Constellation to develop industrial site

January 12, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Hoping to capitalize on a surge in activity, the Constellation Real Estate Group Inc. intends to develop the first major new speculative industrial project in the Baltimore area since 1989.

The new 250,000-square-foot warehouse -- roughly equivalent in size to the 27-story office tower at 201 N. Charles St. downtown -- will be constructed at the firm's 220-acre Brandon Woods Business Park in Anne Arundel County.

Constellation's decision to proceed with the $10.5 million project comes in response to a marketwide drop in vacancy rates, combined with slight rental rate increases, for distribution space.

In the Baltimore-Washington corridor, the vacancy rate has fallen to 5.5 percent, according to a recent study by industrial real estate specialists KLNB Inc.

"Large blocks of contiguous space have dried up over the past year, and the local market has progressed to the point where prime warehouse product is at a premium," said Randall M. Griffin, Constellation's president.

Constellation believes its new building will attract the type of large tenants -- such as Commerce Corp., Goldwell Cosmetics USA Inc., Starbucks Corp. and Time Warner Inc. -- that have been forced to build new projects in the past year because many available older buildings fail to meet current distribution standards, said J. Richard Uhlig, a Constellation senior vice president.

The Brandon Woods project will also benefit from its availability. In the case of Commerce Corp., the outdoor supply company selected Brandon Woods land owned by the Svatos Co. in October for a new $10 million, 273,000-square-foot distribution hub, in part because Svatos had previously obtained necessary county permits and designs. Those preliminaries allowed Commerce to meet a strict timetable for completion.

Constellation intends to begin construction of the new Brandon Woods building in early spring, with completion slated for December. Although neither financing nor final county permits have yet been obtained, Constellation believes neither will create an impediment.

The project also dovetails with predictions by various local real estate analysts, who had projected that speculative industrial development would occur in 1995 in response to the tightening market.

"It's an aggressive move, to build something of that magnitude," said J. Richard Latini, a vice president of real estate firm Colliers Pinkard. "But I'm not surprised. They're trying to position themselves to have a competitive edge, and it's a logical move for them because they have the site and the financial wherewithal."

Constellation, a subsidiary of the Baltimore Gas & Electric Co., controls a 1 million square-foot commercial and residential portfolio valued at roughly $375 million, which is 94 percent occupied.

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