Two towering projects optimistic about getting tenants

Developers have taken new interest in the Tower Oaks office park on the south side of Rockville, as they have broken ground on two speculative office buildings without waiting to line up tenants.

The Tower Cos. have started work on the Tower building, a 10-story office structure at Montrose Road and Interstate 270. Nearby, Boston Properties has started site work on the Preserve, a seven-story building at 2600 Tower Oaks Blvd., also fronting on I-270, a little north of Bethesda. Neither have lined up tenants yet.

The two buildings combined will add 451,00 square feet of speculative office space to the Montgomery County market by spring 2001, but leasing activity is strong now, brokers said.

"It wouldn’t shock me if both were leased before they were finished," said Jay Olshonsky, a broker with CB Richard Ellis who works in the area.

It’s an active market, said Beth Barger, an analyst with Delta Associates. She pegs the vacancy rate in the North Bethesda submarket – an area with some of the most widely definitions – at a low 3.2 percent.

Developers in suburban Maryland have been cautious about starting speculative projects, preferring to sign tenants before breaking ground.

But Tower feels that its $50 million investment in the 276,000 square feet office building is safe.

"If you look at what’s in Bethedsa , there are no vacancies, no planned buildings, Look north to Rock Spring, and you see the same, very tight market for large users," said Jeffrey Abramson, a partner with Tower.

"There,s a lot of activity, People who are calling are looking for space much faster than we can provide it."

Tower is asking rents equivalent to $30 a square foot, full-service, Mr. Abramson said.

The market is strong enough that Tower is now designing what will likely be a proposal for a 500,000 square feet complex of two buildings, he said. Tower then hopes to build a 300-room hotel at the park.

Tower also wants its building to make an architectural statement that will attract high-tech companies. The company is using a dramatic design by Kishimoto. Gordon Architects of McLean. Sigal Construction is the general contractor.

In this regard, the firm is following up on the work it did with the Millennium Building at 1909 K St. NW. Both use advanced mechanical and ventilation systems to control noise, save energy and accommodate telecommunications.

"We’re building a total environment in which people are working 10 to 12 hours a day. They’re in there more than they’re in their homes. Buildings need to work for people." Boston Properties also feels confident in its project, which is estimate to cost $38 million or more.

The North Bethesda/Silver Spring submarket has a vacancy rate of 1.2 percent, said Anne Dumont, vice president with Boston Properties.

"We have a number of strong prospects" Ms. Dumont said. Another Boston properties official agreed.

"We’re trying to capitalize on a market that hasn’t had any new office projects over the last five to six years yet the tenant base has continued to grow," said Woody Bolton, project manager for the building.

The 185,00 suare foot building, with about 177,000 rentable square feet, may not be finished until January next year. Hellmuth, Ovata & Kassabaum PC is the architect and Tompkins Builders is the general contractor on the project. The building is the first of what could be six structures totaling 1.1 million square feet, planned by the Boston –based real estate investment trust.