Longtime Baltimore Office Tenant Stays Downtown With Move To Renovated 100 Light St. Tower
Downtown Baltimore faces high office vacancy as some tenants depart the central business district, but the owner of one newly renovated office tower has managed to keep a significant tenant downtown.
ABR Capital Partners leased 11,600 SF on the 24th floor of 100 Light St., property owner Corporate Office Properties Trust announced Thursday. ABR, a real estate investment firm, plans to relocate in August from 300 East Lombard St., its home for about two decades.
Formerly Alex Brown Realty, the firm has been based in Baltimore since its founding 50 years ago, and it traces its roots back to the country's oldest investment bank, Alex. Brown & Sons, which was founded in Baltimore in 1800.
"It is important to us to operate close to our roots," ABR Senior Managing Partner and Chief Investment Officer Tom Burton said in a statement.
COPT purchased 100 Light St. in 2015 for $121M, according to property records. After taking control of the 35-story, 562K SF office tower, the firm invested more than $20M to reposition the building.
"We believe the upgraded space and its amenities will benefit our employees, our clients and our partners," ABR Senior Managing Partner Ed Nordberg said.
John Herman, COPT's vice president of asset leasing and management — speaking this fall when 100 Light St. hosted the Downtown Partnership's annual meeting — said the goal of those investments are to transform the asset into “the new center of energy in the heart of the CBD.”
“Why would COPT make such investments in a market that is undoubtedly struggling? I think the answer is obvious,” Hermann said at the time. “These investments will make this iconic building … something to be seen.”
However, the central business district's office market has endured significant challenges of late. Major tenants including T. Rowe Price, Pandora and Goodwill Industries plan to depart offices downtown, leaving large vacancies that brokers fear will be difficult to backfill.
“We’ve got a problem on Pratt Street, and that’s the best of the best,” Owen Rouse, vice president of investment sales at MacKenzie Commercial Real Estate Services, said recently.
According to JLL's fourth-quarter market report, the CBD's office market recorded negative net absorption of nearly 87K SF last year. That's despite Maryland moving state offices from the State Center complex in West Baltimore to downtown. Those deals accounted for four of the biggest lease agreements inked in the metro area last year.
"Despite the State of Maryland’s move to the CBD, the downtown submarket will struggle to avoid chronic vacancy, as move-outs and relocations continue to occur at a faster rate," JLL's market report said. "To remain competitive, older buildings in the CBD will require significant improvements, which may not be feasible at the current average asking rent and the outlook isn't any better."
A decision by one of 100 Light St.'s tenants to donate unwanted office space rather than pursue a sublease highlights struggles to fill office space in the city's traditional downtown.
Baker Donelson in October donated more than 15K SF to The Light of Baltimore Incubator to house 30 small businesses on the 23rd floor of 100 Light St. for the next year. The law firm still occupies about 77K SF across four floors at 100 Light St., according to CoStar, and its 15-year lease expires in March of 2025.
Despite the office market's struggles, downtown's boosters said they remain optimistic.
Downtown Partnership Chief Marketing Officer Lauren Hamilton said during the ceremonial opening of Lexington Market this week that she constantly fields calls from news organizations pursuing stories about the area's demise. That's a premise she said she rejects.
"I'm not worried about downtown Baltimore," Hamilton said.
