Office Space

Office vacancies, which have jumped in the county because of the mid- to late-1980s building boom coupled with this year's recession, won't fill up any time soon and might even increase by year's end, commercial real estate agents predict.Agents and developers expect the county's commercial building slowdown to continue for at least a year, especially in new, speculative office buildings, while the market absorbs available space.Some builders have continued developing office parks at scattered sites, while others plan to start filling a growing need for warehouses.

The Army and a Minnesota-based developer have signed a 50-year lease for about 400 acres at Aberdeen Proving Ground, a project that will bring office space for up to 10,000 civilian defense contractor workers at the expanding base. Opus East LLC, the Rockville subsidiary of the company, plans to break ground at the end of the month on the first building in a business and technology park that will be located inside the 73,000-acre base in Harford County, Army officials said. "This is a good thing for various reasons," said George Mercer, an APG spokesman.

As businesses have delayed or halted expansion plans, office landlords are going to great lengths to get commercial brokers to at least visit their buildings, even without tenants in tow. Brokers who represent potential tenants are being paid cash just for showing up at broker events - the commercial real estate version of an open house - in hope of leasing office space in a slow market. Some landlords are raising commissions, offering gift certificates or treating brokers to lunch. The flurry of broker perks is just one more sign of an office slowdown.

Developer David Cordish has been so successful leasing space in Baltimore's Power Plant that he is exploring the construction of an addition south of it on Pier 4, replacing the Chart House restaurant building.Cordish, head of the Cordish Co., has been discussing expansion of the Power Plant with the city, which owns the section of Pier 4 occupied by the Chart House, an outdoor terrace and a smaller building south of it.The proposed building, which might be physically linked to the Power Plant, would contain space for a new Chart House restaurant and a major retailer new to the Baltimore area.

A Philadelphia real estate company intends to buy the former Luskin's Inc. headquarters and warehouse in Columbia and convert it to premier office space, a move that could flood the ever-competitive Howard County market.O'Neill Properties Inc.'s plan to invest roughly $35 million to buy and renovate the building into so-called Class A space comes as numerous developers are preparing to build new offices there.In all, about 2 million square feet of new office space is being planned in Columbia, which currently has 5.5 million square feet of office space.

Spurred by increasing demand for office space from telecommunications and other fast-growing high-technology businesses, Baltimore Gas and Electric Co.'s real estate arm intends to construct a $12 million building at its 175-acre National Business Park in Annapolis Junction.Like other real estate developers that are bullish about the area's continued job growth and decreased office vacancy rates, Constellation Real Estate Group Inc. plans to build the 90,000-square-foot project without commitments from tenants.

Developers who once could not build offices fast enough for high-tech companies flocking to Columbia and the airport could find themselves with floors and floors of empty space. Close to a million square feet of top-tier space is planned or under construction around Columbia and Baltimore-Washington International Airport -- enough to accommodate at least 5,000 workers. But only a handful of the buildings have signed up committed tenants. "They're building too much too fast," said David Fick, who analyzes real estate as a managing director at Legg Mason Wood Walker Inc. Fick said last week that developers should not have started construction until the buildings were at least half-leased.

About a year from now, workers will occupy lakefront offices in a six-story, steel-frame building of precast concrete and green glass where the Rusty Scupper restaurant once stood. "We bought it with the idea of making it an office building," said David Costello, president of Columbia-based Costello Construction Inc. and one of four developers on the project. The old Rusty Scupper building will be razed next month. The new building is expected to be complete by spring 2001. Its leasing agent anticipates that at least a quarter of the new, 75,000-square-foot building will be spoken for before construction is complete -- an occurrence he says that is not unusual for Columbia.

The high-profile office space that will come available at 100 Light Street when money manager Legg Mason Inc. moves to Harbor East in 2009 presents an unusual chance to lure new companies to Baltimore. But it also could put pressure on downtown's traditional core as it competes with newer areas such as Harbor East, experts say. Legg announced last week that it would leave the landmark 1970s skyscraper - the first private office tower built in the Inner Harbor - and consolidate nearly all its 1,000 Baltimore area employees in a new 24-story office tower that will bear its name in the H&S Properties Development Corp.

Construction and leasing of office space in the Baltimore metro area topped more than 2 million square feet for the third year in a row, Colliers Pinkard said in its year-end report, making the past three years the best period ever for the area's office market. At the same time, the vacancy rate in the metro area, including the commercial hubs of downtown Baltimore and Anne Arundel, Howard and Baltimore counties, decreased slightly to 14.2 percent from 14.9 percent in 2005, Colliers Pinkard said.