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Commerce Center rising at GM site

The Baltimore Sun

The Chesapeake Commerce Center, planned as a vast industrial park, is taking shape on the site of General Motors' now demolished auto plant on Baltimore's eastern fringe. The first two warehouse buildings are nearing completion this week, with the first - and so far only - tenant preparing to move in and bring 200 jobs.

Though industrial leasing has slowed in the region, owner Duke Realty Corp. says it still plans to build 2.8 million square feet of warehouse, distribution and office space in 16 buildings on 185 acres at Holabird Avenue and Broening Highway, a site that's served by a rail line and is within sight of cranes at the Seagirt and Dundalk marine terminals at the port of Baltimore.

But Duke said it's unable to project whether the park's completion in five to seven years will bring the more than 3,000 jobs - many of them expected to be port-related - projected by state officials when Duke bought the site two years ago. At the time, officials of the Ehrlich administration had envisioned relocating some state offices, including the port administration, to new buildings on the site, but those plans have been scrapped with the decision to pull the state-owned World Trade Center off the market.

The eventual number of jobs will depend upon the mix of industrial versus office tenants, said John H. Macsherry Jr., a vice president for development and leasing for Indianapolis-based Duke.

The first buildings, totaling 460,000 square feet, sit on what used to be the parking lot of the former van plant, which closed in 2005 after 71 years. A 117,600-square-foot office/distribution center with rear loading docks has just secured its first tenant, which will occupy half the space. The medical-related tenant plans to move in by March and will bring about 200 jobs to the center, Macsherry said.

A larger warehouse encompasses 342,000 square feet, with front office space and cross-loading, which enables trucks to deliver goods on one side and pick up goods for distribution on the other.

The company hopes to start building a third warehouse building by August.

But the timing of the construction will be driven by the market, and so far no other leases have been signed, Macsherry said.

"We have several prospects for these buildings," he said. "When things get slow, you have to become more creative in how you go about the marketing."

Plans include an 118,000- square-foot warehouse that could get under way by August, depending upon current leasing. That would be followed by a 370,000-square-foot warehouse to be built in between the two existing buildings, and a 1.1 million- square-foot complex to be built on the footprint of the former factory.

Baltimore now has more than 48 million square feet of industrial/flex space in more than 1,000 buildings. Bulk warehouse space totaling more than 504,000 square feet was completed last year, and another 650,000 square feet are planned, according to a report by commercial real estate firm NAI KLNB.

But many of the older buildings are becoming obsolete, the firm said, and less than half the space in those buildings meets the demands of users in today's market. Still, overall occupancy rates are over 90 percent.

New development is concentrated at the Duke site and at Hollander 95, a warehouse, distribution and manufacturing center under development in Northeast Baltimore on the site of the demolished Hollander Ridge public housing project. Though not in the city, construction of new warehouse space is under way nearby at Crossroads @95 near White Marsh in Baltimore County. That complex is slated to have more than 5 million square feet of flex/office, office, warehouse and industrial space.

"This is the first time as long as I can remember that there's been new, aggressive development in Baltimore City," to meet warehouse and distribution needs, said Jim Caronna, a principal with AI KLNB. "To see bulk warehouse in the city is great news. So many times, those companies that grew in the city and found they needed to really expand to larger quarters didn't have a choice if they wanted modern, well-designed product."

In the metro area, 2.4 million square feet of warehouse space was completed last year, with 1.9 million square feet of space leased by tenants, according to commercial real estate firm Colliers Pinkard. The region's vacancy rate decreased to 14.21 percent, from 15.23 percent in 2006, Colliers said in a year-end report.

Duke is counting on the business center's proximity to the port to give it an edge in competing with regional warehouse space. Because of the park's location near major highways, the rail line and the port, shipments can move via containership, rail or truck.

"The port submarket [in the eastern part of Baltimore City] has continued to be extremely vibrant and probably the most robust submarket in the metropolitan Baltimore region," said Bill Pellington, a senior vice president with CB Richard Ellis, the commercial brokerage handling leasing for Chesapeake Commerce Center.

But with more space available at a time when economic worries are causing tenants to be more cautious in their leasing, it might take longer to absorb the new space, Caronna said.

The Colliers report, too, said the pace of leasing could slow in the wake of economic uncertainty and higher lease rates on the new properties. This year, the report said, "developers, lenders, buyers, sellers and brokers are going to have to work harder."

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