World Trade Center To Be Sold By State

Inner Harbor's premier landmark is going on the market

buyer would be allowed to convert office tower to different use

October 19, 2005|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

Baltimore's World Trade Center, the slim, pentagonal skyscraper that has defined the skyline at the Inner Harbor for decades, will go on the market by early December, opening the possibility that one of the city's tallest office towers could be converted into luxury condos or a boutique hotel.

The building's owner, the state Department of Transportation, will begin taking offers early next year in hopes of having the prime waterfront property at 401 E. Pratt St. under contract by spring, a state real estate official said. "It's a very active market, and we think there will be substantial interest," from private and institutional investors, said Samuel F. Minnitte Jr., director of the department's Office of Real Estate.

The state intends to sell the signature, 30-story tower as an office building and keep the Maryland Port Administration headquarters there three to five years.

The building, which has shipping-related businesses and other commercial tenants, is about 25 percent vacant, high for the Inner Harbor, where vacancy rates averaged just over 15 percent in the third quarter, according to MacKenzie Cushman & Wakefield Alliance, the Baltimore real estate company. The building has no parking.

Under the urban-renewal plan for the Inner Harbor, a new owner would have the option of changing the use from office to hotel, residential or retail or some combination of the three.

The city hopes for a use that complements the Inner Harbor, said Andrew B. Frank, executive vice president of the Baltimore Development Corp., the city's development arm, which expects to be part of a panel convened by the state to review offers for the building.

"This is not just a real estate transaction - they're selling one of the most prominent and important buildings in the Inner Harbor, and we want to make sure it is sold to someone who understands that," Frank said.

"We would want to see the building have an active use, to attract a lot of people to the building, whether it's housing or office or hotel. We'd like to see a capital infusion into the building for renovations."

Commercial real estate experts and state and city officials expect strong interest in the tower because of its prominence, historical significance and waterfront location.

Real estate experts say the trade center could fetch a price similar to recent sale prices of other downtown office towers. These include 300 E. Lombard St., which sold for a then-record $172 per square foot in 2004, and 100 E. Pratt St., which this year sold for $207.5 million, or $312 a square foot, the highest price ever paid for a Baltimore office property.

But the World Trade Center's prime spot on the harbor has also been a drawback for occupants. The building has a history of flooding, including severe water damage two years ago from Tropical Storm Isabel that disrupted businesses and displaced tenants for months. Less severe flooding in 1979 prompted the state to install floodgates.

During Isabel, about 3 million gallons of water entered the basement, destroying most of the electrical, mechanical and telecommunications systems for the office tower. Some tenants were forced to scramble to set up operations elsewhere.

One of them was John S. Connor Inc., a freight forwarder, customs broker and shipping agency that had 50 employees occupying a full floor. When the building shut down for a month, the company moved to temporary quarters near Baltimore-Washington International Thurgood Marshall Airport. It has since relocated again to a permanent spot near the airport.

"We had hoped to get back in there, but it didn't work out," said Lee Connor, president of John S. Connor. "We left downtown, which was unfortunate."

State officials contend they have corrected problems that caused the flooding.

"We've replaced all the mechanical systems in the building and redone the floodgates and dikes we had installed, and we've documented all that, and we're very confident of the way the building sits today," said Minnitte, the state real estate official.

Despite the past flooding, "in today's investment world, it's hard to find well-located quality product," said J. William Miller, a senior vice president of NAI KLNB, a Towson commercial real-estate services firm. "I've got to believe you'll have a lot of people looking at it."

The tower, designed by the famed architect I.M. Pei as the world's tallest pentagonal building, predates most waterfront Inner Harbor landmarks, including Harborplace and the National Aquarium. Originally the use was limited to offices.

But the city recently amended the initial land disposition agreement with the state to allow other uses. The 1973 agreement transferred the city-owned property to the state to enable the building of the trade center.

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