Baltimore's Boom!
With $2B in economic activity expected in Baltimore over the next two to three years and being the eighth-largest destination in the US for Millennials, Charm City is quite the place to be. "I don't know if we've ever seen such a period of intense growth like we've seen over the past seven months," says Baltimore Development Corp president Bill Cole, who kicked off Bisnow's 5th annual Baltimore State of the Market event at the Four Seasons on Wednesday.
Bill (right) joined Baltimore Mayor Stephanie Rawlings-Blake for a special session moderated by CohnReznick partner Adam Kleeman. "I'm extremely pleased with the pace of development, and also what that means for growth," says Stephanie, who left afterward with Bill to attend the Harbor Point groundbreaking. "Some people thought it was a little strange that I would make an aspirational goal of growing the city...It's important to have a vision for a thriving, vibrant jurisdiction." The Red Line, she told the crowd of 500, is a once-in-a-generation project that is vital to increasing jobs in the region (it connects to two-thirds of the city's jobs) and is a critical link in east-west growth. And it's attractive to Millennials, whom Bill calls the BMW Generation: "They want to bike, walk and take mass transit."
Enterprise Community Investment CEO Charles Werhane (right, with Miles & Stockbridge principal Jeffrey Seibert, who moderated the keynote) told the audience more about his organization, which focuses on affordable housing and community development in low- and moderate-income neighborhoods. Charles says that there are 11 million people in the US who spend more than 50% of their income on housing—and that's just those renting. You can factor in another 11 million homeowners, he says. "We strongly believe that government itself is not the answer," he says. "What we need to do is galvanize communities" to link with private partnerships and public resources to solve the problem at a local level.
Baltimore is coming back strong, says Under Armour VP of corporate real estate & campus Neil Jurgens, whose company has 350k SF coming online here over the next year. And it's something he's witnessing globally in places that Under Armour is located. From Munich to Santiago, Chile, to Austin, TX, "we really do see it everywhere that the world is coming back and there's lots of confidence." It's a landlord's market, he says, so we all have to be smart and aggressive in how we deal with it. He's snapped above with Partner Engineering and Science national client manager Kathryn Peacock, who moderated the Baltimore & Beyond panel.
Armada Hoffler president of development Tony Nero is no stranger to Baltimore—his contracting company has done more than $1B in projects here over the past 20 years and now has the most cranes operating in Downtown. In the next 30 to 45 days, it's breaking ground on its first-ever development here, on the block of 33rd and St. Paul: student housing and retail anchored by a CVS. With that, he's very bullish on Baltimore. "What I'm seeing here is sound fundamentals—office buildings being built with anchor tenants and A-location apartment communities. So I'm very happy and anxious to spread our wings from a development standpoint in the City of Baltimore."
Cordish Cos is beginning to look at Baltimore again, where it's headquartered and already has assets like Power Plant Live. "We see some very exciting things going on here—TIF programs, tax rebates," says COO Zed Smith. "We do feel that Baltimore is on the right track." Its focus now is determining where there are solid residential opportunities. Overall, Baltimore is a very compelling story, he says, and Cordish Cos uses it to sell its talent and show others what they're able to create.
PMC Property Group partner Steven Bloom says his Philadelphia-based company looks for opportunities up and down the East Coast, and he and his partners are particularly excited about Baltimore. Right now, it's building 167 units at 26 S Calvert St—adjacent to the Brookshire Suites—in six properties that had been abandoned for the past 22 years. There are also two or three other properties in the pipeline, he says.
Greenberg Gibbons CEO Brian Gibbons (right, with Continental Title Group CEO William Yerman, who moderated the CEO panel) says today reminds him of the conversations the industry had in 2005 and 2006, when capital was plentiful. He recalled that a few years later, in 2008, Waugh Chapel Towne Centre already had agreements with Wegmans, Target, Regal Cinemas and Dick's Sporting Goods. "It was a fully baked deal, and we still couldn't get capital," he says. We need to take advantage of the opportunities as they exist today, he says; political leaders ought to realize that these opportunities come and go, and if you don't grab them today, they can possibly be gone for eight to 10 years.
We shouldn't forget '08 and '09, says Continential Realty Corp CEO JM Schapiro—nor our relationships. "We try to go back to the relationships that have been with us for the long haul and will be with us going forward," he says. "Because we'll reach a point where all the money that's there today won't be there. The relationships you have with those lenders who are going to be in that cycle are really, really important."
The development entitlement process tries to be user friendly, and the City has done a great job, says Manekin CEO Richard Alter. But environmental regulations and permitting have changed, and if you have to work with a neighborhood or get a special exemption, a project you're talking about today can take four years to get started. As a CEO, how can he predict seven years from now, he asks? "The only thing that I know for sure is what goes up will come down, and what goes down will come up."
