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Class A office space: If you build it, will tenants come?

When a family with strong ties to Anne Arundel County broke ground for a new building on West Street in Annapolis, they also broke a long dry spell of speculative office construction. The Annapolis Town Center was the last spec office project here, and that opened in 2008.

According to the broker for the new Tate Building, the family was looking for a long-term investment on the property where their auto service center had stood. With class A office space hard to find in Annapolis, it seemed like a smart option. The property owners, the developers and the brokers held a grand opening celebration in mid-January.

In all, the two-story building offers 31,600 square feet of space. While the original plan was for all of that to be offices, there may be some storefront space for a wine shop and one or two other retail tenants. Law firms, technology companies and brokerage firms are among the businesses that have toured the property. Rent is set at $30 per square foot.

While there is parking, the developers included at least one amenity that should encourage tenants to bike to work: The building boasts shower facilities on the first floor.

Spec office buildings have been rare over the past few years, and not just in Annapolis. The recession had a lot to do with it, of course, but the market in Annapolis is unusual, the broker explained. In other cities, a developer won't break ground until a certain percentage of the space is leased. In Annapolis, it's hard to find businesses that are willing, much less anxious to commit before the space is nearly finished. Leasing isn't usually a problem once there's something to look at, especially with Class A space, he said, but businesses have to see it before they'll sign for it.

Source: Baltimore Business Journal, "Annapolis gets first spec office building since 2008," Kevin Litten, Jan. 14, 2014

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