1 Light tower pushed anew 34 stories would rise after leveling of block where Southern stands

Real estate

March 04, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Stalled throughout the 1990s by downtown's languid office market, a Baltimore real estate developer is pressing ahead with plans for a 34-story skyscraper that would be among the city's largest and most ambitious buildings.

But before J. J. Clarke Enterprises Inc. can proceed with the $100 million project -- set to include a suites hotel, office space, restaurants and a parking garage -- it will have to demolish an entire city block containing the dormant Southern Hotel and other buildings.

"We've just reached a point where we've decided that we can sit on it as it is, indefinitely, or we can work to develop a solution," said J. Joseph Clarke, president of Clarke Enterprises, which would develop the project for Capital Guidance Corp., a Geneva-based investment firm that owns the block. "We prefer to do the latter."

Clarke is set to go before the city's Architectural Review Board tomorrow to present the latest designs for the 1 Light St. tower, which would contain a total of 980,000 square feet. At that size, it would be nearly twice as large as the 35-story Legg Mason Tower at 100 Light St.

Before Clarke could begin construction, he would also have to obtain various zoning approvals and a demolition permit from the city. Clarke said he would like to begin demolition before the end of the year, if tenants can be successfully relocated.

Perhaps the most ambitious aspect of the project is 300,000 square feet of Class A office space that Clarke is proposing without tenants in place. A decade ago, numerous developers lost fortunes betting on so-called "speculative" office projects. "The market is very close to being ready for new office construction," said Walter D. Pinkard Jr., president of Colliers Pinkard, a Baltimore real estate firm. "The question is how much of it would have to be preleased and whether the market is ready for a purely speculative project. I'm not as confident about that."

Clarke is likely to balance the risk of the speculative office space, however, with income from a 600-space parking garage, 18,000 square feet of retail space at street level and a 269-room suites hotel.

Clarke has for the past year been negotiating to lure an Embassy Suites hotel to the project, although at this point he has no definitive deal signed, he said.

The new design for 1 Light St. represents a scaled-back version of the 45-story, 750,000-square-foot office tower that the Trammell Crow Co. and Capital Guidance proposed for the block bounded by Light, Redwood, Grant and Baltimore streets nearly a decade ago.

Plans for that $190 million skyscraper fell apart when an economic recession forced businesses to eliminate workers and real estate overbuilding caused rental rates to plummet.

Just as uncertain is how the new 1 Light St. project would be financed. Though Capital Guidance's is believed to be backed by wealthy Middle Eastern investors, the developers would probably attempt to arrange third-party financing at a time when investors and banks are eager to pledge capital for real estate.

"It's an intriguing project and it would be a welcome addition to Baltimore," said M. J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development arm.

Brodie acknowledged that Clarke has approached BDC about the possibility of obtaining parking revenue bonds and reduced taxes to assist in the project's financing.

Clarke's new scheme becomes only the second significant office project proposed for downtown this decade, the result of numerous corporate defections and limited white-collar job growth.

The only other major office project being proposed is a $120 million, two-tower development on a vacant Pratt Street tract owned by the Baltimore City Community College. There, Peter D. Leibowits Co. Inc. hopes to construct up to 875,000 square feet of Class A office space. Leibowits hopes to relocate Piper & Marbury, the state's largest law firm, to one of the new towers.

Both Leibowits and Clarke believe that a dearth of new construction, combined with rapidly shrinking vacancy rates, are potent factors that will spur new development. In so-called Class A office buildings downtown -- defined as buildings less than 25 years years old with amenities such as on-site parking -- vacancy levels have fallen to about 10 percent, according to real estate firm Casey & Associates Inc.

"He obviously feels that there is room in the market to absorb the office space," said Joe Casey, the company's chief executive. "And there are very few options for tenants downtown these days. It would really improve the Light Street corridor, but it is a highly speculative venture."

Moreover, large blocks of contiguous office space are even harder to find. For instance, only two buildings downtown have more than 50,000 square feet of contiguous space available.

"The market is a lot tighter than it was a year ago, and much tighter than it was three years ago," Clarke said. "And we plan on developing the site intensely -- why do an insignificant building if we can do a nice one?"

How they measure up

Listed below are the five tallest buildings in Baltimore. The proposed 1 Light St. Tower would be the sixth tallest

Building.. .. .. .. .. .. .. .. .Stories.. .. ..Approximate height

1. William Donald

Schaeffer Tower.. .. .. .. .. .. ...28.. .. .. .. .. .. .*590ft.

2. Legg Mason Tower

(formerly USF&G Tower).. .. .. .. ..35.. .. .. .. .. .. ..529ft.

3. NationsBanks Tower.. .. .. .. ...35.. .. .. .. .. .. ..500ft.

4. World Trade Center.. .. .. .. ...30.. .. .. .. .. .. ..423ft.

5. Commerce Place.. .. .. .. .. .. .30.. .. .. .. .. .. ..423ft.

6. Proposed 1 Light St. Tower.. .. .34.. .. .. .. .. .. ..394ft.

* Includes 120-foot "mast"

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