As Baltimore County Builds Density, Where Is The New Office Supply?
Baltimore County is gaining in walkable, urban-style density, particularly in Towson, but for all the residential and retail development, the office sector has not yet followed.
In 2016, a restrictive set of zoning laws with hard limits on height and floor-to-area ratio gave way to the Downtown Towson Overlay, a new set of guiding principles entirely based on design and aesthetics in downtown. That change opened the floodgates for ambitious development, like Greenberg Gibbons’ Towson Row complex, which is currently under construction.
Even ahead of Towson Row’s completion, the gathered panelists at Bisnow’s Baltimore County Growth and Development Summit on Sept. 18 were singing the praises of the zoning change.
“[The DT overlay] is one way that you can see that Baltimore County is guiding density in the direction of an urban environment,” Venable Partner David Karceski said.
Greenberg Gibbons CEO Brian Gibbons said that the overlay didn’t just acknowledge Towson’s need for greater density; it also spoke to the area’s dreary appearance.
The town’s lack of distinction contributed to Ernst Valery Investments founder Ernst Valery telling Bisnow in June, “I wouldn’t want to live in Towson unless my life was in danger.”
“Standing on top of our garage and looking out over Towson, frankly it’s not a pretty picture,” Gibbons said. “It needs some work.”
Mid-Atlantic Properties President Wayne Gioioso, always among Towson’s biggest cheerleaders, was quick to point out that despite its challenges, its demand drivers like the county government and Towson University have kept up interest from developers.
“Towson has got an incredible ecosystem, and that ecosystem has been neglected over the years, but it’s held up,” Gioioso said. “And over the last 10 years, there has been an incredible amount of development in residential and retail.”
What has been lacking, and what the county hopes to address most directly with the overlay, is office development. In five of the last 10 years, no new office developments have been built along the York Road corridor from Towson to Hunt Valley, and what has gone up has been largely build-to-suit, Gioioso said.
The main impediment to new development, according to Gioioso and Gibbons, has been a lack of rent growth in the county over that time. But in addition to retail, multifamily and student housing, Towson Row will include an office portion, which Gibbons expects to achieve rents comparable to Columbia in Howard County.
St. John Properties’ Greenleigh at Crossroads mega-development has not had the same issues as the York Road corridor, which SJP Senior Vice President Rick Williamson attributes to the company’s ability to master-plan the entire 500 acres on which it is building to achieve the combination of density and design that Towson has had to work so hard for.
SJP notably landed Stanley Black & Decker at one of the speculative office buildings at Greenleigh, and has broken ground on more office and a hotel. Residential and retail projects have already been built in the 10-plus years that Greenleigh has been active.
“The first question that office tenants always ask is, ‘What’s around? Where do I eat and where do I shop?’” Williamson said. “But restaurants don’t live on lunch alone, so you need residents.”
Faith in the residential and retail market could be enough for more build-to-suit projects or an incremental boost in rents, but for a sea change in the office market, some think that better financial incentives from Baltimore County could prove the difference.
“The thing about a lot of this ambition for Towson and the county is that we’re in the late stages of this cycle,” Greenworks Lending Principal Andrew Zech said. “As you get this late and margins start to compress, construction costs go up and nobody knows what the [Federal Reserve] will do, then if the county wants the momentum to continue, then it needs to look to more public-private partnerships.”
Complicating the issue somewhat is the fact that the county is already friendlier to development than its neighbors, which could perhaps make further benefits to the corporate sector less politically feasible.
“Baltimore County has been one of the most predictable places in terms of getting projects approved,” Gibbons said. “[The overlay] is sort of like a [tax incentive], because Towson’s [recent] development wouldn’t have happened without it.”
The investment and development cycle is approaching its inevitable end, and some concern exists that some of the multifamily development in the county was slightly anticipatory of a better office environment.
“There has been a tremendous amount of multifamily development in the Baltimore area, and I’m interested to see how it leases up,” Gibbons said. “So far, the results have been good, but there has been an extraordinary amount [of ongoing construction], and a lot of units to absorb.”