An arm of Dutch insurer Aegon will move into an iconic downtown office tower next year and rename it — transforming Baltimore's skyline and filling part of a void in downtown's commercial district left behind by Legg Mason Inc.
Transamerica Life Insurance Co. has agreed to lease the top nine floors, or about 140,000 square feet, at 100 Light St., the company and its new landlord announced Monday. The insurer will relocate more than 700 employees now working out of two buildings in midtown Baltimore. And its chief executive will move from Iowa to Baltimore next year, solidifying the city as Aegon's North American base of operations.
The 35-story skyscraper was first named for life insurer USF&G and then for Legg Mason until the money manager left for its newly built headquarters in Harbor East last year. Now it will become "Transamerica Tower" when the move is complete by November 2011.
Legg Mason's move was seen as an eastward shift in the center of economic gravity in Baltimore, and it added to the central business district's vacancy rate in a tough economy. The rate hit 18 percent this summer, the highest rate in the time that commercial real estate firm Cushman & Wakefield has tracked the data since 1994.
Downtown advocates said Transamerica's decision to take the topmost floors at 100 Light St. — the largest leasing deal in Baltimore this year — is a critical step in stabilizing the office market.
David M. Gillece, president of commercial real estate advisory firm Cassidy Turley, which represented both parties in the Transamerica deal, said the 10-year lease "speaks loudly to premature worries" about downtown's stability. Transamerica looked across the region but said from the start that it preferred the central business district, he said.
The company thought a longer-distance move could be problematic for employees.
"We didn't want to upset people's routines," said Cindy Nodorft, a spokeswoman for Transamerica.
Though the insurer will be the largest tenant at 100 Light St., it's not the first major leasing deal at the tower since Legg Mason left. Downtown law firm Ober Kaler announced in April that it would take 94,000 square feet there next spring.
Building owner Lexington Realty Trust said the property, three-quarters vacant a year ago, will be nearly three-quarters full when both new tenants move in.
"We hope this raises the prospects of leasing in the building and the whole downtown Baltimore market," said Joseph S. Bonventre, executive vice president at Lexington Realty.
The building owner built a parking garage across the street and is upgrading the building and plaza, a $43 million improvement project that began in 2007 — the year Legg Mason announced it would leave.
"100 Light was able to attract these two key tenants because of the investment they made in their property, and I hope it sends a signal to some of the other older office buildings to do the same," Fowler said. "The investments will pay off."
M.J. "Jay" Brodie, president of Baltimore Development Corp., the city's economic development arm, said Transamerica is relocating without government incentives. The city gave about $34 million in tax breaks to the owner of Legg Mason's new headquarters, H&S Properties Development Corp. Lexington Realty, 100 Light St.'s owner, said it received no government incentives for its renovation work.
Transamerica's lease gives it the option to add or subtract two floors as it completes its space plans in the next few months. "So they see growth potential," Brodie said.
The firm and its landlord did not disclose monetary terms. Cassidy Turley, the real estate brokerage, said it is quoting rates ranging from $29.75 to $31.75 per square foot for the skyscraper's unleased space.
T. Courtenay Jenkins, senior director with Cushman & Wakefield in Baltimore, said Transamerica's move "takes a large amount of space off the market," a plus for downtown landlords. But it will add to vacancies elsewhere in the city. The company is leaving 1111 N. Charles St., which it owns, as well as leased space at 520 Park Ave.
The state is in discussions to purchase the Charles Street building to lease it to the University of Baltimore, said Shaun Adamec, a spokesman for Gov. Martin O'Malley. Both UB and the state already have a large presence in midtown.
Transamerica's Baltimore operations are part of a division that offers life insurance, health insurance and financial products. Workers moving to Light Street range from salespeople to administrators.
The top executive, Mark Mullin, will also move to the city next year.
"Baltimore is a better fit for his needs as the president and CEO," said Nodorft, the company spokeswoman.
For Transamerica, the chance to brand a skyscraper was part of the math that made the move to 100 Light St. worthwhile.
"It's Baltimore's most visible building," said Matthew Seward, a senior vice president at Cassidy Turley and one of the brokers representing the landlord. "To be able to have their name at the top of it was a great opportunity for them."