State Highway Administration buys its headquarters $8.5 million deal called 'terrific' for Maryland.


Acting to take advantage of the depressed real estate market and to keep more than 1,500 jobs in Baltimore, the state has purchased an office building at 707 N. Calvert St. for continued use as headquarters of the State Highway Administration.

Maryland's Department of General Services completed the transaction last Friday, after agreeing to pay $8.5 million for the 220,000-square-foot building.

"This is a terrific deal for the people of Maryland," said General Services Secretary Martin W. Walsh Jr.

"We're buying an $8.5 million building, and the alternative would be to pay $10 million more in rent and not own it at the end of the lease period."

Mr. Walsh said the cumulative savings of more than $10 million represents the difference between purchasing the six-story building and renting it for a typical 15-year period.

"This acquisition is another example of the state moving aggressively to reduce operating costs and make smart investments for the future," said Gov. William Donald Schaefer.

"With this transaction, the state will acquire an important asset and lower overhead costs at the same time."

The move also ensures that the agency and 1,528 employees will remain based in the Mount Vernon area, where they have been for more than a decade.

"This follows very closely on the governor's emphasis on keeping as much economic vitality in the city as possible," Mr. Walsh said. "The governor is very concerned about the economic health of the city."

The State Highway Administration explored plans more than a year ago to move to Camden Yards by adding an eight-story office building to the long brick warehouse that serves as a backdrop to the Orioles' new ballpark.

After that plan met with opposition, there was some discussion of moving the agency to Owings Mills or another location outside Baltimore's central business district.

The seller of the Calvert Street building was 707 Associates Limited Partnership, a group headed by Herbert Katzenberg.

Mr. Walsh said the state is acquiring the building under an innovative "capital leasing" program under which it will make payments to a trustee for 15 years and gain full ownership at the end of that period. Funds for the acquisition will come from the highway administration's operating budget.

The building was effectively taken off the tax rolls last Friday, said Deborah Photiadis, assistant secretary in charge of real estate for the General Services Department.

The purchase is part of a comprehensive "Facilities Master Planning Program" that the state initiated last year in the Baltimore and Annapolis areas in an effort to save money.

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