The Multimillion Dollar Multifamily Question
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|Longer than Santa's list of good little CRE boys and girls is the list of proposed conversions to apartments in Baltimore City, the highest-profile one being Metropolitan Partnership's plan to turn 10 Light St into 445 units. 3,500 apartment units are under construction, says CBRE's Bill Roohan (above, with Apartment Realty Advisors' Ryan Ogden), and the past few weeks' proposals would raise the total of additional proposed units to 4,300. That's a lot more stops for the fat man in the sleigh, but Bill wonders just how many really will get built.|
|Photo credit: Hank Mitchell|
|Above is 10 Light St. The city's tax rate, twice the state's, means most developers need abatements or PILOTs (like the one in the works for 296 apartments at the Lexington Square Superblock) via City Council to make deals work, Bill says. Government has a wonderful opportunity to help developers, he adds, and it won't cost the city a dime. (An abatement means not taxing the value a developer creates, but the existing tax revenue on, say, an empty warehouse, doesn't change.) However, that's not an easy 30-second sound bite to deliver to voters, who often view such incentives as free money for Mr. Monopoly types.|
|Above is a unit count for the recent wave of proposed projects (1,065 to 1,105). Conversions of fallow lots, vacant offices, and empty warehouses mean more residents investing in their communities and less money spent on police patrols of desolate areas, Bill says. And because fewer apartment dwellers have children, they contribute more tax dollars (to the school system) than they take out. As for fears of overbuilding, Bill, the master of diplomacy says, "There are a lot of units coming online. That's great news for the tenants." And no matter how many really do come online, "anything is better than an empty warehouse, office, or lot."|
|JLL's Chris Espenshade (right, at Bisnow's national multifamily conference last month with colleague Erin Miller and AHC Greater Baltimore's Andrew Vincent) tells us the office buildings slated for conversion (10 Light St, 301 N Charles, and 300 Cathedral—the others are a high school, a warehouse, and GE's old site on Locust Point) would drop Baltimore City's office vacancy rate below 13%. She also says Solstice Partners' Locust Point project would benefit from McHenry Row's success. Bill adds Under Armour's ongoing growth to that equation.|