'I Don't Think We're Seeing Much Leadership': CRE Execs Seek More Help From Baltimore-Area Officials
Commercial real estate developers in Baltimore are being forced to navigate a range of economic obstacles, and they say local officials in the city and surrounding counties aren't providing enough support for the industry.
Executives across the industry, speaking Thursday at Bisnow's Baltimore State of the Market event at the Renaissance Baltimore Harborplace Hotel, said factors like high interest rates have been a hindrance for the industry, but multiple developers criticized local officials for their inability to grasp the challenges influencing markets and for their perceived hostility to development.
"I don't think we're seeing much leadership, strong leadership," Chesapeake Real Estate Group principal Jim Lighthizer said. "Eventually, the leaders of these municipalities, whether it's Harford County, Baltimore County, Baltimore city — we're working with the leaders in every one of these jurisdictions, and it just seems like they say one thing. The next day, they do [something else] based on what they read in social media."
Harrington Commercial Real Estate founder Terri Harrington said one example where Baltimore leaders need to show leadership involves changing city property tax rates that are the highest in Maryland.
Working with a group called Renew Baltimore, Harrington, business leaders and former elected officials intend to place a referendum on next year's general election ballot asking city voters to limit property taxes.
"I can't believe the lack of knowledge sometimes that our leaders have about what we're dealing with in the trenches, particularly in commercial real estate," Harrington said. "You try to educate, and it just doesn't seem like they're connecting with some of the challenges that we see day to day."
Baltimore Mayor Brandon Scott, however, said during his remarks to start the event that city officials are listening and working to make the city more responsive to the needs of the commercial real estate industry.
Scott touted a falling crime rate and the appointment of a new deputy mayor of community and economic development last year as evidence of his administration’s efforts to improve Baltimore's business climate.
"Under my administration, we're committed to ensuring that development is balanced, equitable and, most importantly, sustainable," Scott said. "We will continue to invest in our infrastructure, affordable housing [and] public spaces to create a city that caters to the needs of all of its residents and visitors."
Industry executives said that jurisdictions outside the city also struggle with leadership in promoting commercial real estate and economic development.
Lighthizer, who began his comments by praising the ease of developing industrial properties in Baltimore city, referenced an ongoing battle between his company, Harford County elected officials and activists over a proposal to build the Chesapeake Logistics Center on Perryman Peninsula.
While Lighthizer didn't specifically mention that project in his comments, he referred to a group called Protect Perryman Peninsula, or 3P, that he described as "trying to figure out how they're going to try to kill a project."
"I think we need to have a little more of a moral compass and a direction based on, 'Hey, here's where we want green space, here's where we want jobs, here's where we want to grow,' and they identify that with their master plans, and then they stick to it," Lighthizer said.
Harford County Executive Bob Cassilly’s office didn't respond to a request for comment for this story.
As proposed, the Chesapeake Logistics Center would consist of 5.2M SF of warehousing and logistics space across five buildings on a roughly 700-acre parcel locally known as Mitchell Farm.
The county designated the property for light industrial development in 1997. The state also established the area as an Enterprise Zone that awards investment and job creation tax credits. Developers have already built roughly 12M SF of industrial assets in the area, according to NAIOP Maryland.
However, activists have pressured county officials to adopt and consider measures to thwart the project. Those measures include passing a 90-day development moratorium and, most recently, taking up legislation to stop the project.
"Mixing industry with residential living is a plan for disaster, and we're trying to do something to prevent that," Protect Perryman Peninsula activist Leigh Maddox told WBAL-TV.
For others in the industry, dealing with local government isn’t as much about leadership as about convincing officials to provide enough incentives to make deals happen.
Cross Street Partners Vice President of Development Adam Rhoades-Brown said his firm focuses on community development and traditional market factors like interest rates have less of an impact on its projects because they depend heavily on funding sources like tax credit equity.
"We're used to higher interest rates for these kinds of projects," Rhoades-Brown said. "They're riskier deals. And because debt is a lower portion of the capital stack, the increasing interest rates only marginally affect our ability to get these things done."
However, he said the community development space is growing more crowded, creating greater competition for available tax credits and slowing the pace of deals. Roughly two years ago, Maryland increased the pool of historic tax credits from $9M to $20M, he said. But the state already fielded applications for $67M in historic tax credit applications this year.
"It's getting more competitive," Rhoades-Brown said. "The markets are tougher, so more people are going after the various tax credit programs we typically use for deals. So, you know, we're working on a lobbying effort with the state to increase the historic tax credit program."
