The Blaustein family has sold its namesake 25-story skyscraper downtown to a Santa Fe investment firm for $9.5 million, ending more than three decades of ownership of a building that helped spark Baltimore's renaissance in the early 1960s.
BGK Equities' decision to buy the 1 N. Charles St. office tower marks the second significant commercial real estate investment downtown in as many weeks. Earlier this month, the Washington, D.C.-based Meridian Group Inc. bought the 12-story Candler Building at Market Place for $21.8 million, citing renewed activity downtown.
"We think real estate in Baltimore is bottoming out, and that things will turn around," said Ed Gilbert, a BGK principal. "The downtown and Inner Harbor areas are being rejuvenated, and so we feel the time is right to buy a building in Baltimore."
BGK Equities, formed in 1992, currently owns about 100 projects nationwide containing roughly 10.3 million square feet. The Blaustein Building represents its first local investment, although the firm is considering other projects.
"We like to reach a critical mass in an area," said Samuel Konigsberg, BGK Equities general counsel. "It makes sense from a management perspective."
When it was completed in 1963, the Blaustein Building was viewed as a showcase of family patriarch and Amoco Oil founder Jacob Blaustein's business success.
It also became a personal quest for Blaustein, as the 290,000-square-foot building vied with the 23-story One Charles Center office tower across the street to become the city's first modern high-rise and the first monument to the Charles Center revitalization project.
"It became a symbol of corporate ownership and symbolized the importance of image," said David W. Kornblatt, chairman of the Kornblatt Co. and a fixture in the local commercial real estate industry.
"Baltimore had not seen that before, where one company had the leverage and a circle of associated companies capable of filling an entire office tower. Blaustein created interest in downtown and brought new buildings that hadn't existed before," Kornblatt said.
He said that, as a result of Blaustein and One Charles, Mercantile-Safe Deposit & Trust Co., the First National Bank of Maryland, Vermont Federal Savings & Loan and the Sun Life Insurance Co. all developed new quarters downtown in and around Charles Center.
The sale by Blaustein family-controlled American Trading Real Estate Properties Inc. is part of a three-year plan to diversify its real estate holdings nationwide, according to a company statement.
American Trading began marketing the Blaustein Building for $13.5 million in September 1994, when the company hired Colliers Pinkard to sell the structure, the adjacent 16-story W. R. Grace Building at 10 E. Baltimore St. and the 796-space Downunder parking garage beneath the Morris A. Mechanic Theatre.
In recent years, stalwart tenants such as Amoco have shifted offices from the Blaustein Building to suburban locations such as Towson, causing the project to suffer for tenants for the first time.
The building has also suffered from changing business needs. Its relatively small floor plates, asbestos insulation and limited parking have served as a detriment to landing new tenants, according to Kornblatt and other local real estate analysts.
As part of the BGK Equities deal, however, American Trading and Blaustein-dominated entities such as Crown Central Petroleum Corp. plan to remain in the building through 2003. The building is currently 80 percent leased and will generate in excess of $1.5 million in rental income this year, according to Gilbert and an investment package circulated as part of the sale.
Under its diversification plan, American Trading also has disposed of office projects in the Washington, D.C., metropolitan area and in Los Angeles. In Baltimore, American Trading sold the Downunder garage to Chicago-based LaSalle Partners in August 1995 for $10.3 million. A sale of the W. R. Grace Building is expected early next year.
At the same time, the company has been developing and buying apartment complexes and industrial properties in cities such as Indianapolis, Dallas and Charlotte, N.C.
Pub Date: 8/14/96