Baltimore Developers Navigate Concerns Over Safety And Inequality
Developers working in Baltimore expressed optimism about the future of commercial real estate in the city but said making those visions a reality requires improving safety while simultaneously addressing inequality.
Safety issues remain a prime concern for developers working in Baltimore. The city of roughly 600,000 people has suffered more than 300 murders a year for the last seven years. As crime has risen, more tenants have left the traditional central business district, which according to JLL’s second-quarter market report had a 22% office vacancy rate, compared to 14% on average across all suburban markets.
While the coronavirus pandemic and the ongoing trend of a flight to quality from the district’s older office stock have played a role in the struggles with vacancy, developers at Bisnow’s Baltimore State of the Market event Sept. 22 at 2455 Banner St. said concerns about safety have also made it challenging to retain and attract new tenants.
As a result, developers and property owners said they are investing heavily in safety measures.
“We invest a lot of money in security, both in guards and access control systems, and regardless of [a tenant's] size, that's a big deal,” said John Hermann, a vice president of asset leasing and management at Corporate Office Properties Trust. “So we take that very seriously, we invest a lot of money in that. That's probably one of our biggest expenses, if you will, something we pay really close attention to.”
Corporate Office Properties Trust owns some of the most prominent buildings on the Baltimore skyline, including the Pandora building at 250 West Pratt St. and the former Transamerica building at 100 Light St. where the firm is investing millions of dollars in upgrades not only on infrastructure like HVAC and amenities such as gyms, but multiple levels of security measures as well.
Others said making tenants feel secure requires more than security guards, nearby parking and key fobs. Bill Struever, principal at Cross Street Partners, said having more activity on the street is the best crime deterrent that will also boost tenant interest in city office space.
“It's so important to have a safe, lively streetscape and stuff going on … So you have more people nights and weekends to support that,” Struever said. “Because if you don't have action on the street, we're dead meat.”
Struever’s firm has steered some of the city’s highest-profile projects, such as the redevelopment of the A. Hoen & Co. Lithograph Campus. Cross Street Partners is also developing office space as part of the redevelopment of Penn Station, which involves at least $400M in private investment.
Despite headwinds blowing in the city’s face, some developers said they see Baltimore as the last East Coast city where the cost of building, especially for younger builders, is not prohibitive.
Dan Blythewood, president of La Cité Development, said Baltimore represents the last opportunity for developers of his generation to have an impact on par with what previous generations made in other East Coast cities.
La Cité Development is leading the Center\West project in Baltimore’s Poppleton neighborhood. Plans for the development involve overhauling nearly 33 acres into 3.2M SF of new building with roughly 1,800 units of housing and as much as 200K SF of commercial space.
“Baltimore has the opportunity because, if you [compare it] to say, Boston all the way to D.C., this is the last bastion of opportunity on a large-scale basis to do redevelopment in a major city in America. So, finally, our age group, the bottom portion of Generation X, have an opportunity to play in the sandbox, which is [what] our parents did … in New York, and Boston and D.C.,” Blythewood said.
But some developers argued that before those opportunities can be seized, the city must fix the seemingly intractable issue of wealth and race in Baltimore.
Thibault Manekin, principal at development firm Seawall, said developers need to make sure their investments are going to city neighborhoods besides often well-to-do waterfront communities. Builders also must make sure there is a diversity of stakeholders in these projects, he said.
Manekin’s company is preparing to deliver a $45M market building in hopes of reviving the historic Lexington Market, which is in the struggling Westside neighborhood downtown. He said 50% of the new vendors will be Black-owned businesses, 50% will be city resident-owned businesses and 50% will be women-owned businesses.
“In our experience, the only way it happens is when we are really able to listen deeply to the communities. We're making sure that everybody that the ideas touch feels the same sense of pride of ownership and authorship in what's getting created,” Manekin said.
Struever agreed the success of future developments in Baltimore depends on addressing the wealth gap between White and Black neighborhoods, which is often reflected in the city’s development patterns.
“I’d take the ‘tale of two cities,’ which has been a plague, and make it a tale of one city coming together. We've had the best waterfront anywhere in the world,” he said. “But there's always been the plague of the profound issues of East and West Baltimore. And if we don't address those, we're going to be two cities, and it's not going to work.”