The owner of the Southern Hotel and adjacent buildings is evaluating amending its plan to develop a 45-story skyscraper on the Light Street site in favor of two smaller office buildings.
Capital Guidance Corp.'s consideration of alternatives to its planned $190 million 1 Light St. tower comes on the heels of Alex. Brown Inc.'s decision in May to relocate its headquarters to the 30-story Commerce Place building at 1 South St.
"Two building sites would allow a tenant the premier location without having to commit to 200,000 square feet," said J. James Clarke, president of J. J. Clarke Enterprises Inc., the Paris-based investment firm's local representative. "And it would match the market need at this point."
An anchor tenant in either of the two smaller buildings -- a prerequisite for any new development -- would be required to commit to roughly half the space necessary to begin the 750,000-square-foot project.
At the same time, however, most tenants of modern office towers relish large, unencumbered floors -- a sacrifice the two-building plan would have to address.
"There are a lot of existing downtown buildings with smaller floor plates," said Milton H. Miller Jr., a principal of Miller Corporate Real Estate Services Inc., the local commercial real estate firm responsible for leasing Commerce Place. "If I were a tenant interested in a new building, I'd look for product differentiation. A lot of the success Commerce Place has had, I think, can be attributed to the larger size of its floors."
Because of its size, an office building supplanting the Southern Hotel would be limited to having floors of 15,000 square feet or less. By comparison, Commerce Place's floor sizes range as high as 21,000 square feet.
Mr. Clarke noted the market forces shaping the project and the economic quandary associated with scaling down its plans as well.
"The market doesn't want small footprints that yield smaller floors," Mr. Clarke said. "The problem is, the value of the site is directly related to the eventual size of the building on it."
Capital Guidance most likely would raze the 14-story hotel at 7-11 Light St. and replace it with a building of 15 to 20 stories. In May 1993, the city gave Capital Guidance permission to demolish the historic 400-room hotel, a 78-year-old property last used as lodging in the 1960s.
Development of a similarly-sized structure along Baltimore Street would begin when market forces dictated it, Mr. Clarke explained.
The continuing dour downtown commercial office market has also forced Mr. Clarke and Capital Guidance to consider donating the 189,000-square-foot Southern Hotel to institutions such as the Johns Hopkins University or some other entity, in exchange for a tax break and relief from the $200,000 annual city property tax bill.
But neither Mr. Clarke nor Capital Guidance appear willing to give up on its initial plans, either.
"The first thing we'll try to do is develop the site in its entirety," Mr. Clarke said.
"And the owners are content with a long-term hold. We've waited this long, and they can afford to wait a little longer."
Mr. Clarke added that Capital Guidance is prepared to maintain the properties in their present condition through the year 2005, including the 11-story 5 Light St. building adjacent to the Southern Hotel.
The two-building concept represents the latest variation in an eight-year scheme to develop the property, begun when Capital Guidance financed the Trammell Crow Co.'s $18 million purchase of the hotel and surrounding properties bounded by Light, Grant, Baltimore and Redwood streets.
Originally, 1 Light St. had been targeted as a headquarters for the former Maryland National Bank.
In the years since Maryland National's financial troubles -- its ultimate acquisition by NationsBank Corp. and the collapse of the local office market forced Trammell Crow to abandon the project -- Capital Guidance has proposed a variety of alternatives for the site.
Most recently, the investment house considered and rejected the idea of tearing down the hotel for a park, citing excessive maintenance and security costs.