Prominent Lombard Street Office Tower's Value Drops 76%
The appraised value of the financially troubled office tower at 300 E. Lombard St. in downtown Baltimore has plummeted by 76% in the last decade, according to a new report from Morningstar Credit.
The property received a new appraisal in January, putting its value at $9.1M, down from $38.5M in December 2014.
Morningstar cited a sharp increase in vacancy at the property as the catalyst for the dropping value. It reported that the building had an occupancy of 57% last June, a sharp drop from 97% a decade before.
According to property records, Pittsburgh-area firm JMS Capital Group, via subsidiary PWA 200 East Lombard LP, purchased the property in 2015 for $40M. JMS Capital Group didn't respond to requests for comment.
Last month, the Baltimore Business Journal reported court records showing that the CMBS lender for 300 E. Lombard St. filed documents on Jan. 15 seeking a court-appointed receiver for the building.
As the building's financial woes continue, it may slow efforts to backfill vacancies as tenants keep departing.
In February, real estate investment firm ABR Capital Partners announced it planned to relocate from 300 E. Lombard St. to a nearby downtown tower at 100 Light St.
Also last month, a state official told the Baltimore Business Journal the building's financial issues may delay moving the state Department of General Services into the property. The department inked a 10-year, 44K SF lease at the building as part of a plan to relocate state agencies from the decrepit State Center complex near Midtown.
Baltimore's traditional central business district has struggled to retain tenants for years, due in large part to the flight-to-quality trend that has resulted in tenants leaving downtown for newer mixed-use developments like Harbor East and Harbor Point.
According to reports from CBRE and JLL, that trend continued last year. In 2023, the city posted an occupancy loss in every quarter, with over 100K SF of negative absorption in Q4 alone.
JLL Research Manager Kate Paine wrote in her Q4 market assessment that "leasing activity continues to be a story of contractions coupled with an upgrade in building quality.
As a result, several prominent office assets downtown have lost significant value, and in some cases, even ended up sold on the auction block at a substantial discount to the buyer.
Those properties include 100 E. Pratt St., which saw its assessed value drop 45% last summer to $93.65M. That drop in value coincides with the property’s largest tenant, T. Rowe Price, planning to vacate 450K SF in the building this year for a new headquarters in Harbor Point.
Some properties, like One E. Pratt St., have sold at auction after owners defaulted on loans. An affiliate of MCB Real Estate held the mortgage on that property and bought it at the auction for $25M. The previous owner, an affiliate of Banyan Street Capital, had purchased that building for $80.1M in 2018.
