Government and retail lead tepid recoveryThe latest...

COMMERCIAL REAL ESTATE

September 08, 1993|By Timothy J. Mullaney Staff writers Ellen James Martin and Kim Clark contributed to this column.

Government and retail lead tepid recovery

The latest building-permit figures from the Baltimore Metropolitan Council back up what experts have been saying for months about the tepid recovery in commercial building: Government and retail projects are leading the way, with little help from manufacturing companies or the office-building sector.

Building activity "is working its way back, but it's not where it was at the beginning of the decade," said Josef Nathanson, director of economic research and information systems for the council, a private nonprofit regional planning agency.

Nonresidential construction is running ahead of last year's abysmal pace but trails the figures for 1991 and 1990 by about 20 percent, he says. Building permits are considered a leading indicator of the health of the construction business and of the broader economy.

Overall, area contractors took out building permits in July for $27 million of commercial construction, up from $20.5 million in July 1992. But permits for alterations, additions and repairs to nonresidential buildings fell to $41 million, from $73.1 million, in that period.

In Anne Arundel County, the biggest project permitted was for an $8.4 million J. C. Penney store at Marley Station. In Harford County, the biggest permit was for $2.7 million to expand Hecht's at Harford Mall. Carroll County reported no major nonresidential permits.

In Howard County, a government project headed the list: $6.4 million for a new elementary school in West Friendship.

Baltimore County's biggest permit was for $5.6 million in renovations to the former Blue Cross/Blue Shield building in Towson, the new police and fire headquarters.

"I think the only other thing we'll be able to count on over the next few years [besides government and retail-related building] is construction in the wholesaling trade," said Michael A. Conte, director of the regional economic studies program at the University of Baltimore.

Smithy Braedon Co. will split in two

One company will become two when Smithy Braedon Co., the Washington-based real estate firm, splits on Oct. 1.

Smithy Braedon-Oncor International will specialize in real estate

brokerage, and H. G. Smithy Company will focus on real estate investments and management.

Smithy Braedon's break into two pieces "is in response to the real estate market's demand for customized services," said Edmund B. Cronin Jr., managing director of Smithy Braedon.

Smithy is the latest firm to set up new divisions or change emphasis to compete in segments of the real estate business less volatile than commercial brokerage. Fee income from managing buildings is considered more stable than commissions from commercial brokerage.

State Farm to break ground for headquarters

State Farm Mutual Automobile Insurance Company will break ground Oct. 7 for its regional headquarters in Frederick.

State Farm has awarded the $31.9 million contract to build the facility to the Centex-Simpson Construction Co. of Fairfax, Va.

After outgrowing its 209,649-square-foot building on Oak Street in Frederick, State Farm decided to build a 406,470-square-foot headquarters on Trading Lane. The office, with room for 1,300 employees, "should provide adequate space for growth into the 21st century," said K. Don Waskom, State Farm's regional vice president.

WTS fitness center at HarborView condos

WTS Associates is bucking the wisdom that only new office buildings can attract or keep customers by providing on-site fitness centers. WTS is selling the idea that small fitness centers can be built into older buildings.

"It's happening everywhere," said WTS President Gary J. Henkin, whose company is working on management, consulting or design for more than 40 buildings nationwide. The company, which has other divisions that run free-standing golf and racket-sports facilities, has offices in Denver and Atlanta and is eyeing its first overseas office, in London.

WTS has no office-building accounts in Baltimore but will run a health center at the new HarborView condominiums near Federal Hill.

The centers allow tenants to get a "fast, convenient and enjoyable workout," he said. "These are not set up as high-end profit centers. What the developer wants to accomplish is to get the most bang for the marketing buck."

Centers usually can break even or make a small profit if run well, he says. The key: on-site management to promote a center and to offer a programming mix that keeps users interested.

T. Rowe Price adds space at Pratt St. site

T. Rowe Price & Associates is taking over more space in its 100 East Pratt St. building.

The money management company is adding more than 12,000 square feet to its old lease of 203,000 square feet in the building it jointly owns with IBM. The building is 88 percent leased, says W. C. Pinkard & Co., manager of the building.

Steve Norwitz, a spokesman for Price, said the new space will provide roomier quarters for back-office operations.

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