CSX extends its lease at One Charles Center

March 31, 1994|By Timothy J Mullaney | Timothy J Mullaney,Sun Staff Writer

CSX Corp. said yesterday that it will stay at One Charles Center in downtown Baltimore, ending a widespread belief in the real estate community that the transportation giant was preparing to move an additional 500 jobs to Florida.

The nation's biggest railroad, which formerly occupied the entire 320,000-square-foot building at 100 N. Charles St., signed a lease for 132,645 square feet of office space through the year 2000, said Kathy Burns, a CSX Transportation Inc. spokeswoman.

Ms. Burns said CSX moved 545 workers to Jacksonville, Fla., in 1992 and 1993 as the company consolidated its railroad unit to a single headquarters. The operation previously was based both here and in Florida.

CSX was aware of "rumors" the company was going to move entirely out of the building, Ms. Burns said, but she insisted "that has never been in the plans. There are departments that it makes sense to have in Baltimore, that are specific to a location."

Joseph Casey, president of Casey & Associates Inc., a Baltimore commercial real estate firm, said the speculation began when CSX was slow to commit to a new lease in 1992, after it began moving workers south.

"Everybody else had that impression," said Mr. Casey, whose firm held the listing on the building until a unit of Metropolitan Life Insurance Co. foreclosed on the building's mortgage last year.

CB Commercial Real Estate Services, which represented Met Life in negotiating the lease, said the current deal was Baltimore's biggest office lease in a decade.

"This is great news," Mayor Kurt L. Schmoke said yesterday. "It's a real boost for downtown.

"At a time when we are working with the business community to promote downtown, this is the best vote of confidence in downtown that wecould possibly have."

Gary G. Dewey, managing officer of CB Commercial's Baltimore office, said, "They want to keep a presence here. This is where it all started for them, and there's a lot going on here."

But the deal came at the price of cutting CSX's rent sharply, a common sacrifice landlords make to retain big tenants. Met Life was glad to make that sacrifice, though, considering the poor alternatives in a still weak real estate market, CB Commercial broker James Grieves said.

Mr. Grieves would not disclose the new rent, which Ms. Burns said she did not know, but indicated it was lower than the $16.50-a-square-foot asking price in effect last year.

He said the deal was possible because retaining an existing tenant such as CSX could save Met Life $40 or more a square foot in renovation costs. The old rent was $18.50 a square foot.

The 32-year-old building was the first speculative office building built in Baltimore in several decades. Designed by architect Ludwig Mies vander Rohe, it was the first step in what became the downtown renaissance of the 1970s and 1980s.

But One Charles Center ran into hard times when CSX moved out of most of the building, and former owners, led by Chicago real estate titan Samuel Zell, were unable to find new tenants during the real estate recession.

Met Life bought the building at foreclosure auction last year for $11.5 million, equal to $36 a square foot, which established a new low for building values hurt by the recession.

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