With Anchor Tenant Leaving, Baltimore Tower Tries To Fill 450K SF Vacancy Amid Slow Market

One of the most prominent office buildings in Baltimore's Inner Harbor will soon be without its anchor. 

Later this year, T. Rowe Price is scheduled to depart the 100 E. Pratt St. building for Harbor Point, leaving the building at the busy Pratt and Light street intersection with 450K SF of vacant office space in a market that has struggled to land new tenants.

The investment firm's move is reflective of Baltimore's larger office market trends, a shift toward newer buildings and away from the city's traditional downtown. And it leaves the 28-story building's leasing team, Cushman & Wakefield's David Downey and Linn Worthington, with a tall task ahead of them. 

"Baltimore, just right now, doesn't have a lot of what I'd say are private sector companies that are T. Rowe Price’s size, or even close to that," Worthington said. "It's a challenge to backfill such a huge vacancy. It's a tough market for office leasing overall."

"But I think the good thing is we're using all of our efforts, and so is ownership, leaving no stone left unturned in terms of the efforts to try and find tenants locally, and also on a national scale," Worthington added.   

The building's owner, Tampa, Florida-based Vision Properties, acquired 100 E. Pratt St. in 2016 for $187M. Vision Properties didn't respond to requests for comment for this story. 

In December 2020, anchor tenant T. Rowe Pratt revealed plans to leave the building for a new development at 1307 Point St. in 2024.

This early announcement left the 100 E. Pratt team with nearly four years to find a new tenant for the space, but it has still yet to do so as the departure approaches this year and the building has suffered a dramatic drop in value. In July, the state assessed the property at $93.65M, down 45% from its prior assessment of $171.4M, dealing a blow to Baltimore's commercial property tax revenue that creates urgency for the city to backfill the vacancy. 

"While T. Rowe Price’s departure will certainly have an impact as employees relocate out of Downtown’s core Central Business District to Harbor Point, we continue to view all of our Downtown neighborhoods as an ecosystem, and vacancies in one sector create areas of opportunity in others," Shelonda Stokes, president of the advocacy group Downtown Partnership of Baltimore, said in a statement. 

The space's size is one of the many hurdles in signing a lease with a new tenant at 100 E. Pratt St. The roughly 660K SF building is located in Baltimore's traditional central business district, which has struggled to retain tenants.  

According to MacKenzie Commercial Real Estate's fourth quarter market report, the district posted a vacancy rate of nearly 24% at the end of last year. By comparison, the report recorded a citywide vacancy rate approaching 20%, and the metro area posted a 14% vacancy rate overall.

Downey said 100 E. Pratt St.'s challenges are in line with the larger downtown market, and it has made the list of every prospect that has been out touring the area for Class-A office. 

"It's no secret the Baltimore City office market has been quiet, much like every other metropolitan office market around the country," he said. "Every office user is downsizing. There's more space-sharing arrangements going on due to modified work schedules. So, it's been a tough market, big picture-wise. And again, having said that, at 100 E. Pratt, we're seeing our share of all the activity in the market.”

While there’s a lack of private companies with the capacity to backfill T. Rowe Price’s space, Downey and Worthington said city, state and federal agencies have the potential to lease the space.  At the same time, they said, there's also potential to find a tenant in the medical sector.    

"We're focused on finding large amounts of backfill for T. Rowe’s vacancy. There's just fewer of those. So, the activity there is a little bit slower than if you were going after all 3K SF tenants," Worthington said. "We did pursue one deal, which would have backfilled all of their space and more, and are still somewhat pursuing that."

 Additionally, the flight-to-quality trend has substantially contributed to downtown's struggles as office users trade in larger spaces in older buildings, like the nearly 50-year-old 100 E. Pratt St., for less space in newer projects like Harbor East, Harbor Point and Baltimore Peninsula.   

That's a trend that doesn't appear to be shifting anytime soon, JLL Research Manager Kate Paine said.

As a result, she said, the Baltimore office market will likely continue to experience a bifurcation in demand for Class-A office space, with firms gravitating to newer properties. 

"There's a whole host of tenants that have moved, and our flight-to-quality train moved from … north of Pratt Street down to Pratt Street," Paine said. "So, it's essentially a shuffling of ships across the board, right, from older products to newer products, and then downsizing at the same time."

Baltimore's office market posted over 100K SF of negative net absorption in the final three months of last year, the fourth consecutive quarter of occupancy losses, according to JLL, which estimated the market at 19% vacancy. The T. Rowe Price space at 100 E. Pratt St. counts in the availability metric as it is up for lease, but it will contribute to the vacancy figure after the firm leaves, Paine said. 

"When T. Rowe moves from Pratt Street to Harbor Point that's going to cause a large vacancy," Paine said. 

Other area commercial real estate professionals also expressed optimism about 100 E. Pratt St.’s ability to find another tenant to replace T. Rowe Price.  

Owen Rouse, vice president of investment sales at MacKenzie Commercial Real Estate Services, said he’s optimistic the building remains an attractive location for companies that want to be located in Baltimore.

Additionally, Rouse said, the building is set near major highways, delivers attractive views of the Inner Harbor and offers a "boulevard feeling" along Pratt Street. 

"I think we've got good solid latitude and longitude, the physical plant is outstanding... [there’s good] lead time to sort of get some traction on who might be interested," Rouse said. 

Downey and Worthington echoed those sentiments. They said factors like 100 E. Pratt St.’s status as a Class-A building, as well as its setting in a prime location adjacent to the Inner Harbor with substantial parking, harbor front views, solid floor plans and ownership invested in upgrades, give them the confidence they’ll find a tenant.   

"We have a Class-A building here and there's no two ways about it. And we believe, and the owners do as well, that we have one of the nicest buildings in downtown Baltimore. We'll compare it to any building ... when you look at the views and the quality of this building, compared to a lot of buildings at Harbor East, there's no comparison," Downey said.