Office building is back on track

Trammell Crow adds its name to Lockwood Place

January 30, 2001|By Meredith Cohn | Meredith Cohn,SUN STAFF

A long-planned office and retail development that would add another silhouette to the Inner Harbor skyline is finally on track with the help of a new developer.

Trammell Crow Co., a national commercial real estate services company, has signed on to build the Lockwood Place office building on the campus of Baltimore City Community College at 500 E. Pratt St.

The offices will be part of what the project's developers promise will be nationally known shops, fancy restaurants and abundant parking. A previously announced 278-room hotel has been eliminated from the project, which will replace a parking lot across from the harbor.

Under an agreement with the school, construction of the parking garage was to begin this year, but now the entire $85 million development, on the block bounded by Pratt, Lombard and Gay streets and Market Place, will start this summer.

The office building could be the first on which construction begins on a speculative basis - without tenants signed up - since a real estate bust in the early 1990s .

The 250,000-square-foot, 12-story office building will be one of three major new Class A office towers in the central business district scheduled to break ground this year after a lull of nearly a decade in such construction.

"We believe in Baltimore and the return to the central business district," said Dan Hudson, a managing director at Trammell Crow. "We think this is a unique option, especially considering the location and vibrance of the Inner Harbor. And there is pent-up demand in Baltimore."

Trammell Crow will team with Lockwood Associates, which includes local developer A&R Development Corp.; King of Prussia, Pa.-based Kravco Co.; and Philadelphia-based Parkway Corp., which will build the 900-space parking garage.

The new deal marks the return of Trammell Crow to development in the city, something the Dallas-based company has not done since 1985. It has developed more than 5 million square feet of space in the Baltimore-Washington area in the past three years, the company said.

The development will break ground shortly after an investment group led by Willard Hackerman breaks ground for an office building atop a Baltimore Gas and Electric Co. substation a few blocks east on Pratt Street. Groundbreaking for a third building nearby, being developed by the Cordish Co. next to the Power Plant, is also expected shortly.

All should take at least 18 months to build, though none has announced tenants, usually a requirement to secure financing in the city.

Developers of the downtown projects have said they are confident of demand in the market because there is next to no Class A space left in desirable locations. But it's unclear how much their buildings will affect each other in their quest for tenants or how much the slumping economy will hamper them.

The Lockwood office developers have said they will set rents at less than $30 a square foot, below the top tier, in an effort to lure tenants immediately and compete with the other buildings.

A hotel was part of the original plan, but a rush to develop hotels in the city convinced the Lockwood group that there might be too many on the horizon. The city also wanted more parking added for the public, said Theo C. Rodgers, president of A&R, which has been working out the project's details. The initial plan called for a 600-space garage.

Under the agreement, the developers have signed a long-term lease, up to 90 years, with the college. The college will receive $1.1 million in rent for the land, plus 2 percent of the gross revenue from the offices, shops and parking garage, Rodgers said.

An old college building has been demolished, and the city has given its preliminary approval to a site plan. The project requires design approval.

"The project was never completely stalled," Rodgers said. "It was an involved process dealing with the college, state, city and a lot of different entities."

The city granted a PILOT, or payment in lieu of taxes, worth no more than $1.5 million a year for 20 years to help finance the garage and office portions.

The developers said they might seek additional investors to pay for construction and a long-term mortgage. Trammell Crow expects to sell its stake in the office building once it has been built.

The project was awarded to Lockwood in 1998, after the Maryland legislature authorized the state-controlled college to pursue the development. Cordish, another bidder on the project, challenged the award for not maximizing income to the college, but the state sided with Lockwood. Cordish has decided not to pursue the challenge in court because company officials do not want to tie up development of the site.

Barbara Hopkins, vice president of external affairs for the college, said the college "got better than a good deal" and that the development is a boon to the city, which she said needs more parking and office space.

The garage and retail portions of the project should be completed in the summer of next year and the office part in the first three months of 2003.

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