Comeback of a Corridor?

August 23, 1993

The office and industrial market in the Howard-Anne Arundel county corridor between Baltimore and Washington is slowly emerging from its most difficult period in memory.

Deep recession, coming on the heels of an unprecedented 1980s building boom, produced record vacancies in office complexes that had mushroomed around Baltimore-Washington International Airport. Columbia fared better, but it also experienced problems.

The situation was aggravated by drastic downsizing and space shifts at Westinghouse Electric Corp., the corridor's biggest employer along with the super-secret National Security Agency at Fort Meade.

As a result, about 8 percent of their space in 167 office buildings, totaling some 24 million square feet, is vacant, according to a survey by CB Commercial, the nation's largest commercial real estate company. But if "available space" in those Howard and Anne Arundel complexes is measured, the rate nearly doubles to about 17 percent because so many tenants are jumpy or uncertain about their futures.

"The market is not driven by growth but efficiency," CB's J. Richard Latini explained.

If the overheated 1980s were motivated by a single-minded business preoccupation with expansion, today's commercial real estate market is propelled by the need of large corporations to save time, save money, increase productivity and also enhance their image.

From the tenants' point of view, this change usually means a more aggressive scrutiny of space needs and a downward renegotiation of existing leases. From the landlords' point of view, it may mean requiring guarantees that were never an issue in the 1980s.

According to James P. Lighthizer, another official of CB Commercial (and son of the state's transportation secretary), owners hesitate to offer improvements that were standard just a few years ago because rents are so low and too many of the tenants are shaky. The fact that virtually no new space is being built, though, ought to stabilize the market down the road.

But the market's rebound will take time and require an improvement in the national economy because so many of the companies leasing in the BWI Airport vicinity are national players that want a Maryland branch office to strengthen their presence in Washington.

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