Washington's Oliver T. Carr real estate development company is undertaking its first Baltimore project with the renovation later this month of the 78-year-old B&O Building at the intersection of Baltimore and North Charles streets.

The Carr Co. is renovating the 13-story building to its original Beaux Arts-style grandeur for office and retail space. When completed, the B&O Building will provide 131,750 square feet of office space, and 17,750 square feet of retail space to be located in the lobby and mezzanine areas.

The B&O Building, which was built in 1905 to serve as headquarters for the B&O Railroad, features a Beaux Arts granite and limestone facade, bronze and marble interiors and wood-paneled executive suites. Computerized elevators and up-to-date air conditioning and electrical services will be installed.

The project contractor is Omni Inc. of Bethesda. Completion of the project and occupancy is scheduled for fall 1984.

Baltimore & Charles Associates, the buildings owners, is comprised of the Carr Co. and CSX Resources Inc., a real estate arm of the CSX Corp., which presently occupies space in the B&O Building.

Financing for the project is being provided by Maryland National Bank.

Other recent developments in commercial realty in the metropolitan area:

* At the Avenel Business Park in Gaithersburg: Penril Corp. has leased 31,000 square feet of space to house a light assembly operation to manufacture modems and administrative offices; Dental Care of America signed a five-year lease for 4,256 square feet; United States Instrument Rentals Inc. signed a three-year lease for 4,393 square feet of space. The company sells and services electronic testing equipment.

* NCSC Housing Management Corp., a non-profit organization serving senior citizens, has leased 3,005 square feet of space at 1010 Vermont Ave. NW.

* The Republic of Bolivia has leased 1,512 square feet of space at 818 18th St. NW to house the Bolivian Mission to the Organization of American States.

* R & W Sales Inc. has leased about 10,000 square feet of space at the Indian Creek I Building on Route 775 in Sterling, Va. The firm manufactures and distributes paper products to airlines.