Amid one of the hottest commercial real estate markets in Baltimore's history, a group of local developers is in danger of losing a 25-story skyscraper downtown because it is unable to pay the tower's mortgage.
And while Calvert-Baltimore Associates' inability to pay its $49 million debt on the Crestar Building can be attributed to the loss of a major tenant, the group's troubles also underscore the fragility of the city's office market and the shift of downtown's business district toward the Inner Harbor.
"We're having conversations with our lender to find a way to bridge the current vacancy, work on a program to lease the available space and bring the mortgage current," said Larry Nussdorf, president of Clark Enterprises, an umbrella company for interests controlled by Bethesda construction magnate A. James Clark.
While Calvert-Baltimore Associates -- made up of Clark, BT Alex. Brown Inc. and Manekin Corp. principals -- acknowledge that payments on the 120 E. Baltimore St. building are delinquent, the partnership declined to comment on how far in arrears they are.
Teachers Insurance & Annuity Association, the New York pension fund that lent the group the money to complete the 327,000-square-foot tower in 1989, also declined to comment on the status of the debt.
The Crestar Building owners' suffering comes at a time when most downtown landlords are prospering, because vacancy rates are lower than any point in a decade and some high-rises are selling for record amounts. In one instance, a 28-story skyscraper at 100 E. Pratt St. sold for $137 million.
But unlike the Crestar Building, 100 E. Pratt St. fronts the Inner Harbor, an increasingly popular spot for office tenants. As a result, buildings in the city's traditionally defined central business district -- even signature properties such as Crestar -- are sometimes ignored.
"It simply reiterates that buildings along the harbor are very strong, and that some projects off the water continue to struggle," said Milton H. Miller Jr., a principal of Miller Corporate Real Estate Services, a Baltimore commercial real estate brokerage firm.
Vacancy numbers bear out the trend. In new office buildings ringing the harbor, the vacancy level is 5.5 percent.
By contrast, so-called Class A buildings outside the Inner Harbor area are 14.6 percent vacant, according to figures compiled by Baltimore real estate firm Colliers Pinkard.
The differentiation between Inner Harbor offices and those north of Pratt Street has become so acute in some minds that late last year, landlords David W. Kornblatt and Peter G. Angelos formed a group to both spruce up and draw attention to a 30-block area in and around Charles Center. Kornblatt owns the 28-story St. Paul Plaza at 200 St. Paul St., while Angelos owns the 22-story One Charles Center, at 100 N. Charles St.
Calvert-Baltimore Associates' problems date back to March BTC 1997, when part-owner and tenant Alex. Brown Inc. decided to abandon the building at the end of a lease.
The investment firm's departure, part of a headquarters consolidation into a 30-story high-rise at 1 South St., left the Crestar Building nearly one-third vacant.
That space remains empty, although law firm Ober, Kaler, Grimes & Shriver is in talks to snatch up as much as a quarter of it, sources said.
But the vacant Crestar Building floors may soon have some nearby competition. In the wake of its purchase of Signet Banking Corp., Charlotte, N.C.-based First Union Corp. is preparing to put as much as 100,000 square feet of office space on the market at 7 St. Paul St., next door to 120 E. Baltimore St.
Still, Calvert-Baltimore Associates maintains they hope to resolve the situation amicably.
"We're optimistic," said Richard M. Alter, Manekin's chief executive officer.
"We have a long relationship with the lender. It's a work in progress right now," he said.
Pub Date: 5/29/98