Patterson Park neighbors joined forces to try to acquire a building they consider the "living room" of the Baltimore neighborhood, and they came out on top at the Friday auction - but walked away empty-handed just the same.

M&T; Bank, which holds the loan on the now-empty property at Baltimore Street and Linwood Avenue, decided not to accept the residents' bid of $298,000. Building owner Patterson Park Community Development Corp., which is going through bankruptcy proceedings, owes more than $790,000.

The Patterson Park CDC, a nonprofit that helped rescue the neighborhood from blight by rehabbing scores of vacant rowhouses, renovated the three-story commercial building when times were good. It moved its offices to the top two floors in 2006, turning the ground floor into restaurant space that became a central gathering spot for residents. Then the housing bust hit, values fell and the Patterson Park group sunk under the weight of its mortgaged properties, filing for bankruptcy a year ago.

Neighbors, a close-knit bunch trying to fill the community development corporation's void where they can, want to gain control of the former headquarters. They'll have another shot when the property hits the auction block again, likely in a month.

"It's more than just a building," said Grant Corley, 36, one of seven Patterson Park residents that bid as a group. "It's the cornerstone of the neighborhood."

Baltimore real estate investor Tom Karle, a landlord with scores of properties around Patterson Park, was their main competition Friday. He upped the starting bid from $250,000 to $275,000, and stayed in the game right until the end, as neighbors agonized over what ended up being the final bid - a $1,000 increase.

The building has stood empty since the collapse of the community development group and the December shutdown of the restaurant, Three..., which struggled as the economy worsened. Ed Rutkowski, who founded the Patterson Park group in 1996, came to watch the action Friday and noted that a vacant commercial building is a tough sell nowadays.

"I think you have to go in with tenants," said Rutkowski, who left the CDC about two years ago and is now executive director of the Patterson Park Public Charter School.

The seven residents bidding on the property all live within a few blocks of the site, which sits at the northeastern corner of the large park that gives the neighborhood its name. They want to get a restaurant operating there again, possibly with artists' studios up top.

"We're here with our hearts," said Kevin Koenig, 40, as residents gathered in the restaurant kitchen after the auction. "We're not investment people, we're not real estate people. We're neighbors."

Karle, their competition, is unpopular with neighborhood leaders because they don't think he rents his rowhomes to good tenants - which added an undercurrent of drama to the proceedings on Friday. But Karle, who said he removes problem renters as quickly as he can, has something in common with the other bidders: He wants to get a restaurant back, too.

He's also interested in moving his offices there. He plans to bid again.

"Why not be centrally located?" Karle said.