Developers who once could not build offices fast enough for high-tech companies flocking to Columbia and the airport could find themselves with floors and floors of empty space.
Close to a million square feet of top-tier space is planned or under construction around Columbia and Baltimore-Washington International Airport -- enough to accommodate at least 5,000 workers.
But only a handful of the buildings have signed up committed tenants.
"They're building too much too fast," said David Fick, who analyzes real estate as a managing director at Legg Mason Wood Walker Inc.
Fick said last week that developers should not have started construction until the buildings were at least half-leased. But the frenzy to be the first to open a building and attract tenants led developers to ignore that formula.
The oversupply of space will mean landlords might have to lower rents and offer other incentives to tenants, he said. That would make the return on their investments lower.
But Fick says he's still bullish on the region because the space will fill -- eventually. "It's not a catastrophic situation," he said.
The BWI-Columbia situation is unusual for the Baltimore-Washington corridor, which has been popular with technology and traditional companies for the past several years.
Landlords and brokers say the region does not have nearly the empty office space that was created by overbuilding in the 1980s, when many developers were forced into foreclosure. They also said the Baltimore area is not totally dependent on technology companies to fill the space.
As of now, the Columbia and airport "submarkets" have about 12.4 million square feet of Class A, or top-of-the-line, space.
About 10 percent is available for lease or sublease, according to CoStar Group, a real estate information service.
Developers consider that vacancy rate to be low enough to construct office buildings on speculation, without committed tenants.
More than a dozen office buildings are in the pipeline. Those and others recently opened make the Baltimore-Washington corridor No. 1 in the region for new Class A buildings.
Some of the region's and nation's biggest office developers, including Merritt, Corporate Office Properties Trust, Trammell Crow Co. and Liberty Property Trust, have buildings under construction in the corridor.
The lack of tenants is "a concern," Robb Merritt said yesterday. He is a vice president of Merritt Properties LLC. Merritt is set to open a building at Route 100 and Snowden River Parkway in July, but the project is just 10 percent committed.
Although he says the demand for office space is still "decent," Merritt expects to hold off on erecting another office building next to the new one until demand from tenants is clear.
Dan Hudson, a managing director at Trammell Crow, said he believes some of the slowdown caught the landlords off guard, but said high-tech and traditional companies still show interest in renting space in the buildings.
Some companies have delayed plans to expand or move, pending surer positive signs from Wall Street, said James S. Leanos, who helps tech companies find offices in the Baltimore-Washington corridor for KLNB Inc.
"Some of the business has just gone away," he said. "About 20-25 percent has gone away. About 50 percent is in the 'let's-play-this-thing-out-awhile-and-see-where-we-are' mode. ... Another 25 percent are doing things now."
Leanos said he is sure the region will fare better than Northern Virginia, which has a much larger market for offices and a considerably higher percentage of space abandoned by tech companies.
The telecommunications equipment makers and software developers that have been fueling the office space expansion in Columbia and BWI have been among the hardest hit.
One of the developers who has attracted a lot of those companies to its buildings is Corporate Office Properties Trust. Randall M. Griffin, the company's president, said most of Corporate Office Properties' buildings under construction are not ready for tenants and that the market may pick up by the time they are.
Corporate Office Properties, the largest office building owner in the corridor, has four buildings in the pipeline. One is leased and another has some tenants.
Griffin said he isn't worried yet about his other buildings or the corridor.
"It's too early to tell if it's in trouble," he said. "Normally, this is a market that absorbs 1 million square feet of space a year easily. This year it's hard to tell. The first four months have been very, very slow."