City grapples with empty office space Converting buildings to apartments studied, but cost discouraging

February 11, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Tucked away on a largely forgotten strip of East Saratoga Street downtown sits an abandoned eight-story office building, its faded alabaster concrete pockmarked by age and many of its darkened windows covered with graying plywood, a casualty of the city's modernization.

Since 1988, 222 E. Saratoga St. has sat empty, after its tenant, the city's Housing and Community Development agency, relocated to a new structure a few blocks away.

The building isn't alone. Nearly one-quarter of all of downtown's Class B office buildings -- structures more than 25 years old that lack amenities such as parking and are unable to adapt to technological advancements -- are currently vacant, a trend few expect will reverse because of a lack of new job creation, computers and other technological advancements.

The available space is enough to fill half a dozen 28-story Legg Mason Towers.

But under a plan announced by Mayor Kurt L. Schmoke late last month, older office buildings downtown such as the one on Saratoga Street may again be inhabited -- by converting them to apartments.

The conversions would solve a number of thorny problems for the mayor, such as reversing the loss of city residents and a diminishing tax base while filling up office buildings that may never again be occupied by business.

Fueling the plan is the fact that some successful conversions have occurred here and elsewhere in such cities as Chicago. But in almost every case, those buildings had previously housed manufacturing operations that were better suited for rehabilitation, and they received lucrative tax breaks that made the economics work -- tax benefits that no longer exist.

"There's an opportunity in front of us and the responsible thing is to look at what's possible," said M. J. "Jay" Brodie, the new president of the Baltimore Development Corp., the city's economic development agency. "It may be after we examine it that we find it doesn't work at all. The point is, we can say we looked at it."

Nor is Baltimore alone in grappling with the problem. Various older cities that expanded rapidly a decade ago during an economic boom now face the same tough questions of what to do with older office buildings.

If the plan fails here, the city's skyline could be altered dramatically. Many real estate analysts view the study and potential conversions as a final, desperate effort to revitalize some of downtown's aging structures -- and architectural treasures -- before demolishing them.

City officials have been reluctant to issue multiple demolition permits downtown, however, to avoid the appearance that the city's economy is in decline.

It's easier to conceal a vacant building than it is a vacant lot, and even an empty structure pays more taxes than an empty lot.

Although no one in the city government will identify potential candidates for conversion at this time, the likely possibilities include a five-story building at 300 N. Charles St. and 222 E. Saratoga St. Various sources, including Mr. Brodie, said the 18-story Munsey Building at 7 N. Calvert St. may also be considered.

In each case, the buildings are vacant or largely vacant.

"We'd be willing to do it, and we've not pursued it thus far #F because of the extreme public subsidy that would be required, and we're aware that there are shortages in that area," said Tom Dowling, president of Dowco Management, the owner of the Saratoga Street building. "We don't see any chance of landing a single, private office user."

Mr. Dowling said he met with Housing and Community Development Commissioner Daniel P. Henson III shortly after buying the property in September 1994 and was encouraged to pursue uses other than housing for the Saratoga Street building. HCD officials could not be reached for comment on either the meeting or conversion plans in general.

Since then, Mr. Dowling said, he has completed a study evaluating converting the building to both apartments and a parking garage. He estimates it would cost at least $7 million to turn the Saratoga Street building to apartments.

The obstacles to conversion are legion. Issues of parking, security, location and a lack of necessary infrastructure such as nearby retail will all have to be addressed.

Those problems don't amount to the biggest challenge, however.

"The chief problem is in the economics," said Bill Struever, president of Struever Bros., Eccles & Rouse Inc., a member of the mayor's Downtown Incentives Marketing Task Force and the developer of Tindeco Wharf, an 82-year-old former tin decorating factory in Canton converted to 240 apartments at a cost of $30 million. "How do you make any money with all the costs associated?"

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