Leading business leaders in Baltimore yesterday recommended a massive rebuilding of that city's downtown retail core - complete with a monorail people mover, second-level walkways across streets and connected to the already built Charles Center, and a covered mall along four blocks.

Faced with a sharp decline in retail sales over recent years, downtown Baltimore merchants said they can't survive much longer without a broad rejuvination aimed at attracting business from nearby residents as well as office building workers.

Two weeks ago, Hochschild Kohn & Co. announced that its department store downtown will be closed for good in July. The Baltimore Playboy Club was locked up last weekend after 12 years, a new Hilton Hotel at Charles Center is suffering financial difficulties and the city also lost its professional hockey team, the Clippers, a week ago. The basketball Bullets defected to Washington earlier.

Both the Clippers and Bullets had played their games at a sports arena adjacent to the 33-acre, $180 million Charles Center commercial and cultural complex.

Another warning of possible withdrawal came yesterday, even as officals of the Greater Baltimore Committee unveiled plans for the rebuilding. Charles Heller, president of Stewart & Co., another long-time Baltimore department store firm, said that unless the project is started "in the very near future, we cannot guarantee our continued presence in the center city."

A department by Stewart's, a division of the national Associated Dry Goods-retail firm, would leave downtown Baltimore with three large stores - Hutzler Bros., the Hecht Co. and Brager-Gutman - compared with five today. The Stewart officer said his firm has "enthusiastically supported" the rebuilding and Hochschild president Ward Woods yesterday emphasized his firm's willingness to study new sites for a store if the program is inaugurated.

American National Building and Loan Association, meanwhile, said it is interested in development of one major office building proposed yesterday.

The master plan for rebuilding is based on two reports, by Wallace, McHarg, Roberts & Todd and Arthur Cotton Moore Associates. Officials emphasized that "none of this can happen overnight," as they detailed key elements:

A retail mall corridor along Lexington Street, anchored at the west by the famous Lexington Market and its dozens of food stalls, which all studies have pinpointed as the strongest single attraction for people in that part of Baltimore. The mall would extend east toward Charles Center, providing a connection between the "new" and "old" parts of downtown.

Three new office buildings, with retail space provided on the first and second levels in two of the towers.

A new department store location with up to 150,000 square feet of retail space at the eastern edge of the complex and actually a part of the Charles Center. A second-level walkway system already in place in Charles Center would be extended to the west with shops on two or three levels.

Conversion of Lexington Street into a covered mall, development of a plaza in front of Lexington Market, entrances forthe city's planned subway system, construction of a new ice rink and five new parking garages.

Spokesmen for the Greater Baltimore Committee said yesterday that the rebuilding will have to be a combined public-private sector undertaking. Talks with some major devlopers have been "encouraging," they added.

The business group plans to recommend to the city the names of firms "best qualified" to execute the plan along with private sector commitments before any city financing aid is considered. The long-range package, expected to take a decade and cost well above $100 million, probably would require voter-approved loans and a new urban renewal district.