A jump in office vacancies in Baltimore offset improvements in the suburbs this year, according to reports by two leading commercial real estate firms.
Overall, the area's office market remained flat.
"While we're seeing growth in selective sectors, we're still feeling the effects of consolidations, which pushes occupied space back onto the market," said Jeffrey B. Samet, a vice president of Colliers Pinkard.
Additionally, few office building sales were recorded in 1995, the notable exception being the RREEF Funds' purchase of the two-building Dulaney Center complex in Towson for $30 million, because many investors appear unwilling to invest in a market with pockets of instability.
In Baltimore, bank mergers and corporate consolidations and the pending relocation of USF&G Corp. outside downtown drove the overall vacancy rate from 19.2 percent to 23.4 percent, the highest rate in the metropolitan area, according to Casey & Associates Inc.
The so-called Class B buildings -- defined as older properties with a lack of amenities and an inability to adapt to improving technology -- suffered the most, producing a 26 percent vacancy level, Casey noted.
The 23.4 percent figure means the city has one of the highest vacancy levels nationwide, according to a recent Lehman Bros. survey of major office markets.
Mr. Samet said that while Baltimore City contains 37.4 percent of all the office space in the area, its vacancies account for 52 percent of all the available space.
The city office market's major highlight occurred in retaining the headquarters of Alex. Brown Inc., which plans to move to the 30-story Commerce Place building in early 1997.
Howard County continued its dramatic improvement, shaving the vacancy rate there to roughly 9 percent, down from nearly 30 percent three years ago.
"The big success story is Howard," said T. Courtenay Jenkins III, a Casey senior vice president and principal. "Although developers still can't justify speculative office space, I think you'll start to see new construction driven by build-to-suit deals."
In all, the Baltimore suburbs posted a year-ending vacancy of 12.1 percent -- despite the abandonment of 200,000 square feet by the U.S. Health Care Financing Administration in Woodlawn, according to Pinkard's statistics.