Vacancy expected to be very temporary

Creditrust now gone, but market is right to fill building again

Commercial real estate

July 01, 2000|By Meredith Cohn | Meredith Cohn,SUN STAFF

Strong demand and a lack of large spaces in Baltimore County should help fill offices abandoned recently by financially troubled Creditrust Corp., the building's manager said.

Creditrust, a credit-card collections company, walked away from the building at 10150 York Road after just a few months on a seven-year lease. At 135,000 square feet, or two-thirds of the building, it was one of the area's largest leases last year.

Based on the company's initial lease rate, the building is losing at least $61,875 a month on each floor. There are three vacant floors, each with 45,000 square feet. The building's asset manager said there is little space of that size in the area and he expects to lease it quickly.

There is little space in general, real estate agents said. Vacancy in the county for more upscale buildings is low at 7 percent to 9 percent.

Brian Doyle, the asset manager at Miller Corporate Real Estate Services Inc., said potential tenants have voiced interest in the building. Sterling York LLC, which bought the building in 1998 from AAI Corp. for $12.5 million, declined to comment.

Doyle said the building isn't top-of-the-line, and the landlord is seeking rents in the $20 range -- about $3.50 more a foot than Creditrust had agreed to pay at the outset of its lease, but $2- to $4-a-foot less than buildings in nearby Hunt Valley.

"It's a very strong market and there aren't many buildings with such huge chunks of space available," he said. "Vacancy for nicer buildings in the area is low, which makes us very optimistic. We filled it once, we can fill it again."

Creditrust had agreed to lease the space last year, expecting the number of employees to more than double to 2,000. Fewer than 500 workers ever worked in the building. They stayed for just a few months before Creditrust filed for Chapter 11 in U.S. Bankruptcy Court on June 22. Four of about 10 contractors who performed electrical work, laid carpet and did other improvements have sued or filed mechanics liens in Baltimore Circuit Court seeking payment.

Creditrust Chairman and Chief Executive Officer Joseph K. Rensin said he expects all to be paid in full once the company reorganizes, although he disputes some claims of his general contractor, Constantine Commercial Construction Inc. "They're entitled to be paid for the work they did," Rensin said. "We expect to settle the claims." Rensin said the company will continue to occupy two other Baltimore area properties, which total about 55,000 square feet.

Sterling York did not sue Creditrust for unpaid rent before the bankruptcy filing, but parties involved said the landlord could expect some payment for the broken lease under the bankruptcy reorganization. The only other tenant in the 190,000-square-foot building is Lucent Technologies.

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