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Bank of America, Zurich planning moves from city locations

November 26, 2008|By Lorraine Mirabella | Lorraine Mirabella,

Two large Baltimore employers are planning to either move some jobs from the city or sell their buildings, creating new office vacancies in a difficult real estate market.

Bank of America will move a portion of its city operations and an estimated 200 workers to an existing campus in Hunt Valley, according to city officials. And insurance company Zurich has put its two Hampden buildings on the market and is seeking smaller quarters for its 800 employees.

The moves will add to vacant office space at a time when the economic crisis is expected to slow the momentum of attracting new business downtown.

"The market is flat at the moment, and adding additional vacancies makes a flat market a little more challenging," said Bruce Matthai, a senior vice president and principal with Colliers Pinkard real estate firm in Baltimore.

Downtown Baltimore had a vacancy rate of 16.1 percent as of the middle of the year, down from 17 at the end of 2007, according to Colliers. That rate is on track to remain unchanged in end-of-year statistics, Matthai said.

The bank's lease on its 220,000-square-foot operations center at 225 N. Calvert St. will expire in June, and workers will be relocated sometime before then, said Nicole Nastacie, a bank spokeswoman. Nastacie said the bank does not disclose its local employment numbers.

"No positions will be eliminated as a result of this relocation," she said, noting that the Hunt Valley space offers amenities such as free parking. "We're just shifting work to better utilize our space."

About 300 people work at the bank's North Calvert Street offices, according to city officials. About 100 will likely move to the bank's Maryland headquarters building at 100 S. Charles St., while about 200 will move to Hunt Valley, city officials said.

"We understand that right now there are a lot of people that are tightening their belts," said Ian Brennan, a spokesman for Mayor Sheila Dixon. "We are prepared to fight to keep jobs from leaving Baltimore, and we will work with companies to find solutions that will keep those jobs here in Baltimore."

M.J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development agency, said bank officials have said the North Calvert back office space is inefficient. The 18-story office building, built in 1975, is just over 82 percent leased, according to CoStar Group Inc.

Bank of America took over the Hunt Valley lease as part of its 2005 merger with MBNA.

"We'd like to have them in the city, but that's their business decision," Brodie said.

Zurich, which in 1989 acquired Maryland Casualty Insurance, has decided to sell its two buildings, totaling 462,000 square feet, on Keswick Road in Hampden, said Steve McKay, a Zurich spokesman.

"We're basically making the best use of our space," McKay said. "The number of employees there has been reduced," after having peaked at 1,200.

McKay said the company is looking for a smaller space in the Baltimore area.

Brodie said the company has potential city sites under consideration, and "we will do our best to see that they stay in the city."

New offices built near the Inner Harbor and in waterfront areas such as Inner Harbor East and Canton have helped to draw companies downtown. Those developments came after years in which the city often lost out to businesses leaving for the suburbs and for amenities such as free parking, brokers said. But now, that momentum is slowing along with the economy.

"The recent downturn will disrupt everybody, suburban and downtown alike," Matthai said. "It's more of a general economic malaise that every one is affected by."

Potential tenants are more frequently suspending searches for new space, said Bill Miller, a senior vice president with NAI KLNB in Towson.

"A lot of companies are taking a wait-and-see attitude, if their business allows them to do that," Miller said.

City officials and real estate experts said both the Zurich facility and Bank of America building could eventually be redeveloped for different uses.

Both facilities "are going to find some use at some point, " Brodie said. "They will have to compete in a market with newer and more efficient space."

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