Baltimore Retail Market Stands Tall, Poised for Another Solid Year Ahead
It’s gearing up to be another solid year for Baltimore’s retail industry. Thus far, the first quarter has shown few surprises and has largely been a continuation of the success the sector saw in fourth-quarter 2019.
Rent has remained relatively flat the past two years, outside of a few developments that have delivered, and we’re expecting more of the same this year. After a small bump in the road five years ago, the market has stabilized and retail vacancy in the Baltimore metro region remains tight. With limited new supply coming to market, landlords are focused on backfilling existing space. Class A and B properties continue to show healthy leasing trends, while Class C properties continue to be the value options for mostly local retailers.
Baltimore metro’s primary retail corridors — York Road, Reisterstown Road, the core of downtown Baltimore, Columbia, White Marsh and Annapolis — continue to thrive. We’re also seeing strong growth along Ritchie Highway from Pasadena to Glen Burnie, buoyed by a string of new store openings at the Pasadena Crossroads Shopping Center, which is anchored by Sprouts Farmers Market, Ulta Beauty, T.J. Maxx, DSW, LA Fitness, Party City, Hobby Lobby, HomeGoods and Gardiner Wolf Furniture. In Baltimore City, the Boston Street corridor in Canton is flourishing with the success of the Shops at Canton Crossing and the new Yard 56 and Collective at Canton developments.
What’s trending now?
The hottest submarkets in the region are marked by new construction and the adaptive reuse of existing space utilized to accommodate new consumer patterns. Circle East in Towson and Towson Row, two mixed-use, pedestrian-friendly centers adjacent to Towson Town Center and the Towson Central Business District, are set to deliver this year and will bring new retail to the submarket, including a new Whole Foods Market.
On the northwest side of the county, the former Owings Mills Mall site has evolved into another successful pedestrian-friendly, open-air center — Mill Station, which is home to Costco, AMC Theatres, Giant Food, Lowe’s Home Improvement, Marshalls, Burlington and HomeSense.
Finally, downtown Columbia introduced Merriweather District, which will be home to 2.3 million square feet of office, 320,000 square feet of retail, 1,900 residential units, 250 hotel rooms and an enhanced Merriweather Post Pavilion entertainment venue.
Commercial real estate investors, landlords and brokers are all witnessing a battle for consumer grocery dollars. Last year, Shoppers Food announced it would exit the retail grocery business and shifted its focus to selling its existing 43 stores in Maryland and Virginia.
On the other end of the spectrum, Aldi has recently completed renovating a number of its stores in the Greater Baltimore area while continuing to expand. Lidl has begun penetrating the market with two new store openings in Baltimore County and a third in Harford County.
Sprouts, a natural and organic grocer based in Phoenix and relative new entrant to the market, continues its expansion throughout the region with the addition of two new locations that will bring its store count to five in the area.
The industry is also keeping an eye on Amazon’s impact on the grocery market as it expands into the region with physical locations. Major questions exist surrounding Amazon’s plan to disrupt traditional grocery patterns utilizing its online delivery and pickup platforms.
In restaurant news, we continue to see corporate and franchise-based food concepts expanding their footprints in the Baltimore metro market, including MOD Pizza, Nando’s, Cava, First Watch, Tropical Smoothie Café and Jersey Mike’s. In downtown Baltimore, chef-driven restaurants continue to add diverse culinary experiences. Atlas Restaurant Group is a popular brand in the dining scene as it adds exciting new options throughout the region and beyond.
The fall of many well-known big box stores is sending ripples throughout the industry. Locally, real estate experts are keeping an eye on the future of Sears locations at Harford Mall, White Marsh Mall and Bel Air, and the likely impact on the dynamic of each center. Owners are repositioning these centers while others look to model projects in Columbia and Hunt Valley as the inspiration for change.
Industry professionals continue to monitor the far-reaching effects of retail bankruptcies on the shopping center business. The subsequent closings of tenants such as AC Moore, Pier 1 Imports, Bed Bath & Beyond and Dress Barn appear to be more global than site- or market-specific. One thing is for certain: This new wave of recent bankruptcy filings has created opportunities for both landlords to reposition aging assets and tenants to reposition older stores or perhaps open a highway for new growth in the region.
Shopping center owners will continue to look for additional redevelopment opportunities to add density to projects. Many centers are adding or expanding multifamily elements to provide additional retail foot traffic.
Overall, growth and cautious optimism ring true in the Baltimore metro market and 2020 will be another solid year for retail.
— By Cooper Henry, Principal at KLNB. This article originally appeared in the March 2020 issue of Southeast Real Estate Business.