Canadian firm to get prime site on Pratt

Lockwood Place tower built in 2005

February 27, 2007|By June Arney | June Arney,SUN REPORTER

One of Baltimore's prime office towers is being purchased by a Canadian real estate investment trust for $73.5 million, according to a spokesman for the company.

IPC US REIT has a contract to buy 500 E. Pratt St., the 12-story office building on a premier site across from the Inner Harbor, and is expected to complete the deal in April, said Ming Zhu, an analyst for the REIT. It is the REIT's first purchase in Baltimore.

"We're always looking for good-quality buildings in downtown markets or suburban markets," Zhu said. "We understand we paid a high price. We think the building is a Class A building with long-term leases."

The office building - one of Baltimore's newest - was developed by Trammel Crow Co. in 2004 and completed the following year. The 280,000- square-foot property includes an attached 900-car garage and a first-floor restaurant, The Capital Grille steakhouse.

The building sparked interest from about 10 investors and fetched a top price - about $262 per square foot, according to Bruce Strasburg, executive vice president with CB Richard Ellis in Washington.

"I expected it would command a premium price, and it did," he said. "It's a great property. It's high-quality. It's right on the harbor, and it's leased long-term to great tenants. It should have received top dollar."

Baltimore office buildings typically sell for closer to $200 per square foot, he said.

For instance, One South Street, the Alex. Brown tower, recently sold for $178 per square foot, and 300 W. Pratt Street for $213 per square foot, according to the 2006 year-end market report issued by Colliers Pinkard.

Last year the 28-story 100 E. Pratt St., headquarters of T. Rowe Price Group Inc., sold for $207.5 million, or $312 a square foot.

The exceptional location and water views at 500 E. Pratt all contributed to IPC's willingness to pay top price, Zhu said.

IPC owns 25 properties across the United States, with a focus on the Boston-to-Washington corridor. In Maryland, it owns just one other property, in Rockville, Zhu said.

Now 91 percent leased, the Baltimore office tower has tenants that include the law firm Saul Ewing LLP, insurance broker Aon Corp. and the accounting and business consulting firm Reznick Group.

"The fact that a foreign investor came in says that they believe in the Baltimore market, and that it's a strong market," Strasburg said.

The land beneath 500 E. Pratt St. is owned by Baltimore City Community College. In addition to the office tower, the site includes a Best Buy, P.F. Chang's China Bistro and soon will be home to retailer Filene's Basement.

That entire site, known as Lockwood Place, brings in more than $1 million a year to the college in ground rent, according to Herbert C. Sledge, interim vice president for institutional advancement.

"It's a prime Class A structure facing the Inner Harbor and a sought-after piece of land," Sledge said. "We're happy to see that Lockwood Place - the concept - is living up to its expectations of being a busy and viable part of the Inner Harbor."

The property features all the right elements to generate a good return for the money, Downtown Partnership President Kirby Fowler said. "We're a good investment, and people understand it," he said. "I believe other parts of the country and international companies are starting to recognize the value of being in Baltimore."

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