One of the largest owners of office buildings in the Baltimore-Washington corridor broke ground yesterday on an $18.9 million building in Anne Arundel County with no signed tenants - bucking a lukewarm economy that has others freezing construction.
Many real estate brokers say businesses remain tentative about moving or expanding. Few speculative office buildings have been constructed in the region in the past couple of years, although some have broken ground partially leased.
Corporate Office Properties Trust, the Columbia-based real estate investment trust developing the building, believes the area is ripe for growth.
"In the current business environment, you would not normally be starting a spec office building, but National Business Park continues to differentiate from the marketplace with 100 percent leasing and continued strong demand, driven in part by the defense community," said Randall M. Griffin, president and chief operating officer. "We need to have product available to meet the continued demands of our existing tenants and anticipated new prospects."
The four-story, 120,000-square-foot building will be COPT's 11th in National Business Park, near Baltimore-Washington International Airport. When the building is completed next summer, the company will have 1.3 million square feet of space in the park.
COPT's existing buildings in the park are fully leased, the company said. Many of the tenants are defense-related, next to the National Security Agency.
However, in Anne Arundel County 13.6 percent of the Class A, or top-tier, office space is available for rent, according to Costar Group, a real estate information provider. That's about on par with the regional vacancy rate of 13.8 percent, which includes space for sublet. Developers generally do not start building again until vacancy dips below 10 percent.
Griffin of COPT said the company plans to continue buying and developing office buildings where appropriate in the mid-Atlantic region. It owns 110 office buildings with 8.9 million square feet of space.
The Anne Arundel Economic Development Corp. said COPT's new development is the county's first Class A building to be started this year.
Bill Badger, executive director of the Anne Arundel Economic Development Corp., which markets the county, said officials there were glad to have new space to advertise.
"There's no room at the inn," Badger said of the business park. "Most of the space is occupied or spoken for. They've been rolling out a building or multiple buildings every spring, so their track record indicates that, if you build it, they will come."