Converting old offices into homes Team is seeking out prospective buildings, looking to financing

Repopulating the core

'Vibrant, livable cities have people living in their downtown'

June 09, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

A team of real estate experts exploring ways to convert older city office buildings into housing expects to select several prospects by the end of September and devise plans to transform three downtown districts into residential communities.

Consultants, architects, construction managers and attorneys -- headed by Legg Mason Realty Group Inc. -- have begun seeking out buildings suitable for apartment renovation and ways to finance such conversions.

The Downtown Partnership of Baltimore Inc., a quasi-public agency that promotes the city's central commercial district, hired the Legg Mason team last month with a $25,000 Abell Foundation grant. Mayor Kurt L. Schmoke and other city leaders had proposed the conversion idea earlier this year as a way to both draw new residents downtown and save historically or architecturally significant buildings that have lost their commercial appeal.

"The overwhelming goal of the study is that it would result in at least several Class B buildings converted to residential use," said Laurie Schwartz, Downtown Partnership's president.

"Truly vibrant, livable cities have people living in their downtown core. Those of us involved in the study really believe that creating a larger residential base downtown will improve the overall health of downtown."

The team will target the Redwood Street corridor, the University Center area, and the first five blocks of North Charles Street, studying market demand, location and financing. The study will focus on structures more than 25 years old without parking and other amenities -- now 25 percent vacant overall.

"Our assumption going in is that the rental solutions that we're going to propose are going to be market-rate residential, not that there couldn't be a possibility of other types of residential," said Joseph Cronyn, vice president of Legg Mason Realty Group.

Along with Legg Mason, the team includes the architectural firm Design Collective; Heery International, an architectural and construction management company; and the law firm Piper & Marbury.

Consultants will look at whether services exist nearby and whether a residential community already exists that can be built upon -- or how to build one where none exits.

"You really have to study the three areas as three distinct areas," said Rich Burns, a partner with Design Collective.

Former warehouse space in University Center, for instance, could be marketed as loft housing to university and hospital students and employees. Upper-floor apartments could be designed in the narrow storefront buildings along Charles Street, while services for residents would need to grow to support apartments in the six- to 10-story vacant office buildings in the traditional financial district in the Redwood Street corridor.

"It's one thing to take a building and see how it could be converted," Burns said. "But you have to look beyond that at creating communities and making them viable communities."

Critics of the proposal say the high costs involved -- providing parking facilities and security, removing asbestos and lead-based paint, replacing mechanical systems -- on top of high city taxes make the feasibility of such conversions questionable.

Additional housing downtown would indeed help current property owners and managers, spurring the development of shopping and other services, which in turn attract residents, said Marilynn K. Duker, executive vice president of The Shelter Group, which manages 13,000 apartments nationally and owns and manages the Park Charles, a combined apartment and office project on North Charles Street.

But, she said, "We've not developed other properties in downtown Baltimore because of the difficulties of making the economics work. If rents are not vastly higher than in other parts of the city and in the suburbs and if taxes are higher, it's hard to see the equation work without some significant level of public help."

Part of Legg Mason's job will be to find ways to limit construction costs by using innovative design techniques, overcoming zoning and code obstacles and plugging into city, state and federal programs.

For instance, Burns said, property owners along Charles Street may be able to reduce costs by sharing items such as elevators and fire stairs that could serve more than one building.

Part of the solution also will include federal historic rehabilitation tax credits and city and state tax credit programs, Cronyn said. A Baltimore program, for instance, forgives property taxes for 10 years on improvements to historic homes and commercial properties, thus allowing the properties to be taxed at their pre-rehabilitation value.

"There's no solution if it doesn't work financially," Cronyn said. "We do not want this to be a bookshelf study. We're dealing with real demand and real money all along the line. We're not saying it's an easy solution. If there were a clear, straightforward solution, chances are the private market would have picked up on it already."

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