Military health insurer Sierra expands base downtown

Company leases space in new Pratt St. tower

August 28, 2002|By Meredith Cohn | Meredith Cohn,SUN STAFF

In a deal that preserves a major company headquarters downtown, Sierra Military Health Services Inc. has signed a lease for a floor in a new office tower at 750 E. Pratt St.

The deal for 19,685 square feet means the fast-growing military health provider, one of the city's largest companies, will occupy space in three high-profile office buildings in the Inner Harbor, including the 15-story Pratt Street tower, the first major office building to open downtown in more than a decade.

"This really allows us to have space for those we currently have on board. We'll be adding incrementally over the near term, but over the long term as well," said David R. Nelson, Sierra's president.

Sierra has about 525 employees in Baltimore, up from about 400 a year ago. The company holds Defense Department contracts to provide health benefits for the nation's active military personnel, retirees and their dependents from Maine to Virginia.

The company is negotiating to maintain the 83,000 square feet it occupies in the Candler Building at 111 Market Place, adjacent to the new tower. And it expects to keep a small amount of office space in Power Plant Live.

Several of Baltimore's major employers, including T. Rowe Price Associates Inc. and Legg Mason Inc., have operations and employees to the suburbs in recent years because of costs and parking problems.

City officials have been working for weeks to retain Sierra, said Andrew B. Frank, executive vice president of Baltimore Development Corp., the city's economic development agency.

"Sierra has proven itself a leader in the delivery of managed health care to military personnel, and we are thrilled that its continued growth will occur in Baltimore," he said.

"Parking was an important consideration for Sierra, which, in just four years, has become one of Baltimore City's largest employers. Sierra's commitment to expand in downtown Baltimore speaks well of the city's efforts over the last two years to expand the supply of parking in the central business district."

Neither Frank nor Nelson would specify incentives offered to the company, because they are still being renegotiated.

Frank would confirm only that BDC is negotiating the original package offered to the Sierra in 1998 to move to the city.

In that package, the city agreed to underwrite a tenant-improvement loan on Sierra's space in the Candler building. The guarantee - of slightly more than $1 million - would apply only if Sierra failed to renew its lease after five years.

The company also received a $450,000 loan, of which a portion was forgiven for meeting hiring targets. It had agreed to maintain 300 jobs in the city, he said.

The state Department of Business and Economic Development recently offered a $300,000 loan to Sierra at 3 percent interest, providing that the company increases the number of employees to 550.

"This is very much a retention project for the state and city, and we're happy to participate to keep such a great company," said Jacqueline Lampell, a spokeswoman for the department.

Sierra expects to move workers into the new building beginning next month.

The company will join Constellation Energy Group Inc., which is anchoring the building. Constellation, the parent of Baltimore Gas and Electric Co., has signed a lease for about 3 1/2 floors and might take more space, even another floor.

About 150 executive-level workers who have moved into the new building came mostly from Constellation's former headquarters at 250 W. Pratt St.

With 314,000 square feet of office space for lease, the $50 million building is being developed by its owner Willard Hackerman, head of Whiting-Turner Contracting Co., which is the contractor. The tower is built atop a BGE substation.

A walkway over Lombard Street connects the building to Harbor Park garage, also co-owned by Hackerman.

Architectural company Hord Coplan Macht Inc. is the third tenant to lease space in the building. It will take about two-thirds of a floor.

"We're about a third leased, and we have continued interest from a number of organizations representing an additional 150,000 square feet of users," said Robert A. Manekin, a principal at Manekin Brothers Abeshouse and the leasing agent.

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