Buildings Hot, Land Not

June 08, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

It was just like people expected -- and then some -- as 300 speculators, real estate brokers and curiosity-seekers packed an auction of 25 commercial real estate properties at the Sheraton Inner Harbor Hotel yesterday.

People knew the market for office buildings and warehouses, especially smaller ones, was improving. And they knew the market for undeveloped land is still moribund, as existing buildings sell and rent for prices so low that developers can't absorb the cost of building new buildings and still compete with the old.

The result: Most of the 15 buildings offered by Michael Fox Auctioneers of Pikesville and Columbia-based Manekin Corp. sold, some of them for surprisingly high prices.

And most of the empty land went by without anyone bidding, or with buyers bidding so low that the auctioneers wouldn't commit the owners to accepting the bids.

"We were hoping to have interest in some of the land," said Bill Fox, the auctioneer who handled the bidding. "The economy in this area is improved, but it's improving slowly. Land is not going to hold any dramatic attraction for another year or two years."

The auction was Baltimore's first exposure to the multi-property commercial auction, a method for selling off distressed real estate that gained popularity elsewhere during the recession.

The biggest projects to sell were two Columbia office buildings that Mercantile Bankshares Corp. took over as part of the bankruptcy reorganization of the former owner. The Clark Building, an almost fully occupied five-story building that is projected to earn operating profits of nearly $487,000 this year, went for $5.3 million. The Commerce Building, a 12-story building that is 68 percent occupied and is expected to earn $645,000 this year, drew a bid of $6.25 million.

Both bids are still subject to approval by Mercantile before the sales can become final. Mr. Fox declined to identify the high bidders for any of the properties.

Andrew J. A. Chriss, a vice president of Manekin, said much of the strongest interest before the auction was in smaller properties that business owners wanted to use themselves, rather than lease to tenants. Two of the longest biddings were over buildings that fit that bill: two small warehouse condominiums in Anne Arundel County that went for $132,500 and a 6,250-square-foot former bank branch in Towson that drew a high bid of $655,000.

"People are realizing we are definitely on an upswing," Mr. Chriss said. "That one [in Towson] was not a surprise to any of us."

Baltimore City buildings, including some older properties that are vacant or nearly so, brought respectable bids.

A small, empty office building at 10 West Chase St. drew a high bid of $350,000, and a 33,000-square-foot office and retail building at Charles and Franklin streets drew a bid of $750,000 despite being 80 percent vacant. Both bids are subject to acceptance by the owners.

Land in the city didn't do as well. A piece of land on Boston Street zoned for condominiums drew no bids, and a parking lot downtown that is zoned for office buildings drew a bid of $2.215 million, less than the price its owners had set as the minimum for which they would commit to sell.

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