One Charles Center, the project that signaled Baltimore's downtown renaissance when it was built in 1962, was sold on the auction block yesterday for just $11.5 million -- far less than the $19.6 million debt against the building.
To the surprise of no one in the city's commercial real estate community, the landmark was taken back by the mortgage holder, Metropolitan Life Insurance Co. of New York. The only other bidder, who bid as high as $7 million, was Charles C. Edwards, a Baltimore physician and investor with a taste for bargains in commercial real estate.
The winning bid was about a third of the replacement cost of the stately tower, estimated J. Joseph Casey, president of Casey & Associates/Encore International, the Baltimore-based commercial real estate brokerage.
The building was designed by Ludwig Mies van der Rohe, the world-renowned architect whose design was a direct knockoff of his acclaimed Seagram Building in Manhattan.
"I think the price reflects how far the market has fallen over the last couple of years, and frankly, it doesn't surprise me," Mr. Casey said.
One Charles Center, located at 100 North Charles St., hit hard times after its former owner and nearly sole tenant -- CSX Corp. -- announced it would vacate the building as part of the railroad company's corporate move to Jacksonville, Fla. That move will be completed in the next two years.
With a glut of high-quality office space on the market and shrinking demand from many corporate tenants due to the tepid U.S. economy, One Charles Center went to auction in a weakened condition, Mr. Casey said.
"You have to appreciate that the value of an asset is in its ability to attract tenants and produce an income stream," Mr. Casey noted.
Going for a sale price of about $36 a square foot, the auction set a new bottom in pricing for prime square footage in downtown Baltimore, according to local real estate specialists. Still, they say prospects for the soon-to-be vacant building are unclear.
"Baltimore, unfortunately, as well as all major cities throughout the United States, has been experiencing very high vacancy rates. This is no more than a reflection of what's happening throughout the entire economy," Mr. Casey said.
Metropolitan Life's bid for the building was based on the current appraised value of the property, officials of the lender said yesterday. But Tammy E. Tuller, the company's associate counsel, who madethe pre-arranged bid at yesterday's auction, declined comment about the company's plans for the structure, as did other Metropolitan Life officials.
In a statement released after the auction, Metropolitan Life -- which owns $26 billion worth of U.S. real estate -- confirmed that it had selected the Baltimore office of CB Commercial, the realty brokerage firm, to lease and manage the troubled One Charles Center property.
"MetLife is fully committing its extensive real estate expertise and resources to the property," said the company statement. Still, James Grieves, one of the CB leasing agents who will be working with One Charles Center, said his firm has no immediate prospects for tenants.
"Our initial thrust is going to be to get a large-lease tenant," Mr. Grieves said.
The problems of the 22-story office building, located on the Northwest corner of North Charles and West Fayette streets, became serious when the owner of the building, First Capital Financial Corp. of Chicago, defaulted on its the mortgage from Metropolitan Life. First Capital bought the building from CSX in 1988.