Maryland Looks to Dispose of 37-Story Office Tower in Downtown Baltimore
Repairs to the building, which is facing “catastrophic failure,” would cost $110 million in taxpayer funds
By Nick Trombola March 24, 2025 2:30 pm
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Turns out the federal government isn’t the only institution looking to cut down its real estate portfolio to save some much-needed capital.
The State of Maryland is taking a page out of the Department of Government Efficiency’s playbook with new plans to shed the 37-story William Donald Schaefer Building in Downtown Baltimore and relocate its workers there, in a bid to avoid repairs to the property that are estimated to exceed nine figures. The Business Journals first reported the news, citing Maryland Department of General Services (DGS) spokesperson Eric Solomon.
The state’s decision to dispose of the tower at 6 St. Paul Street, which houses some 800 workers across more than a dozen state agencies, comes after over a year of handwringing over what to do about the aging property, which it purchased in 1992 for $12.2 million. The 1986-built tower was facing “catastrophic failure” if repair and upgrades to it weren’t made, according to a December 2023 report by DGS, including structural issues in its underground parking structure and HVAC system.
The estimated cost of the repairs are more than $110 million.
The state Board of Public Works last July approved a nearly $3 million emergency request to design structural improvements and HVAC repairs. Yet the state ultimately decided last month to “retire” the property. The state will gradually relocate the hundreds of workers housed in the tower to newer, commercially leased properties over the next three years, Solomon told Commercial Observer.
“I have to question whether it is worth it for us to put $110 million into this building rather than moving the employees to other buildings,” Maryland Comptroller Brooke Lierman said in a statement following the July emergency spending approval. “I’m happy to vote yes on it, but $110 million is three elementary schools, so I’m cognizant of it being a lot of money. I just want to understand what kind of comparison or economic analysis we have done to make sure that’s the right course for the future of the state office buildings in Downtown Baltimore.”
The state’s decision to shed the 37-story tower comes just a few months after Gov. Wes Moore’s executive order to improve government efficiency and save taxpayer funds. Moore’s order from early January directed all state agencies to collaborate with his Office of Performance Improvement to identify viable operational cuts, and clearly the shedding of the Schaefer Building fit the bill.
There are also other state-owned properties Maryland could unload, including some at the 28-acre State Center, less than two miles north of the tower.
That’s also true of a stable of at least eight other state-owned properties that are either underused or too costly to maintain, Solomon said. The aging State Center, for example, had for years been tied up in courts, as the state’s previous administration canceled plans to redevelop the vast complex in 2016 and then announced plans to trade it to the City of Baltimore in 2022.
While that transfer hasn’t yet happened, Moore in November announced that a $58.5 million settlement had been reached with the developer of the canceled redevelopment, potentially paving the way for the sale of four buildings at the complex, per Solomon.
“The delays caused by the ongoing litigation have created questions about the future of State Center, delayed critical planning, and blocked much-needed investment and redevelopment in the City of Baltimore,” Moore said in a statement at the time. “A settlement will avoid more prolonged, costly litigation and risk on behalf of taxpayers, which would have continued for years.”
The decision to sell the Schafer Building also reflects current market realities in Baltimore. Despite a strong final quarter of 2024, office vacancy in Charm City has steadily trended upward since at least the onset of the pandemic, hitting 19.7 percent at the end of last year, according to a recent market report by CBRE (CBRE). The city has also posted five straight years of occupancy loss, mostly from tech and business services tenants, per the brokerage.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
