Baltimore’s retail market is alive and well and has experienced something of a boom in retail activity, driven in large part by the thriving retail hubs in the city and in the surrounding suburbs. Demand for space continues to be robust and prospective tenants and investors alike are excited to be part of the Baltimore market.
But the reasons why are more nuanced than simply piggybacking off the overall growth that brick-and-mortar retail is seeing across the country.
Baltimore is a bargain
One of the causes is the terrific value that Charm City offers when comparing prices to the major metropolises of Washington, D.C., to the south and Philadelphia to the north. The Baltimore MSA offers attractive demographics and strong retail fundamentals, making it a prime target for local, regional and national investors.
A great example is the sale by KLNB’s Retail Capital Markets team of Arbutus Shopping Center in fall 2024, a 88,000-square-foot, grocery-anchored center that attracted significant demand due to its Baltimore County location, sub-$20 million price point and the broader market’s interest in grocery-anchored retail assets.
Due to these robust conditions and factors, among other reasons, owners are hesitant to sell — despite the substantial interest they would inevitably see from buyers. Instead, they prefer to hold their properties long-term because of solid asset performance and overall positive market fundamentals.
They also benefit from strong cash flow, stable rent rolls and rising rents. In addition, if they should decide to sell, the limited market availability of similar properties for reinvestment contributes to owners’ reluctance to let go of a productive property they already have.
Consumers love convenience
Today’s consumers are looking for accessibility, variety and innovation. Shoppers continue to gravitate toward properties that offer seamless, expedient shopping experiences that provide a huge variety — everything from grocery runs to dining out — without the need to navigate through crowded urban spaces. Convenience is especially important for people who work from home.
With fewer employees commuting to the office, lunchtime, mid-day errands, gym visits and after-work shopping in local, accessible centers has become more common.
And the modern blueprint to meet this seamless shopping experience is the surface shopping center, particularly those anchored by grocery stores and with ample nearby parking.
Areas like Canton Crossing and McHenry Row in Baltimore are prime examples of the types of centers that are driving Baltimore’s retail sector. They provide a variety of brands and experiences, have convenient close-in parking and are near major interstates, which pulls a regional draw. Together, these traits allow shoppers to get in, run their errands or meet friends for dinner and be headed home in no time.
But because of the popularity of these destinations, space is understandably limited. To help accommodate the thriving market and meet tenant demand, landlords are becoming innovative in adapting existing spaces and finding unique ways to increase GLA (gross leasable area) within their centers. One method is by developing pad sites. They bring additional traffic to the property, often synergizing well with the existing co-tenancy.
Developers react to demand
The scarcity of available retail properties has not been ignored by developers. Baltimore is experiencing a surge in new developments and revitalization projects that are reshaping the city’s landscape and helping to fuel and support the market.
Local developer Caves Valley Partners has breathed new life into the popular Village of Cross Keys in north Baltimore, attracting a mix of exciting new tenants like the dining options of Cece’s Roland Park and Kneads Bakeshop, and the first Baltimore location of Blue Mercury.
At Baltimore’s Harbor Point, the arrival of T. Rowe global headquarters is driving growth, with new residential spaces and restaurants enhancing the area. Meanwhile in south Baltimore, the Baltimore Peninsula is undergoing a major transformation as Under Armour’s new headquarters continues to take shape, creating a dynamic hub for both business and retail. In Middle River, new developments like Greenleigh and Aviation Station are bringing more retail and residential options to the region.
These projects reflect Baltimore’s evolving retail scene that continues to expand beyond the beltway, with a focus on spaces that blend surface-center shopping, dining and even residential life, signaling exciting experiences for the city’s future.
Baltimore’s retail market is not one-size-fits-all. For savvy investors and retailers, the key to success lies in knowing where to look — and understanding the evolving demands of today’s shoppers.
Whether in the suburbs or the city, the retail landscape is full of opportunities for those who are ready to adapt to the changing market.
— By Alex Shearer, vice president at KLNB. This article was originally published in the February 2025 issue of Southeast Real Estate Business.