ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Wednesday, December 27, 1995 TAG: 9512270050
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: BALTIMORE
SOURCE: Associated Press
Baltimore's downtown, like that of many cities in recent years, has been battered by companies leaving for the suburbs.
Just this year, insurance giant USF&G announced it would move out of its downtown office tower to a corporate campus on the northern edge of the city. And Baltimore Gas & Electric said it too would flee to suburbia as part of its merger with Potomac Electric Power Co.
But Sylvan Learning Systems, an educational tutoring company, is bucking that tide and has broken ground on a new $12 million downtown headquarters.
And other cities, such as Atlanta and Louisville, also are seeing a return to downtown, where rental prices have slipped in recent years and local leaders are willing to help make moves affordable.
``What Sylvan is doing does send a good positive signal, and we will use that,'' Baltimore Mayor Kurt Schmoke said. ``It brings a good powerful symbol that the city is a good place to do business.''
Sylvan's new seven-story headquarters building will be part of the new Inner Harbor East development, a $350 million business and residential complex that is Baltimore's first major new downtown development in five years.
Sylvan founder Doug Becker's theory is that as more and more companies have moved to the suburbs seeking cheaper office space, they have driven up the cost of suburban locations and made downtown space affordable again.
Others agree.
``We're seeing a lot of the companies that moved out to the suburbs now looking at downtown because the rental rates are competitive,'' said David Kornblatt, president of the Kornblatt Co., which owns several Baltimore office buildings.
Sylvan, now with its headquarters in Columbia about 12 miles west of Baltimore, isn't the first employer to move downtown this year, said Ira Miller, principal of Miller Corporate Real Estate Services, a Baltimore brokerage.
The Annie E. Casey Foundation, a philanthropic organization that benefits children, moved to new downtown offices from Connecticut this year, as have several other companies, Miller said.
``And there are others that are considering it,'' said Miller, who helped negotiate the Sylvan deal.
Also important is the fact that major downtown employers whose leases are coming up for renewal, such as securities firm Alex. Brown & Sons, have decided to stay put.
About 20 percent of the office space downtown is now vacant, up from 17 percent or 18 percent a few years ago.
Companies now looking for top quality office space downtown can find it for $17 a square foot, while in the suburbs it is often $21 to $22, Miller said.
One advantage suburban locations have over the city is the availability of free parking, brokers say. But the city in recent years has started to address the problem, offering deals for employee parking, Miller said.
And Baltimore isn't the only place where the trend toward the city is evident.
Atlanta this year lured a major utility-holding company, Southern Co., downtown in what city officials billed as the first time they had managed to get a major company to move into town since 1982.
Hillerich & Bradsby, maker of Louisville Slugger baseball bats, recently opened a new headquarters building in the center of Louisville.
Still, there are companies that think city life is just too costly.
``The fact that you get more for your money [in the suburbs] is still a true statement,'' said Mark Hoewing, executive director of International Association of Corporate Real Estate Executives, whose members help companies select sites.
For Sylvan, which operates tutoring centers in some Baltimore public schools, the move was driven in part by the company's changing customer base. The company began as a chain of suburban tutoring centers, but in recent years, it has begun offering its tutoring services to city school systems, including Baltimore.
But the company was also lured by city officials' willingness to make the move downtown affordable.
``We went to the city and said this is what we'd be willing to spend,'' Becker said.
``I hope that we're really signaling change in the other direction.''
LENGTH: Medium: 87 lines ILLUSTRATION: PHOTO: AP. Sylvan Learning Systems founder Doug Becker thinksby CNBbusinesses should be looking again at downtown locations such as
Baltimore's Inner Harbor. color.
SYLVAN LEARNING SYSTEMS is building a $12 million headquarters
in Baltimore. As more companies move to the suburbs, the cost of
space there rises, making the city affordable again.