City vacancy rate declines slightly

FEWER EMPTY OFFICES

June 25, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,CB CommercialStaff Writer

Baltimore's office vacancy rate fell slightly in the first half of the year, marking the first improvement in the closely watched indicator since 1988, a report released yesterday by CB Commercial Real Estate Group Inc. indicated.

The city's vacancy rate edged down to 22.5 percent, from 23.1 percent at the end of last year.

That rate combines the 20.7 percent rate in newer, Class A buildings and the 24.8 percent rate in older, Class B buildings, whose price advantage has slipped away as Class A building owners cut prices to cope with the recession. Class A vacancy fell from 23.3 percent at year-end; Class B vacancy rose from 22.9 percent.

The biggest deals in the first half of the year included Maryland's purchase of the failed 6 St. Paul Centre tower and Maryland National Mortgage Corp.'s move into space in the Candler Building at 111 Market Place.

Other deals that had not been previously announced were part of the improvement.

The Johns Hopkins School of Hygiene signed a lease this week for 45,000 square feet in the Candler Building.

"Downtown is becoming more competitive," said Gary G. Dewey, the head of the national brokerage firm's Baltimore office. CB said relocation from the suburbs to downtown is becoming more feasible as rental rates downtown drop.

The vacancy rate in Baltimore County also moved down a notch, to 14.6 percent, from 14.8 at year-end. Douglas Schmidt, a broker, said that county deals that have been announced but not completed would drop the county's rate below 13 percent by year-end.

KCI Technologies, an engineering services firm, recently agreed to move to 50,000 square feet of space in Hunt Valley.

Information on office vacancy rates in other regional counties was not included in the report.

But CB Commercial made clear that the office industry was not out of the woods. Loans on many buildings call for balloon or "bullet" payments this year and next. As a result, more foreclosures could affect well-occupied buildings.

Mr. Dewey, the CB Commercial official, added that the future of Maryland National Bank, which CB said occupies between 5 percent and 8 percent of occupied space downtown, was another factor that could affect the market.

If officials of NationsBank Corp. sharply cut Maryland National's Baltimore staff after completing the deal to buy Maryland National's parent, MNC Financial Inc., it would be a significant setback, he said.

MAJOR COMMERCIAL REAL ESTATE DEALS

Baltimore transactions, January through June.

Contracting Party... ... ... .. Sq. ft....Location... ... ... .

State of Maryland... ... ... .. 305,000...6 St. Paul St. (sale)

Maryland National Mortgage... .. 83,000...111 Market Place... .

Johns Hopkins School of Hygiene. 45,601...111 Market Place... .

Healthcare Investment Analysts.. 45,000...300 E. Lombard St...

ACI... ... ... ... ... ... ... . 40,000...100 E. Pratt St... .

The Prime Group... ... ... ... . 22,000...100 E. Pratt St... .

Alex. Brown... ... ... ... ... . 20,000...7 St. Paul St... ...

Hazel Thomas... ... ... ... ... .20,000... 111 S. Calvert St..

Alex. Brown Kleinwort Benson... .16,000... 100 E. Pratt St... .

CDC... ... ... ... ... ... ... ..15,000... 100 E. Pratt St... .

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