Baltimore's office real estate market improves

February 02, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Correspondent

WASHINGTON -- Metropolitan Baltimore's office real estate market improved markedly during 1993, but only modest increases in occupancy for offices and industrial properties are expected in 1994, a real estate industry group said yesterday.

The annual market report by the Society of Office and Industrial Realtors, in conjunction with Landauer Real Estate Counselors of New York, said downtown Baltimore's office vacancy rate fell to 17.6 percent last year from more than 20 percent in 1992. The Baltimore rate is still slightly higher than the national average of 17 percent.

As in years past, the city's market shows a sharp division between how older and newer buildings are doing. The report put the vacancy rate for newer buildings at 16.2 percent as of Sept. 30, but noted long-standing problems in the Class B market of buildings predating the 1960s. Vacancy in Class B downtown is 20 percent, the study said.

Class A office space outside the downtown central business district is 20 percent vacant, the study said. The report covered the city, Baltimore County and the Columbia area as part of a city-by-city survey.

"The highlight is that the [downtown office] vacancy rate is down 3 1/2 percent," said James V. Caronna, executive vice president of Industrial Realty Co. Inc. of Baltimore and one of the contributors to the report.

The bad news is that corporate cutbacks are continuing, he said, and the state and federal government office leases and purchases that helped make 1993 a relatively good year are expected to slack off considerably this year.

"Baltimore employment has been slow in recovering from its serious recession," the report said. "Due to its dependence on federal agencies, military installations and government contractors, Baltimore is vulnerable to government budget cuts."

Mr. Caronna acknowledged that 1993's improvement was largely due to the state's purchase of two nearly empty office buildings, at 6 St. Paul St. and 500 N. Calvert St. Those sales took more than 400,000 square feet of space off the market.

The study said Baltimore's industrial market is in considerably worse shape than the national average, with 30.8 percent of central city warehouse, manufacturing and similar space available and 20 percent availability in the suburbs as of Sept. 30. The national average is 10.2 percent.

Mr. Caronna said much of the vacant warehouse space in the city is obsolete, since warehouse users now demand higher ceilings and other features that weren't common when older structures were built.

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