Former Legg Mason Tower in Baltimore Gets New 94,200-SF Tenant

April 14, 2010
By Barbra Murray, Contributing Editor

Leasing activity in Baltimore’s struggling office market is slowly picking up, small lease by small lease, but a relatively large new transaction at the former Legg Mason building downtown has incited hopes that a more significant turnaround may be on the horizon. Law firm Ober|Kaler has just committed to 94,000 square feet at Legg Mason’s onetime home at 100 Light Street, soaking up a noteworthy chunk of the available space at the 520,000-square-foot, Class A office tower.

“It is absolutely a big deal,” NAI KLNB, Joseph P. Nolan, principal with real estate services firm NAI KLNB and Baltimore office market expert, told CPE, “There is activity going on but certainly this is a significant transaction.”

Owned by an affiliate of Lexington Realty Trust, 100 Light Street was developed in 1973, and at 35 stories, is the tallest building in Baltimore. The REIT is now planning to spruce up the property with a capital investment of about $43.1 million, including $23 million for the development of a new parking facility adjacent to the building. Ober|Kaler’s lease, which will boost the office building’s occupancy level to 44 percent, begins July 1, 2010 and expires March 31, 2026; the agreement also allows for renewals for up to 10 additional years. The law firm relied on real estate services firm Jones Lang LaSalle for representation in the lease transaction, while Cassidy Turley stood in for Lexington.

For Ober|Kaler, the new lease paves the way for the law firm’s relocation of its headquarters from 120 East Baltimore Street, where it has made its home for the last two decades. Financial terms of the lease transaction have not been disclosed, however, Cassidy Turley is presently marketing office space at 100 Light Street for $29.75 to $31.75 per-square-foot. “Now is the best time for tenants to sign long-term leases and take advantage of the market,” Nolan said. “Ober|Kaler is doing the right thing. There are very attractive lease conditions–very attractive rates, free rent and more money for tenant improvements. It’s a tenants’ market because there is a lot of space available and landlords are being very aggressive.” While conditions are quite advantageous for office property occupants, at this point, only a limited number of businesses are taking advantage of the climate. “There is an element of uncertainty for companies no matter how aggressive landlords are, but businesses with a high degree of certainty can benefit.”

NAI KLNB has seen the trend–capable businesses taking advantage of the tenants’ market–in action at one of the Baltimore properties the firm is currently marketing, the mixed-use McHenry Row. The downtown development, scheduled to deliver this summer, will feature 75,000 square feet of office space, in addition to 250 residential apartment units and 110,000 square feet of grocery, retail and restaurant space.

“In many ways, the market has been slow, but we have signed deals at McHenry Row before the shovel was in the ground,” Nolan noted. KCI Technologies Inc. has committed to 16,000 square feet, a full floor of the office building, the Baltimore Metropolitan Council has signed on for 13,200 square feet, and NAI KLNB has a letter of intent for 20,000 square feet with an unnamed company. “To secure pre-lease agreements for this amount of space is almost unheard of in a market like this, so there are positive signs. It fits in with the turnaround. It’s slow, but deals are happening.”