Chesapeake agreed to lease 16,400 square feet of space for five years, said Ira Miller, a broker from Smithy Braedon Co. who represents Metropolitan. In return, Chesapeake got a break in its rent.

"They had a year left at a high rate, and we basically signed them at a new rate and for five years," he said. "In today's market it's hard to say 'no' to a 16,000-square-foot deal, especially in a 38,000-square-foot building."

The old lease, set to expire late this year, was for 10,700 square feet, says Mark Deering, a CB Commercial Real Estate Group Inc. broker who represented Chesapeake.

Metropolitan bought the building for $1.25 million after former owners Henrietta Light L.P. defaulted on a mortgage of more than $3 million, Mr. Miller says. The building is about 70 percent leased.

Retarded citizens' group to relocate

The Baltimore Association for Retarded Citizens is moving its headquarters to the York Road corridor between the city line and Towson. The association has bought a 46,800-square-foot building at 7215 York Road for $1.8 million and intends to move in February 1994.

The building, just south of Stevenson Lane, is known as the Armco Building.

Executive director Stephen Morgan says the building will house the association's administrative offices, which are now in Govans. The Govans site will be converted into a job training facility for retarded adults. Other staffers will move to the Towson-area site from Timonium.

Mr. Morgan said the building needs work to upgrade heating and air conditioning systems and to improve handicapped access.

The association plans a fund-raising drive to come up with about $750,000 for the repairs.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.