One Center Plaza getting a new look

September 14, 1994|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

J.P. Morgan Investment Management Co. is investing several hundred thousand dollars to upgrade One Center Plaza, its first action since taking control of the 12-story office building downtown earlier this year.

As part of the improvements, the company plans to renovate the 120 W. Fayette St. building's lobby with a new marble floor, install new elevators and offer significant improvement packages to prospective tenants.

"We saw in One Center Plaza an attractive institutional-grade property with the opportunity for full occupancy within a reasonable period of time, provided it received the type of investment that we have the financial resources for," said Susan Swan, a J.P. Morgan Investment Management vice president in New York.

The investment -- together with an aggressive marketing campaign designed to lure firms from aging Class B buildings downtown -- has resulted in two new tenants, marketing firm Barton-Gillet Co. and records company Information America.

Those firms will relocate to 22,000 square feet by next month, pushing the 11-year-old building's occupancy to 88 percent and generating roughly $2.8 million in rental income through 2004.

Other key tenants include Baltimore Gas & Electric Co. and the advertising firm Richardson, Myers & Donofrio.

For Barton Gillet, the move from 10 S. Gay St. is further evidence of the trend among businesses taking advantage of depressed real estate market conditions downtown by relocating to better quality quarters for essentially the same rent.

The J.P. Morgan & Co. affiliate took possession of the 152,000-square-foot property in January, after its developer, the Manekin Corp., was unable to make payments on its $12.9 million mortgage. Morgan became involved with the building in January 1983, after assuming a Mercantile-Safe Deposit & Trust Co. loan, according to city records.

Manekin's experience with One Center Plaza is analogous to the difficulties virtually every downtown landlord has faced since the collapse of the local commercial real estate market in late 1990. With a decline in rental rates of roughly 30 percent from their 1988 peak, even well occupied buildings have suffered the strain of meeting debt and other expense obligations.

In the case of One Center Plaza, CSX Corp.'s move from three floors as part of a corporate headquarters shift to Florida severely trimmed its cash flow, as did BGE's nearly one-quarter annual rent reduction when the utility renewed its 58,349-square-foot lease in September 1992.

"One Center Plaza has been a successful venture, but ultimately, we saw a drop in rental rates in a building that was financed at historically high interest rates in the early 1980s," said Manekin Chief Executive Richard M. Alter.

Since taking possession, J.P. Morgan has retained Manekin to both lease and manage the building, said Richard P. Manekin, a company senior vice president.

One Center Plaza becomes the sixth major downtown office property to be controlled by its lender.

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