Legg Mason Building to Get New Name
- Sep 27, 2010
September 27, 2010
By Barbra Murray, Contributing Editor
Signing a 140,500-square-foot lease with Lexington Realty Trust, Transamerica Life Insurance Company has paved the way for its consolidation and relocation to the 530,000-square-foot office building at 100 Light Street in Baltimore’s City Center submarket. As part of the lease agreement, the 35-story high-rise once known as the Legg Mason Building, will be branded the Transamerica Tower.
“The greatest significance of this transaction is the fact that Transamerica has elected to move their U.S. headquarters here and renew their commitment to Baltimore by leasing in this iconic building on the Baltimore skyline,” David J. Downey, Jr., managing director and principal with real estate services firm Cassidy Turley, told CPE. Cassidy Turley represented both the landlord and the tenant in the transaction.
Transamerica will occupy space at the renovated 37-year-old property under a lease with a term of 10 years and three months, and two options to renew for an additional five years. The lease will become effective by November 1, 2011, and will allow the company to relocate its 700 employees from two outdated, single-tenant buildings north of City Center, and consolidate the workers under the roof of a Class A facility. Lexington, acting through a wholly owned subsidiary, acquired 100 Light Street in late 2006 and later submitted the property to a $43.1 million modernization program that included the development of a $23.3 million parking facility across the street from the office structure.
From Maryland Governor Martin O’Malley –who said in a prepared statement that the Transamerica lease will “help boost Maryland and Baltimore City’s economy”–to the mayor to the local economic development offices, it appears everyone is touting the company’s commitment as a major coup for the city. But perhaps no one is more pleased than Lexington, which has now taken the occupancy level at 100 Light Street from 26 percent to 72 percent within the last 12 months. Among the more notable leases over the last year was law firm Ober|Kaler’s deal for 94,000 square feet in April.
Financial terms of the Transamerica transaction have not been disclosed; however, Cassidy Turley is marketing the remaining space at 100 Light Street for between $29.75 and $31.75 per square-foot
Transamerica’s impending move is also good news for the Baltimore office market. According to a midyear report by MacKenzie Commercial Real Estate Services, the average vacancy rate is approximately 15.3 percent in Greater Baltimore, and 19.6 percent in the City Center submarket. “The market vacancy hasn’t been this high in 20 years,” Mark M. Deering, senior vice president and principal with MacKenzie, told CPE. “The market is anemic. It’s struggling. Most companies are just trying to keep their business afloat; they’re not taking advantage of leasing opportunities. The Transamerica lease is a double bonus to the marketplace because they are vacating two single-tenant buildings that are not statistically tracked, so there will be 100 percent absorption.”
The insurer owns one of the office properties it currently occupies and leases the other. “They are leaving behind two buildings, so if they don’t stay off the statistically-tracked market, that will need to be addressed,” Deering noted. “One of them is the former Monumental Life building, and I don’t envision it as a multi-tenant property without radical surgery to the building. But Transamerica is a major national tenant so it’s good for City Center regardless if it’s 100 percent absorption or not.”
Although the market vacancy rate has reached a two-decade peak, those in the trenches see a light at the end of the tunnel. “The good news is there is no new construction and, along with the Transamerica deal, there has been some leasing activity,” Downey said. “We’re hoping that all the activity will put a dent in vacancy rates.”