Mirroring conditions nationally due to elevated interest rates, associated higher construction costs and general economic and geopolitical uncertainties, the volume of retail leasing and new development activity remains “slow and steady” in the greater Baltimore metropolitan region.
The collective business and real estate communities remain optimistic for a rebound later this year, given the robust fundamentals that remain constant locally and the lessons learned during a tepid first-quarter 2025, which was followed by an over-performing remainder of the year. We expect the same to occur in 2026, with robust third and fourth quarters on the horizon later this year.
Interest rate complexities
Although interest rates have declined somewhat over the past year, the continued elevated climate has made all phases of the retail industry more expensive and forced developers and retailers to take a brief pause or to dig deeper for projected returns. More specifically, this has placed a halt on the future development of several new shopping centers in the Baltimore area due to higher financing costs, and multiple local retailers are also rethinking expansion plans because of steeper Small Business Administration and local banking loans.
Separate retail centers in Harford and Howard counties — after being designed and receiving site plan approval — have been casualties as construction pricing came in higher than expected and halted pending groundbreaking events. We believe this is a short-term situation with a rebound looming in the months ahead.
Food-and-beverage
Despite feeling increased pain in their wallets and pocketbooks, American consumers continue to dine out frequently, and the Baltimore area is no exception to this pattern. Similarly, new quick-service restaurants continue to be three out of every four new leases we see in the marketplace, with multiple new users lining up outside the door to replace second-generation spaces.
Canadian-based chain Tim Hortons is aggressively searching for sites to fuel an entry program, and Paris Baguette is quickly gobbling up sites. In the non-food category, Mavis Tire & Brakes, a subsidiary of National Tire & Battery, is hoping to drive into the market in a substantial manner.
Clearing red tape
Baltimore City and its surrounding counties acknowledge the painfully slow permitting and approval procedure that add multiple months to the tenant build-out process, but improvement has been difficult to distinguish.
In one specific case, Aldi signed a new lease at a Baltimore City shopping center nearly 18 months ago, but construction is still not underway due to the plodding approval process. This is causing frustration at all levels and we surmise that certain transactions have been derailed by these issues.
Around the Beltway
While the region has been bereft of high-profile retailers entering the market in the first quarter, certain projects are making positive headlines, and the overall 4 percent retail vacancy is historically high and contributing to continued rental growth. Bright spots include Kimco Realty’s Towson Place, which landed a BJs’ Wholesale Club anchor, and Hunt Valley Towne Centre, which recently unveiled a $10 million improvement strategy on the reformulated Hunt Valley Mall, which was the first entry in the infamous “dead malls” website.
In Baltimore City, 28 Walker Development’s 400,000-square-foot The Shops at Canton Crossing — anchored by Target, Harris Teeter, Michael’s, and Crunch Fitness — continues its reputation as the dominant retail venue in the downtown area. Additionally, Harbor Point, which houses the corporate headquarters of T. Rowe Price, is attracting new restaurants to serve a robust daytime and evening audience.
Chicago-based TREND Community Development Corp. acquired Edmondson Village Shopping Center, a 1940s-era retail venue in 2023 and subsequently revealed its $40 million redevelopment strategy. That investment paid significant dividends with the signing of a major grocery store anchor and supplementary restaurants, but the “cherry on top” emerged recently with Meals on Wheels of Central Maryland’s decision to relocate its corporate headquarters to the site, along with more than 150 employees.
Light at end of tunnel
Retail leasing activity during first-quarter 2025 started off extremely slow before hitting its full stride in the third quarter, and we are optimistically anticipating a similar turnaround this year. Businesses and consumers are coming to grips with multiple economic challenges led by elevated energy and insurance costs, distribution fees, utility bills and employee wages. If you are a small coffee or sandwich shop operator, the market can only bear a limited amount of product pricing increases, which is causing head-scratching and worry.
Developers, retailers and consumer alike are adopting a “wait and see” approach. Retail remains resilient, so we believe better times are just around the corner.
— By Tom Fidler, Executive Vice President, Principal, MacKenzie Retail. This article was originally published in the April 2026 issue of Southeast Real Estate Business.