New snag for Lockwood Place

Droopy economy may delay building of retail portion

January 03, 2002|By Meredith Cohn | Meredith Cohn,SUN STAFF

Lockwood Place, the office and retail development planned on a high-profile swath of the Inner Harbor, has been changed, delayed and delayed again.

Now, Baltimore City Community College, which owns the Pratt Street property, is faced with another potentially costly delay in the $85 million project.

King of Prussia, Pa.-based developer Kravco Co., head of the Lockwood Associates development team, has notified the school that it wants to put off building the retail portion of the project because of a poor economic climate. A BCCC committee will ponder the request over the next two weeks.

"A committee of folks is studying this. We're still in negotiations," said James D. Tschechtelin, president of the college. "We have a lot of different options. Lockwood Associates wants to do all of the components, and we want them to do all of the components. But what we're hit with is a question of timing."

Developers had already scrapped a hotel project at the site, citing a lack of financing and overbuilding of hotels. They also delayed a groundbreaking for the office portion until March.

A 900-space parking garage is the only part of the proposed project under way.

The school's committee is to make a recommendation to the school's board of trustees by Jan. 17, the next scheduled meeting. The state Board of Public Works would also need to approve changes to the lease agreement at the state-controlled school.

The school and state panels could decide not to alter the lease agreement, which includes deadlines for construction and rent payments.

The agreement requires the developers to pay an annual ground rent beginning at $1.1 million when the lease was signed in 1999 - when developers promised to build the project in one phase. The fee has been rising each year along with the Consumer Price Index, with a cap of 3 percent. Those payments are up to date, according to the college.

Lockwood Associates also is to pay 2 percent of gross rents collected from tenants after the offices, shops and garage are up and running. The longer it takes to build, the longer the school has to wait for its money. No tenants have been signed.

"The word I'd use is anxious, anxious to see it move quickly," Tschechtelin said. "The college doesn't want this to just be parking."

But building now doesn't mean that tenants would come, said Wayne Snyder, chairman of Kravco.

"Market forces are slowing things down," he said. "Sept. 11 really shocked the retail industry. Everyone is waiting to see if it comes back."

He said he expects to begin work this year, but he added, "We're talking to the college. They ultimately have to agree to a new timetable."

Trammell Crow Co., the partner responsible for development of the office tower, is also optimistic. The company plans to break ground on a 12-story office tower in March without signed tenants. It was originally slated to break ground last spring.

T. Courtenay Jenkins III, a senior vice president, said the company has at least one promising potential tenant to anchor the building and an institutional lender willing to risk a ground breaking with no committed renters. He declined to identify the tenant and the lender because final agreements are not yet signed.

Jenkins said the tower would take two years to build and predicted that the economy will turn around by then - and absorb office space being developed in two other buildings downtown.

"We have what we feel is the best location," he said. "I'm not worried about [the retail portion] being built eventually. Retail is just not a hot market right now. We hope our timing is good. We don't want to sit there empty. Complete and empty."

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