Real estate expert sees no signal of recession's end Head of Smithy Braedon expects tough times for office projects


COLLEGE PARK -- The chairman of a major Baltimore-Washington real estate firm refused yesterday to declare the area's recession at an end and declined to make any predictions about when it will end.

"As far as I'm concerned, the bottom of any economic trough is when the first guy starts buying," said Edmund B. Cronin Jr., chairman of Smithy Braedon Co., a leading commercial leasing company.

"And that hasn't occurred," he said.

Mr. Cronin acknowledged rumors of large pools of money, so-called "vulture funds," just waiting to swoop down on real estate bargains.

But none of it is being spent yet, he said during a Washington-Baltimore Regional Association seminar on the area's economic outlook.

As a result, securing financing for real estate projects, particularly those without major tenants committed before construction, will be "virtually impossible for the next few years," Mr. Cronin said.

In 1990, an impressive 10 million square feet of office space was absorbed in the state, he said. But 6 million of that represented movement from old space to new, leaving empty space behind.

Even though office vacancy rates are a moderate 10 percent in downtown Baltimore and Washington, landlords can expect to see office rents decline in the next few years, Mr. Cronin predicted.

Other experts at the seminar offered different visions of a way out of the current malaise and of a firm anchor for the region's economy in the future.

According to D. Keith Cobb, managing partner of the Baltimore office of KPMG Peat Marwick, an accounting and consulting firm, smart companies in the area will recognize the opportunities international businesses are providing to the region.

In 1983, he said, there was $125 billion of direct foreign investment in the United States. By 1989 that figure had grown to $401 billion.

The Baltimore-Washington region hosts the headquarters of 225 companies with at least 50 percent foreign ownership, and 50 percent of them set up shop in the last five years, Mr. Cobb said.

"We have before us a tremendous, rapidly growing economic phenomenon," he said.

Ralph King, on the other hand, touted computer software services as the front-runner to be the region's next economic anchor.

Mr. King, vice president of French-owned CAP Gemini America, a software consulting firm, said that computer hardware and software personnel account for up to one in 10 employees in the region and that the industry is beginning to emerge from the recession.

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