While New York City office landlords live in fear of an estimated 44% drop in value, Baltimore landlords are witnessing further, faster declines.
An affiliate of Virginia-based American Real Estate Partners sold a downtown office building at One South Street for $24 million, the Baltimore Business Journal reported. report. New York-based BHN Associates acquired the property, a first for the city.
The 30-story, 475,000-square-foot property is trading for about $52 a square foot. If that’s an easy sell for American Realty Partners, it’s this: Just eight years ago, it paid $66 million for the same property, selling for nearly 64% less than what it paid for.
For BHN, this is an opportunity to buy a luxury Grade A office building at an exceptionally low price, hoping to turn the fortunes of the property around.
The transaction was a short sale, meaning BHN paid less than the property’s outstanding mortgage. Mordy Wider, a senior director at the firm, said it would have been more costly to refinance the property, especially given rising interest rates.
“The time has come,” Wade said in the announcement of his corporate deal. “Now is the opportunity to move in.”
The property is not without its faults, which may have contributed to the discounted price. Alex Brown & Sons has long been the anchor tenant of the property, which was completed in 1992. However, the anchor tenant vacated the space more than a decade ago following a merger and sale to Deutsche Bank.
Brokerage firm Stifel, Nicolaus & Co. is the current anchor tenant in the 76,000-square-foot space. BHN is already trying to drum up more business for the downtown landmark. A broker for the property said three local law firms are visiting vacant spaces in the building, considering leasing up to 30,000 square feet.
— holden walter warner