Homework pays off for minority developer

THE BALTIMORE EVENING SUN

One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sun with newsworthy business leaders. Otis Warren is a local real estate broker and developer whose City Crescent project recently was chosen by the U.S. General Services Administration to be the new site for its offices. The project will mark the first time a minority-led development team has built a downtown office building in Baltimore.

Your Crescent City project recently was chosen by the GSA to be the site of its new federal offices. Why do you think your project was chosen over a number of others?

think that we did our homework . . . I spent a lot of time talking with people who have done work for GSA and trying to understand what was important to GSA in its decision process. And the thing that I found that was crucial to them was one, they needed a building that had a certain floor plan that would allow their agencies to work . . . (And) I think the key was that I found out that public transportation was very important to them. I looked at that particular location and I saw that the thing that really drove it for me was that it was close to the Metro stop . . .

And then, luckily enough, at the time the submission was due, there was an article in the paper that the contract was signed to put the light rail down right in front of it.

I believe yours will be the first downtown office building in Baltimore to be developed by a minority-led team. Do you think that sends a message of hope to other prospective minority developers?

A. No question. To me that's probably the most exciting thing . . . You have a city that has come on line with thousands of square feet of new buildings and a population of over 50 percent African-Americans and none of those buildings downtown were owned by African Americans. That would make one wonder why . . . I believed it could happen. My partners believed it could happen, and I think that the city was glad it happened. So I think that other developers not only that live here in Baltimore, but that live in this region, can now say, "Well, Baltimore is an equal opportunity development town, you know, and everybody is welcome to come to the table and play in the downtown arena."

Why do you think it has taken so long for a minority developer to be chosen to build a downtown office building?

Well, I think it was a combination of fear and believing that they could not do it or they wouldn't be welcome . . . I think that the key to the developing of a building of any size is that you have to have a tenant. And most minorities are not in the circle where they can meet commercial tenants . . . So it would take an opportunity like the government who says to the world, "Show me why I should come to you" and that would give us an opportunity. The land was not owned by us; the land was owned by the city. Therefore we were able to use that land at a particular location . . . It probably will happen again for us because now the universe knows that we can play in that game.

Did you encounter any particular difficulties in the City Crescent project because you are an African-American?

A. I think that some people just didn't take us seriously. And don't know whether it was because we're African-Americans or whether it's because we're new guys on the block. But I like to think it's because we're the new guys on the block . . . We went to two of the largest architects in this area. I met with one of them, but I just couldn't see the interest. It was like he was saying, "Are you really serious about doing this?" or "Do you think you can win with all this competition?" Then we had an interview with another major one, and we had a lady who was doing all the mailing out and coordinating the meetings and she happens to be white. At the interview the team came in to interview us, and the whole time they are interviewing they talked directly to her and never looked at me, never asked me a question although my name was on the literature. I think that was an African-American problem.

Q. Did your competitors take you seriously?

I think at the early part of the stage, they didn't take us seriously. They just didn't think that we were going to be able to pull it off, that we had the financial wherewithal or that we were willing to risk that much money . . . We had architectural work done, we had hired a lawyer to represent us, we had done all

types of accounting numbers that we had run, and I would safely say that we had an obligation of over a quarter million dollars . . . Our money was coming out of our pocket. It was a big crap roll.

Q. Tell me how you got started in the real estate business.

My father was in the business. My father was a guy who just basically cut grass and he would sell houses and he worked in the business. The big news about that situation [is] that my father was in the business [and] he never joined the multiple list [Multiple Listing Service] and he never was a member of the Greater Baltimore Board of Realtors, and the reason that my father never joined the Greater Baltimore Board of Realtors was because when he wanted to join it, he wasn't accepted because he was black. And to show you how things have changed, that same board that denied my father membership, I have had the honor of both being a Realtor of the Year and the president of that board.

What difficulties did you encounter as you started in the development business?

I guess the number one problem was that in the development business you don't make any money, you know, right away. It's way down the road before you can have any money coming in and you're just putting it out.

What are the residential and commercial developments that you've done since you've been in business?

[There's the] 72-unit [apartment house in the] 1500 block of Fayette Street. We have another project that we did right after that and also with Tom Harkins right across from Druid Hill Park. That's a 45-unit rehab. There is a 240-unit apartment house in Dickey Hill and also Tom Harkins built that. And then I have a 38-unit townhouse development in Baltimore County.

Q. You've had one previous commercial project. Tell me about it.

Well, it was a project that I tried to get somebody to let me do a commercial project with them. And I went to these guys in Richmond, and they wanted to get into the Baltimore market. So I went into a 30/70 partnership arrangement with them where they owned 70 percent of the project and I owned 30 percent.

Q. And that is in the Seton Business Park?

It's in the Seton Business Park. And we sat there and tried to lease it. It was 80,000 square feet. We leased 30,000 to a group of guys who were into bio-tech work and then Jiffy Lube came along and purchased the building, and I made money on that one. So I put the money in the bank, and I'm glad I did because I spent it now on this one. So that was my first commercial [project].

Q. Do you think that in the future you want to do only commercial projects or do you intend to do both commercial and residential in the future?

We would like to do both. On a residential basis, I'm mainly interested in affordable housing, and I would hope that my commercial portion would develop in a way that we could do well and make the money so that we can also allow us to make less of a profit, a smaller profit, in the residential portion . . . I just think that the African-American community needs to figure out ways to mass funds and channel funds into things that are relevant to their community. And that's what I'm trying to do.

How did you and your team come up with the concept for the City Crescent?

A. Theo Rodgers of A&R; [a development company] and I talked about doing something downtown . . . I said, "Theo, I'm interested in the commercial part; you're interested in residential. Let's put in a request for a proposal to the city for the whole thing."

Q. Now when you first got together with Theo Rogers it wasn't with the idea for the GSA contract was it?

A. No. It was for the idea of putting up an office building and going out and finding a tenant. We told the city that we would not build until we found a tenant.

When did it become obvious that GSA was the one you wanted to go with?

The GSA stuff was on the street for a long time. But . . . the word on the street was that they had already made up their mind and they were going to go into 6 St. Paul Centre [formerly the Merritt Tower] . . . When I saw the presentation, I said this can't work for 6 St. Paul, they're asking for too much. And we decided to go for it. So we went for it.

The GSA office is only part of the project. Can you briefly describe the other components?

A. My partner, Theo Rodgers, is responsible for the parking garage which will probably start construction at the same time we're stopping . . . The residential component will be the next step after the parking and it should have about 125 units.

Q. And there's another office building?

A. Yes. We're talking to potential tenants now . . .

Q. How big will that be?

A. We could do another 300,000 square feet.

Q. What now must be accomplished before construction can begin on the City Crescent project?

A. We're wrapping up our financing . . . The city has notified the tenants that they have to vacate the properties . . . They should be leaving next month. We have done all of our borings and we have our architectural plans done. We haven't signed a contract with the contractors yet . . . We're looking at Atlantic, Omni, Thompson.

Q. When do you expect construction to begin?

A. Construction should start in 30 days.

Q. And it is to be completed when?

A. March 1992.

Q. Has it been difficult getting financing in today's credit environment?

A. It hasn't been as easy as we thought it would be, but it hasn't been impossible. We've had a few people calling us.

Q. It must help that you already have a tenant.

A. It does. If we didn't have this type of tenant, it would be impossible.

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