Three major storylines are playing out in Baltimore, the northern part of the one-two city punch that combines for more than 9 million people and forms the fourth-largest metropolitan region of the country. These three sub-plots each contribute to the larger vernacular of the Charm City story.
The activity in the office sector is occurring against the backdrop of a robust warehouse/industrial market, as national companies are recognizing the attractiveness of the Port of Baltimore and access to the Eastern Seaboard. Baltimore is also enjoying the healthiest retail environments seen in years, highlighted by the construction of new large-scale shopping centers to service Millennials and empty-nesters moving downtown.
1. Shifting Blocks of Space
Two separate 200,000-square-foot blocks of prime office space are moving to the now-under-construction Harbor Point overlooking Baltimore’s Inner Harbor, the development centerpiece of the Constellation Energy Group merger with Exelon Corp. Upon completion, the former industrial brownfield site will feature more than 1.6 million square feet of commercial office space. Add in a separate 200,000-square-foot move by the Baltimore headquarters of M&T Bank from 25 S. Charles St. (with sources indicating the company may back-fill the space themselves) and you have pretty large shoes to fill in the central business core of Baltimore.
Developers and owners not associated with Harbor East, as well as economic development officials, find themselves scrambling to create balance in the city and highlight the virtues and amenities of other sections.
David E. Johnson, Artemis Properties Inc.
2. Apartment Conversions
Millennials and empty-nesters alike are forming a line to stream back into Baltimore City, and everything from neglected or abandoned schools, hotels and former office buildings are being converted into condominiums or apartment complexes. This is significantly softening a vacancy rate that has eclipsed the 25 percent rate among projects north of Lombard Street. Among the most impressive conversion is the repositioning of the 34-story former Bank of America Building at 10 Light St. into 430 residential units.
In a three-block radius encircling the Charles Center section of downtown, nearly 2,400 new apartment and condominium units are currently under construction or in the planning stage, a figure that will add to the nearly 2,600 existing units. This residential backfill is creating new opportunities for restaurants and retailers looking to leverage this population movement, as well as a selling point to area landlords marketing “a several minute walking commute” for employees.
Citywide, a report from The Downtown Partnership suggests that “nearly 8,000 households will be in the market to rent an apartment in Baltimore over the next five years.”
3. Attractive Opportunities
Emerging in the Locust Point section of Baltimore City several years ago was McHenry Row, a mixed-use project near the headquarters of Under Armour that reshaped that section of the city by attracting Harris Teeter, the first grocery store to open downtown in many years. The success of Phase I has spurred McHenry Row II, which recently attracted two national companies from locations in the suburbs. This latest phase involves the conversion of the former Phillips Seafood Co. into a multi-use development.
The iconic One Charles Center, a 22-story high-rise tower in the Charles Center submarket, also filled a full floor with a national company that relocated from the BWI Airport area in Anne Arundel County.
With county to city moves rare, the company cited the project’s proximity to the vortex of transportation amenities including light-rail, heavy rail and bus commuter systems. With many on the east side of the city complaining of traffic woes, thanks to streets that have not kept pace with development activities, the available transportation amenities remains a beacon of hope for the center core.
Other areas of note include the redevelopment of the “Superblock” located on the city’s west side and fronting Lexington Street; the plan to renovate the historic Lexington Market with a $25 million facelift designed to spur nearby office development and the continued rehabilitation of the area surrounding Baltimore’s first casino, located within walking distance to M&T Bank Stadium (home of the Baltimore Ravens).
— David E. Johnson, Executive Vice President, Artemis Properties Inc. This article originally appeared in the July 2015 issue of Southeast Real Estate Business.