Building survey reflects slow recoveryThe latest...

COMMERCIAL REAL ESTATE

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

Building survey reflects slow recovery

The latest statistics on Baltimore-area building permits keep alive questions about the strength of the construction recovery.

The value of permits for commercial construction fell to $13.1 million in April, an 11 percent drop from the previous April, according to the Baltimore Metropolitan Council. The value of permits for additions and repairs, which has been stronger than that of new construction, fell by 40.5 percent.

Council figures for January had offered hope that there would be a fairly strong commercial construction upturn by summer. But that hope began to fade as early as February, when the value of permits fell 43 percent compared with the previous February.

In April, the two biggest commercial permits were for nursing homes -- an $8 million addition to the Charlestown Retirement Community in Baltimore County and a $4.8 million permit to Helix Health System for a new home in Baltimore County.

Even the residential market, which does not have nearly the pent-up problems of the office and industrial sectors, continues to suffer.

Permits for new homes fell 43.1 percent, to 814 homes, during April, the council said. Only Carroll County and Baltimore issued more permits than in April 1992.

From January to April, Baltimore and the counties surrounding ,, the city issued 2,917 permits for new homes, 25 percent fewer than in 1992.

Columbia building to be auctioned

A Columbia office building is the newest entry in the ranks of properties being auctioned in the face of the real estate recession. And it illustrates a potential problem remaining from the financing boom of the 1980s.

Travelers Corp. has ordered the June 25 auction of One Knoll North Drive in the Twin Knolls Business Park.

The five-story building is headquarters to Columbia Medical Plan, says Travelers' spokesman Nick Carter.

The building, which is 88 percent occupied, was built in 1981, he says. But owners Knoll North One L.P. failed to pay the mortgage when a balloon, or "bullet," payment of more than $6 million came due.

Bullet loans have become a source of worry to developers and real estate analysts.

When the loans were made in the mid-to-late 1980s, it was assumed they would be refinanced when the balloon payments came due. But the radical deterioration of credit availability for real estate has cramped those plans, raising fears that the bullet loans could cause a wave of foreclosures, even on buildings that have strong leasing records.

For example, the owners of Knoll North One had managed to make the payments on their 1984 loan until the bullet came due, Mr. Carter says. And the building's vacancy rate is about half the Howard County average.

Atlantic Auctions Inc. will handle the bidding, which is scheduled for 10 a.m. at the Howard County Circuit Court entrance in Ellicott City.

Fla. company's move heartens lease agent

The construction market's rebound will depend on whether the economy grows enough to make it worthwhile for companies that are not in the real estate business to lease more space. And that's why CB Commercial's Rick Latini thinks his latest deal, while small, is a good sign.

Mr. Latini recently signed a Florida plumbing supply company, Barnett Brass and Copper Inc. to a lease for 16,000 square feet of space at the DeSoto Business Park in Southwest Baltimore. Barnett moved in June 1, he says.

"I thought it was interesting that it's in the construction business," said Mr. Latini. "It demonstrates that there's some life left in construction, some room for growth."

The other interesting thing, he says, was that someone was moving into the Baltimore area.

Barnett company has been serving Baltimore customers through catalog operation. But it decided to open the distribution center when local demand got to be greater than it could easily handle by mail.

Shot Tower building is on the market

A piece of Baltimore history is on the market -- or, at least, the elbow-rubbing rights to a piece of city history.

MacKenzie/O'Conor Piper & Flynn Commercial Real Estate Services is trying to sell the Shot Tower building in the 800 block of East Fayette Street, hoping that a buyer can be positioned to take advantage of a subway stop scheduled to open in June 1995.

The building, owned by a partnership including the owners of the O'Conor Piper & Flynn residential real estate brokerage in Timonium, has been about half-vacant since Chez Fernand closed in 1991. The building was renovated in 1980, says Timothy Hearn, a senior vice president at MacKenzie.

The 16,000-square-foot building is adjacent to the tower itself, Mr. Hearn says, but has long been known as the Shot Tower building. He says the space is drawing a lot of interest.

"The owners are considering several offers at this time," he said.

The Shot Tower was built in 1829 to make shot for firearms. Lead was melted at the top of the tower and dropped toward a pool of water below. As it fell, the lead cooled enough to form pellets. Some of the ammunition was used during the Civil War.

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