1st Union Tower is purchased for $50.2 million

Virginia buyer lauds 25-story `trophy' here

Price is considered top dollar

Crow Family Holdings is seller of 7 St. Paul

January 29, 2003|By Meredith Cohn | Meredith Cohn,SUN STAFF

The 25-story First Union Tower in downtown Baltimore has been sold to a Virginia company for $50.2 million, considered top dollar in a weak commercial real estate market.

Harbor Group International, based in Norfolk, Va., said yesterday that it has teamed with a corporate investor to buy the building, which is half-occupied by First Union Bank.

Crow Family Holdings and partners sold the Spanish rose granite building at 7 St. Paul St. The purchase price -- equivalent to about $132 a square foot -- was well over the tower's assessed value of $34.7 million, according to state records.

"First Union Tower is a Class A trophy anchored by a prominent bank in a great downtown market," said Jordan E. Slone, Harbor Group's chairman and chief executive.

"Such buildings are a key component of Harbor Group International's acquisition strategy."

The building is Harbor Group's first major acquisition in Baltimore. Last year, the company bought nearly $200 million worth of residential and office buildings and now owns $850 million in real estate in 15 states and four countries. It plans to continue buying this year, Slone said.

Slone said Harbor Group plans to own the buildings for the long term and will look for other opportunities to buy in Baltimore. The company also owns an apartment building in Glen Burnie.

"We're very bullish on downtown Baltimore," he said.

The 380,000-square-foot First Union tower was built in 1985 and is 92 percent leased at about $24 a square foot.

Other tenants include the law firm Whiteford Taylor & Preston, the law firm McGuire Woods Battle & Boothe and the brokerage Salomon Smith Barney.

Also with an office there is Trammell Crow Co., real estate brokers who represented the seller. Crow Family Holdings is the real estate company founder's personal investment arm.

Trammell Crow will continue to lease and manage the property.

Bill Kaye, a senior vice president at Trammell Crow and one of the deal's brokers, said the buyer was willing to pay top dollar because the building is relatively new and filled with quality tenants.

"The buyers saw value in the rent roll," he said. "It is a big deal, but I think the buyers were pleased with their acquisition. ... The sellers achieved numbers they were happy with."

Kaye said the owners wanted to sell because some partners are no longer active investors with the Crow family. The partners were not identified.

Sales have been a bright spot in an otherwise lackluster real estate environment.

"In general, there is a lot of money in the marketplace, but these investors are looking to acquire good buildings, leased buildings," he said.

"If a good quality building is on the market for sale, it will generate interest."

The First Union Tower is the latest in a line of buildings in the city and around the region that have sold recently, most of them to real estate investors.

The recent sales include: the Bank of America building at 100 S. Charles St., the Chicago Title Insurance building that houses a Walgreen's at 19 E. Fayette St. and the Bank of America art deco building at 10 Light St. Several suburban office buildings were sold, mainly in Columbia, Annapolis and near the airport. Industrial and retail properties have also sold recently.

The region has seen leases dry up during the prolonged economic downturn, and it had an office vacancy rate of 14.6 percent at the end of last year. That compares with a rate of 13.3 percent at the end of 2001, according to CoStar Group real estate information.

Brokers say activity has been slow, and few expect a turn-around early this year.

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