The owners of One Charles Center, the award-winning building that became ground zero of Baltimore's 30-year-old downtown renaissance, this month decided to give it back to its lender after the building's major tenant began moving out.
One Charles Center, a 300,000-square-foot structure designed by the world-famous architect Ludwig Mies van der Rohe, will become the property of Metropolitan Life Insurance Co. of New York, which provided financing for a Chicago partnership to buy the building in 1988.
Thirty years ago, the project sparked a building boom that created Charles Center, a 33-acre parcel of land that was planned in the mid-50s by a group of businessmen and politicians, and purchased with the help of federal urban renewal funds.
Before there was Charles Center, there was O'Neills department store, closed and vacant by the mid-50s. There was the famous Miller Bros. restaurant over on Fayette Street, now long gone. And there was the Salvage Corps, an insurer-owned firefighting concern.
But Charles Center, through the city's power of eminent domain, replaced all that, and the first monument to Baltimore's urban rebirth was One Charles Center. This month, First Capital Financial Corp. of Chicago, the owners of One Charles Center, faced with the loss of its major tenant and with the after-shocks of a crushing real estate-based recession, voluntarily chose to turn it over to Met Life.
CSX Corp., the building's former owner and nearly sole tenant, had announced in January that as part of a corporate migration to Jacksonville, Fla., the railroad company would vacate the building over the next three years.
One Charles Center and the nearby B&O Building "were the last remnants of the railroads' [corporate presence] in Baltimore, and when you think about it, it's kind of sad," said Gary Dewey, who heads the CB Commercial Real Estate Services office in Baltimore. "We've still got the B&O Museum -- they can't take that away from us," he added.
One Charles Center's managers and leasing agents maintain that, with more than $1 million of renovations under its belt in the past year, the building is still an attractive property and is bound to lure new tenants.
But the still-soft commercial real estate market and a general shift away from Charles Center, at Charles and Lexington streets, and toward the Inner Harbor could make finding replacements for CSX a difficult task.
First Capital will relinquish ownership of the building next month to Met Life, according to a spokesman for First Capital's management company in Chicago. The company's plans were first reported in the Baltimore Business Journal.
It's not yet clear, though, whether the partnership will simply hand the deed over to Met Life, or whether the insurer will conduct what's known as a "friendly foreclosure," said the management agent, who asked not to be named.
A financial statement filed with the Securities and Exchange Commission showed the partnership's cash flow declined more than 28 percent in the first quarter of the year compared with a year ago, partly because of the CSX move.
"CSX was a major loss to the city, and not just to One Charles Center," said the agent.
Met Life provided First Capital with the financing to buy the building in 1988 from its former owner, the CSX Corp. The insurance company deferred all questions to First Capital.
Also undetermined was whether Met Life will decide to "stay the course, act as developer," said Joseph Casey, president of Casey & Associates/Oncor International, the building's leasing agent in Baltimore. The insurer's other option is to try to sell it immediately at a loss, having written off a portion of its loan to First Capital.
When the building broke ground in 1961, there was some concern about whether enough tenants would show up. One Charles Center was the first parcel of land offered as part of the Greater Baltimore Committee's Charles Center plan, created in the late 50s.
The city bought the 33 acres with federal urban renewal money, and condemned most of the properties in the area, recalled Walter Sondheim, the interim president of the Greater Baltimore Committee and one of those involved when the renaissance began.
The area "was beginning to deteriorate, there were a lot of vacancies," Mr. Sondheim said. "The movement to the suburbs had started and retailers, who follow their customers, had started to move out."
When the decision came to pick a developer, the city chose the design by Mr. Mies van der Rohe, and snubbed a competing offer from businessman Jacob Blaustein, who ran American Trading and Production Co. "He was incensed that here he was, one of the richest people in town, and he wasn't given the right" to put up the first major office building downtown in 30 years, Mr. Casey said.
So Mr. Blaustein promptly bought the old Hub department store across the street, once part of the Hecht Co., and began building what would become One North Charles Street, also known as the Blaustein Building.