Balto. County leads slow office market

COMMERCIAL REAL ESTATE

May 04, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

It's spring, and that means it's time to watch the grass grow.

Yes, we're talking about commercial real estate.

The first quarter of 1994 was a slow time to watch the office market recover -- but it was still recovering, according to Casey & Associates, a Baltimore-based brokerage and management firm.

The big deals weren't plentiful, and the key measures of the market's health were more or less where they were at the end of 1993, but the past few years have provided enough drama to tide the players over for a while.

"I think the overriding beneficiary of the first quarter was Baltimore County," said Thomas C. Jackson, the firm's market research director. "Things have shored up there pretty well."

Casey reports that about 16 percent of the space in downtown's newer Class A office buildings was vacant at the end of the quarter, compared with 16.2 percent Dec. 31. Baltimore County's Class A vacancy rate fell to 15.6 percent vs. 17.9 percent at year-end, helped by AmTote International's lease of 45,000 square feet on Schilling Circle and a series of smaller leases that shored up occupancy at Court Towers and Towson Commons in Towson. The Baltimore-Washington International Airport area was at 20.9 percent (vs. 20.1 percent) and Howard County at 16.6 percent (15.7).

It's still true that no one is planning new office buildings, other than a few small build-to-suit buildings, but things are getting better for relatively new existing buildings.

Indeed, the biggest chunks of the vacancy in newer downtown space are concentrated in two buildings. Commerce Place, the 479,000-square-foot tower at South and Redwood streets, is 66 percent vacant, Mr. Jackson said. There's also more than 100,000 square feet open in One Charles Center at 100 N. Charles St.

Mr. Jackson said 34 percent of vacant downtown Class A space is in those two buildings. Without them, the vacancy rate would be a relatively healthy 11 percent.

"I think we're seeing the Class A definitely shoring up, but the [older] Class B market is another story," he said. "The handwriting there is not as attractive."

Class B vacancy downtown is 23.5 percent, little changed from the worst of the recession.

The Washington-area market fared about the same as Baltimore during the quarter. Downtown D.C.'s vacancy rate stayed at 9.3 percent, one of the lowest percentages in the nation, according to Washington brokerage firm Smithy Braedon Co.

The Maryland suburbs also were status quo. About 14.7 percent of Montgomery and Prince George's counties' office space is empty, reports Smithy Braedon analyst Karen Hirschman.

Starbucks on lookout for distribution site

Look for a decision within three months by Starbucks Corp., the Seattle-based purveyors of coffee to the yuppie and Generation X sets, about where to put a major distribution facility to support the company's expansion to the East Coast.

Craig Kinzer, a Seattle relocation consultant, said the facility will serve the Mid-Atlantic states and the company is aiming to open by June 1995. The company is looking at sites in Delaware, Pennsylvania and Maryland.

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