Optimism about future of downtown growing Turnaround: With few vacancies in prestigious Inner Harbor, renewed construction becomes critical.

November 16, 1998

WITH MOST of the Inner Harbor's prestigious office addresses sporting "no vacancy" signs, older downtown office buildings are reporting strong leasing activity.

This is a marked change from years past. Some older buildings have recently changed hands, their new owners betting on increased demand for less-expensive space.

But possibilities for these spaces are limited. New top-end space is desperately needed if Baltimore wants to attract image-conscious businesses and retain current ones.

"This year's overall news is good -- downtown is competitive. Its future, however, is still fragile," the Downtown Partnership of Baltimore concludes in its annual assessment.

Shortage of suitable space was partially responsible for the decision of Piper & Marbury, Maryland's largest law firm, to relocate to a suburban office campus. That move, by April 2000, will free some 15 floors of space.

No office buildings have been constructed downtown since 1991, when a 30-story tower was completed at Baltimore and South streets. It sat empty for six years before eventually becoming the headquarters for Alex. Brown Inc.

The most desirable office buildings along Pratt Street have a negligible 3 percent vacancy rate and, overall, 10 percent of downtown Class A space is vacant. Nevertheless, developers remain skittish about building new offices.

That may change if a 35-story hotel and office complex at Baltimore and Light streets becomes a reality.

"I think it is absolutely critical," Laurie Schwartz of Downtown Partnership said of the planned $120 million tower. Its developers hope to win City Council approval for tax relief before Christmas, but because they do not have an anchor office tenant, construction plans are not final.

City officials ought to do everything in their power to make that new tower possible.

Its location -- across from the NationsBank building -- is pivotal to efforts to persuade quality tenants to consider locations away from the harbor. Moreover, if new office space is not built, XTC downtown Baltimore is likely to lose more businesses to corporate campuses in Owings Mills and Columbia.

Pub Date: 11/16/98

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