Overhaul Of Baltimore's Penn Station Spurs Nearby Development Plans, Hopes For New Economic Growth
When the coronavirus pandemic erupted, Cross Street Partners CEO Bill Struever worried its impact might scuttle plans to overhaul Baltimore's 112-year-old Penn Station, where he and his partners envisioned creating a new gateway to Baltimore with more than 1.6M SF of mixed-use development surrounding the transit hub.
"Amtrak ridership plummeted 97% at the beginning of the pandemic, and we were worried what that would do to Amtrak's commitment to the Northeast corridor and Penn Station," Struever said.
In 2017, Amtrak selected Penn Station Partners, a joint venture between Cross Street Partners and Beatty Development Group, to steer a planned transformation of Penn Station.
Despite concerns around the pandemic, Amtrak's fidelity to the project never waivered, Struever said. Work to overhaul the historic station building that features Tiffany glass ceilings began last year, and the development team is nearly ready to start the next phase of master planning for its massive mixed-use project on several parcels surrounding the station.
This development is one of multiple signs that the Penn Station overhaul is helping draw economic activity to the surrounding area, including new plans for a 585-unit multifamily project and investments in other existing properties. Officials believe the growth will create a more appealing gateway to Baltimore for people taking the train in from big cities along the East Coast.
"We are launching a new phase of master planning shortly that will advance planning on these different sites, but also very much integrating into what's going on around Penn Station in Station North, Greenmount West, Mount Vernon and across the road there to Johnston Square," Struever said.
Under the master developer agreement, Penn Station Partners is the project's program manager, responsible for coordinating the planning, design and construction of $200M worth of Amtrak-funded improvements. Federal and state governments have also provided respective $6M grants for the project, earning a $3M Maryland Historic Revitalization Tax Credit for the station overhaul.
Those improvements include work on the historic station building, the Head House, and a 47K SF expansion dubbed the Lanvale Building. That building, which the developer shared the first renderings of this spring, will eventually serve as the station's passenger concourse and add new commercial and residential space. The developer intends to convert the historic building’s concourse to commercial uses.
In exchange, the master development agreement stipulates that Penn Station Partners holds a 90-year ground lease on the historic station building. The pact also provides what Struever called a pathway for the private developers to construct a mixed-use project on seven parcels around the station.
According to Penn Station Partners' website, mixed-use development will include up to 1.6M SF of office, retail and residential property. However, the master planning the development team is preparing to launch will help determine the final details, such as the cost of the project and the exact amount and types of spaces.
The project's progress is good news for stakeholders, some of whom embarked on the process of transforming Penn Station more than a decade ago. It is a project economic development officials like Baltimore Development Corp. CEO Colin Tarbert say can reshape Baltimore like few other real estate projects.
Overhauling Penn Station may attract more than just new development and connectivity between city neighborhoods, backers said. It can bolster the Baltimore area by strengthening connections to other bustling East Coast cities, including Washington, D.C., Philadelphia and New York.
Tarbert’s involvement in examining the potential to redevelop Penn Station stretches back to his work in former Mayor Stephanie Rawlings-Blake's administration. He said the project stemmed from a desire to improve first impressions of Charm City.
"We had put together a task force, if you will, which [the late] Congressman [Elijah] Cummings participated in, to look at the importance of Penn Station and make sure the station and people arriving to Baltimore had the kind of an arrival and gateway into Baltimore that was reflective of the great things that the city has," Tarbert said.
"For a long time, we felt like Penn Station did not reflect the progress the city has made. So we're really excited."
While Tarbert said it is hard to predict the impact of a single project on new investment in surrounding areas, he expressed optimism that a renewed Penn Station would attract more development to surrounding communities.
Last month, the nearby University of Baltimore named Zalcho as the intended developer of 585 apartments and 30K SF of retail spread over two buildings on university-owned property roughly a block from Penn Station.
In a statement issued at the time of the university's selection, Zahlco CEO Yonah Zahler described the goals of the University of Baltimore project as "synergistic" with the goals of the Penn Station development.
"This development will help redefine the center of the city as 'Midtown,' an area bustling with activity and connecting Baltimore together," Zahler said.
The redevelopment of the train station has also enticed new investment in nearby properties.
In January, developer Chasen Cos. purchased the 18-unit Chatham Apartments at 1720 St. Paul St. and said it planned substantial upgrades to the property. Chasen Cos. credited upgrades at Penn Station as a significant factor in purchasing the property.
"We are excited to close on The Chatham in Station North, just steps from Penn Station,” Chasen Cos. Chief Operating Officer Drew Peace said in a statement. "The redevelopment and modernization of the train station will undoubtedly raise Baltimore’s profile as a destination for not only residents but visitors and businesses as well.”
Project boosters envision the transformation of Penn Station as turning Midtown Baltimore into a hub for people who work in places like Washington, D.C., Philadelphia and New York but want to reduce living expenses by residing in Baltimore.
Upgrades at Penn Station, such as a new high-speed train platform, aren't the only factors fueling dreams of Baltimore emerging as a place workers from all over the East Coast can call home.
Amtrak plans broader improvements in conjunction with the Penn Station overhaul ranging from more frequent high-speed rail service to eliminating various bottlenecks, such as antiquated tunnels and bridges, up and down the East Coast.
Given the rise of remote and hybrid work, combined with improved rail service, Tarbert said it creates the potential for people who live in more expensive places like New York to consider moving to a less expensive city like Baltimore where they could afford to buy a home, build equity and save money.
"Because we have traditionally developed more incrementally ... we don't have the affordability issues, at least not to any degree that you would see in other cities," Tarbert said. "In this case, that is a huge advantage when you see the type of investment Amtrak's making to connect Baltimore to these other major cities with affordability issues."
Struever also said the redevelopment of the station and land surrounding it, in conjunction with improved Amtrak service, means Baltimore may be attractive to workers in other cities.
But the project's most significant function, he said, is one it is quite familiar with fulfilling. That is as a unifying space for an often fractious metro area where residents regularly feel at odds with their neighbors.
"We want to be a hub that builds on the history of Charles [Street] and North [Avenue] being the crossroads for the city of Baltimore ... the region, and the suburbs and the city come together, and Black and white Baltimore comes together," Struever said. "So it really is a key hub and meeting place that I think will play a big role as a gateway with this better connectivity for our city."