An office building at Howard and Lexington streets in downtown Baltimore, owned by Los Angeles billionaire David Murdock, is for sale in what could be an early test of how investors regard west-side redevelopment.
Murdock is selling One Market Center, the former Hutzler's Palace department store and an adjacent seven-story office building he developed, to take advantage of investors' strong appetite for commercial properties at a time when the west side's revitalization appears to be gaining momentum, said Richard S. Toppe, president of a Castle and Cooke division that manages the property.
The two adjacent buildings at 200 N. Howard St. have been owned for about two decades by the Murdock Atrium Limited Partnership, which is controlled by Murdock, the owner and chairman of Castle & Cooke.
Murdock also developed the Harbor Court hotel in 1986 as one of the Inner Harbor's early high-profile projects. The hotel was rebranded the InterContinental Harbor Court Baltimore last year after a sale.
Toppe said it makes sense to put One Market Center up for sale now.
"There's positive momentum in the general area, given the superblock and other activity that Baltimore Development Corp. and the city is involved in," Toppe said. "There definitely is positive momentum in that part of town. And it's a good time to be a seller of commercial real estate in general."
The area's long-stalled redevelopment of the superblock - a six-block area bounded by Howard, Lexington, Liberty and Fayette streets, and viewed as a critical link in the city's west-side revitalization - got a boost last week when city officials and one of the area's biggest landowners, the Harry and Jeanette Weinberg Foundation, agreed to resolve a dispute over Weinberg-owned properties. The project is expected to inject hundreds of new residents, workers and shoppers into the former retail district.
Toppe said plans for the superblock and other nearby projects, such as the Weinberg Foundation's conversion of the former Stewart's department store for Catholic Relief Services worldwide headquarters, played into the company's decision to sell One Market Center.
The buildings had been offered for sale nearly two years ago but were pulled off the market because of lack of interest, Toppe said.
"This time around, we do have substantial interest in the property," said Bo Cashman, vice president of investment properties for CB Richard Ellis in Baltimore.
The seven-story building is now occupied mostly by telecommunications companies. The adjacent five-story building, constructed on the site of the former Hochschild Kohn department store, is vacant.
In the mid-1980s, it housed a financially struggling Hutzler's Palace, adjacent to the original Hutzler's department store. It was used for offices after Hutzler's Palace closed.
The two buildings, which together total about 200,000 square feet, are 70 percent occupied, Cashman said.
"It meets what a lot of investors are looking for today. You can stabilize and increase cash flow and create some value," Cashman said.
Though the city adopted an urban renewal plan for the west side in 1999, it took years for major redevelopment to occur. Some of the bigger projects have included the refurbished Hippodrome Theater and the 392-unit Centerpoint apartments with 33,000 square feet of new shops, including Starbucks, 7-Eleven and Salsarita's Fresh Cantina.
Bank of America, the developer of Centerpoint, sold that project in January to real estate investment trust Avalon Bay Communities Inc. for $78 million.
"Investors are always encouraged by activity," Cashman said. "Certainly there's been a lot of activity in that general area, starting with the Hippodrome and the new retail popping up."
He said that One Market Center could offer an alternative to pricier leases on Pratt Street in the central business district with the advantage of having access to light rail on Howard Street and to a subway stop.
"This could always be the value alternative to more centrally located office buildings," Cashman said.