How Shack Burgers Are Changing Baltimore
If any store is indicative of a happening market, it’s Shake Shack. On Monday, the chain opened its first Charm City location at the Inner Harbor. It’s only one of the many exciting signs of Baltimore’s revival, and that's why we’re excited to bring you the city’s top minds to talk about it at our 5th Annual Baltimore State of the Market event next Wednesday at the Four Seasons.
Our event features a special session with Baltimore Development Corp president Bill Cole, CohnReznick partner Adam Kleeman, and City of Baltimore Mayor Stephanie Rawlings-Blake (center, at Shake Shack's opening), who join our all-star panelists to assess the key trends and issues impacting our city over the next 12 months. Much of the real estate activity boils down to residents' need for new experiences.
Partly driving this trend is the growing Millennial population wanting more social interaction, says Continental Realty Corp CEO JM Schapiro, a panelist whose firm owns 8,000 apartment units and 3M SF of retail space throughout the Mid-Atlantic and Southeast. Now more restaurants are jumping on the opportunity to be here. (MacKenzie Commercial's Tom Fidler estimated more than half of all retail deals in 2013 and 2014 were food related.) Shake Shack and Bryan Voltaggio's Family Meal at the Inner Harbor are two of the many to open in the past year, while Park Tavern—the newest concept by the owners of Pratt Street Ale House—recently opened in Park Plaza, a CRC-owned property in Severna Park. JM is also excited by the upgraded Belvedere Market and the possible renovations of the Lexington and Cross Street markets.
JM’s wife, Mindy Schapiro, and her business partner, Sue Jean Chung, are bringing back The Emporiyum Food Market to Baltimore on April 18 and 19 at the former H&S Bakery Distribution Center in Harbor East. Over 70 artisanal food vendors from both Baltimore and around the US are confirmed, JM says, and for many, this will be their first introduction to the city’s foodie scene (last year’s event attracted over 2,500 people). It’s one unique way to get retailers to consider a new market, JM says; after The Emporiyum was held in DC in November, one vendor—pretzel purveyor Fatty Sundays out of Brooklyn, NY—came back to Union Market for a pop-up. Internet retailers are also seeing the value of the in-person experience, with stores like Warby Parker and Bonobos continuing to open bricks-and-mortar stores throughout the US, he says.
On the multifamily side, life is returning to Baltimore's downtown, says PMC Property Group partner Steven Bloom, a panelist whose firm focuses on adaptive reuse. There's been little residential development there over the last five to seven years, he says, with more of the projects focused around areas like Fells Point, Federal Hill, Harbor East and Canton. His firm is one of the many investors now seeking plentiful opportunities in the downtown area. Among the projects PMC recently redeveloped were 521 St. Paul St into 69 apartments and 301 N Charles St into 96 apartments.
PMC will also soon deliver 167 apartments at 26 S Calvert St, the former USF&G Building (above) that sat vacant for over 20 years. One problem investors face, he says, is sellers' pricing: Those who purchased buildings during the last boom and haven't developed the property are having a hard time coming to terms with the current value. "Developers need to buy at the right price and right location," as there are more than 3,000 apartment units in the pipeline and renters will have lots of choices. While he doesn't think all will be built, he expects increased competition. A way to set yourself apart: amenities. Steven says 80% of residents in PMC's Baltimore portfolio are Millennials; properties now include indoor basketball courts, game rooms, state-of-the-art fitness centers, resident lounges, rooftop decks and more.
And don't forget Fido: Baltimore residents also want a fur-friendly experience. “40% of our renters now have pets,” says JM. They seek community amenities like dog walkers, dog parks, dog baths and even pet spas. CRC recently purchased a property in Naples, FL, called Aventine at Naples (above...we thought we'd tease you after the recent arctic blast) that features a dog agility course and water fountains that serve both human and pooch. JM says that going forward, CRC is increasing the experience for pet owners at all its properties, the majority of which are located in the Baltimore metro. Retail is following this trend here; among new openings this year were Unleashed by Petco stores in Federal Hill and Pikesville, as well as the continued expansion of Petco as a whole and other pet-focused retailers.
While residential and mixed-use use have been driven by urbanization and a desire to live in the downtown core, the effect has not trickled down to the office market just yet, according to Manekin CEO Richard Alter, who’s also speaking. Deal velocity is slow, employment is down, and it’s still the weakest part of the market. But one sector is seeing quite the uptick: industrial. Amazon.com’s decision to open a 1M SF distribution center near the Port of Baltimore “has awakened a sleeping giant,” he says, with land prices increasing and cap rates decreasing. He says Manekin is strategically pursuing industrial assets in the BW Corridor and port area, as well as single-tenant retail investments.
Greenberg Gibbons CEO Brian Gibbons (above), Armada Hoffler president of development Tony Nero, Cordish Cos VP Blake Cordish and Under Armour VP of corporate real estate & campus Neil Jurgens will also speak, following our keynote interview with Enterprise Community Investment CEO Charles Werhane. Partner Engineering and Science national client manager Kathryn Peacock, Miles & Stockbridge principal Jeffrey Seibert and Continental Title Group CO William Yerman will moderate. Our Fifth Annual Baltimore State of the Market event at the Four Seasons starts with great networking at 7:30am. Sign up here!
