Tide Point, the former soap manufacturing plant-turned high-tech offices, officially opens its doors today, popular with the business community but slightly scathed by a dipping market.
The five buildings once used by Procter & Gamble Co. in the heart of Locust Point's working waterfront are the first experiments in adaptive reuse of old industrial buildings for offices that far south of the Inner Harbor.
The urban office buildings - named for soap products including Joy, Cascade and Dawn - keep the industrial feel with exposed mechanical equipment and open spaces. They attracted a lot of attention and tenants.
In the past six months, as parts of the $65 million project have come online, a high of 90 percent of the space was taken - a number real estate experts said showed the demand pent up in Baltimore in the past 10 years and the desire for something different from the typical corner office in a downtown tower.
"Tide Point has very broad market attraction that includes tech companies, but not just tech companies," said C. William "Bill" Struever, of the project developer Struever Bros., Eccles & Rouse Inc. "Technology is still going to be the driving force in the economy, though, and tech companies are urban friendly."
But the economy has lost some steam in the two years since the Tide Point project began, and many technology companies, particularly dot-coms, have gone bankrupt or scaled back. That has left developers of new offices that targeted the one-time darlings of Wall Street with space on their hands.
The effect has varied from city to city, depending on the amount of space built and number of failed companies, said Richard Baier, managing director of CB Richard Ellis in Kansas City, Mo., and president of the national Building Owners and Managers Association.
Harder hit have been tech hubs such as Northern Virginia, Boston, Austin, Texas, and Northern California. The amount of space offered for sublet by companies that no longer need it has skyrocketed. Brokers say Northern Virginia has millions of square feet of sublet space available. Downtown Baltimore has about 371,000 square feet for sublet, according to CoStar Group Inc., a real estate information provider.
Baltimore, with relatively few dot-com companies, has been spared the worst, real estate brokers say.
Landlords are likely to begin making more demands on tech companies, such as higher security deposits and letters of credit. For now, the industry is still healthy and has nowhere near the excess space that lead to the real estate crash of the late 1980s, Baier said.
"The actual fallout remains to be seen over the next two quarters," he said.
Sublet space is up some in Baltimore, say real estate agents, including Christopher Smith, president of TriAlliance Commercial Real Estate Services Inc., which is trying to sublet Tide Point space not needed after layoffs at Advertising.com Inc. That space and offices abandoned by a bankrupt TidePoint Corp. mean that only about half the space in the Tide Point buildings is being used.
"We have been hit quite hard because of the technology slowdown," said Bruce Matthai, who is leasing Tide Point for Colliers Pinkard, a commercial real estate company. "Before the tech slowdown we had terrific success. But there is still quite a lot of interest in the marketplace."
Struever and Matthai said there are five companies seriously considering Tide Point, but they declined to identify them. They said the interest comes from a university, a nonprofit, a tech company and two traditional companies.
Struever also said he plans to continue work on other redevelopment projects, including transitioning a former Coca-Cola syrup plant near Tide Point into offices - even if he has to wait for the economy to improve for tenants for all of them.
"I'm in this for the long haul," Struever said. "I'm a great believer in this neighborhood and this city. And I'm patient."