Deals near for two key city towers

Pending Alex. Brown, Wachovia sales show interest in local market

November 15, 2005|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

Two of downtown Baltimore's signature office towers - the Alex. Brown Building at 1 South St. and the Wachovia Tower at 7 St. Paul Street - are close to being sold, signaling growing interest from investors in Baltimore's commercial market.

Miami-based America's Capital Partners, one of the biggest owners of office buildings in South Florida, is expected to purchase the 30-story Alex. Brown Building, considered one of the most recognizable on the downtown skyline, from Resource America Inc. of Philadelphia.

Kevin Wille of CB Richard Ellis, the broker handling leasing for the Alex. Brown Building, confirmed that America's Capital has the property under contract but said he could not address what will be a "unique ownership structure." Other brokers described the pending sale as a purchase of a partnership interest.

Brian L. Katz, president of America's Capital Partners Mid-Atlantic, did not return calls yesterday.

The tower had an assessed value of $69 million as of January 2004, according to the state Department of Assessments and Taxation.

The nearly 476,000- square-foot building is almost 85 percent leased, mostly to Deutsche Bank AG, the German banking giant that purchased the investment banking firm Alex. Brown Inc. in 1999. Deutsche Bank has 280,000 square feet under lease but, because of consolidation, has put 150,000 square feet on the market to sublease, said Tim Jackson, a senior vice president of Trammel Crow Co. in Baltimore.

Recently, he said, interest in that space has picked up, with about a half dozen strong prospects.

"There's a lot of interest," Jackson said. "The key for us is it is one of the few big large blocks of space in the city, particularly for large office space. The market is tightening considerably, and the opportunity for tenants seeking 20,000 feet and up is limited."

The skyscraper, designed by Baltimore-based architecture and design firm RTKL Associates Inc., opened in 1992 as Commerce Place. In 1995, Alex. Brown signed a lease for 240,000 square feet, or 12 floors, ending a lengthy search for a headquarters location that some had feared would take the company and more than 900 professional jobs from its home city of 192 years.

The building was renamed for Alex. Brown in 1997, when the company moved in, relocating from a number of downtown locations.

Interest is also said to be strong in the Wachovia Tower, a 20-year-old tower at 7 St. Paul St. The 373,000-square-foot building, owned by Harbor Group International of Norfolk, Va., is 93.2 percent leased, with the bulk of the space occupied by Wachovia and law firm Whiteford, Taylor and Preston, according to CoStar Group Inc.

The building was sold to Harbor Group for $50.2 million - or $134 per square foot - in January 2003, CoStar said. Some brokers believe the tower now could sell for closer to $190 per square foot, a little more than $70 million.

A deadline for investors to submit final offers passed recently, and the field has been narrowed to about four buyers, local brokers said .

That kind of attention is not surprising at a time when Baltimore office properties are drawing strong interest from out-of-state and international investors, said Bo Cashman, a senior vice president of investment properties for CB Richard Ellis.

"Investors have gotten priced out of markets in Washington, D.C., Philadelphia, Boston and New York, where you see office buildings selling for $600 and $700 per square foot, and properties in Baltimore area trading at $200 a square foot."

The record for a downtown Baltimore office building was set this year when 100 E. Pratt St., the headquarters of T. Rowe Price Associates, sold for $312 per square foot.

"That, I think, was the best building in town, and you won't see other properties trading at that level, but it made other owners aware of investors' appetites," Cashman said.

lorraine.mirabella@baltsun.com

Largest givers

Maryland foundations ranked by total grants made in 2003:

1. Annie E. Casey Foundation (Baltimore), $172.8 million

2. Harry and Jeanette Weinberg Foundation (Owings Mills), $101 million

3. Ellison Medical Foundation (Bethesda), $33 million

4. Baltimore Community Foundation (Baltimore), $19.4 million

5. Sherman Fairchild Foundation (Chevy Chase), $13.4 million

6. Eugene B. Casey Foundation (Gaithersburg), $12.5 million

7. Abell Foundation (Baltimore), $8.2 million

8. France-Merrick Foundation (Towson), $8.1 million

9. Alvin and Fanny B. Thalheimer Foundation (Baltimore), $7.3 million

10. Lockheed Martin Corp. Foundation (Bethesda), $7.1 million

[Source: Association of Baltimore Area Grantmakers]

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