This Week's Baltimore Deal Sheet

Maryland's Supreme Court ruled Monday against a bid by the owners of the Montgomery Park office building to reopen the competition to secure a state agency office lease, according to the Maryland Daily Record.

The ruling upheld the decision of lower courts that reversed a decision by the Maryland Board of Contract Appeals. The appeals board found the Department of General Services acted improperly in pulling a request for bids for the Maryland Insurance Administration's office lease based on the objections of the administration's then-secretary.

The owners of Montgomery Park, a former Montgomery Ward catalog building in Baltimore's Pigtown neighborhood, believed they had secured the agency's roughly $17M, 10-year lease through the state's procurement process. But the lease was eventually awarded to the agency’s previous building at 200 St. Paul Place, which the Kornblatt Cos. owns. 

Former Secretary Al Redmer argued against moving his agency to Pigtown. A substantial number of administration employees, he said, objected to the relocation and threatened to quit if the move happened. 

The agency's decision to stay downtown followed local business leaders — including JLL's Robert A. Manekin, developer Kemp Byrnes of Byrnes & Associates and the Downtown Partnership of Baltimore — strenuously objecting to moving the agency from downtown.

Opponents of relocating the administration argued that moving hundreds of state employees from downtown hurt the city's traditional business district, which was already struggling to retain tenants amid a flight-to-quality trend in the Baltimore office market. 

Developer David Tufaro, who owns the Montgomery Park building in partnership with Himmelrich Associates Inc., pushed back against the campaign to keep the administration from moving to his building and blasted critics of the deal. 

"The people protesting are at the behest of a private owners, of a private building, who are complaining about a lost tenant. It's a pretty whiny story," Tufaro said. "Yeah, I would feel impacted, and I might be upset, and I might complain [if roles were reversed], but this is a competitive world, and [Kornblatt Cos.] are big boys."

Despite the objections by Montgomery Park's ownership, in early 2020, Maryland's Board of Public Works — which at the time consisted of Gov. Larry Hogan, Comptroller Peter Franchot and Treasurer Nancy Kopp — approved a new lease for the administration at 200 St. Paul Place in early 2020. 

Kopp and Hogan expressed dismay over how the process played out but ultimately approved the lease. In supporting the lease at 200 St. Paul Place, the former governor worried about the insurance administration ending up "homeless" and Kornblatt Cos. losing control of the building without the agency as a tenant. Only Franchot voted against awarding the lease to Kornblatt Cos., arguing the way the state handled the procurement process was unfair to Montgomery Park's owners. 

"I'm sensitive to Kornblatt's situation, but that's their problem," Franchot said at the time.   

FINANCING 

The office building at 650 South Exeter St. in Baltimore's Harbor East neighborhood may not be able to cover its debt without a surge in leasing, according to the Baltimore Business Journal. The nearly 29K SF building, which is almost vacant, is owned by a subsidiary of H&S Properties Development Corp. and recently landed on a loan-service watchlist.

DEVELOPMENT

Developer Howard Brown said he is pursuing developing the long-vacant site at 325 West Baltimore St., according to the Baltimore Business Journal. Previous plans for the site include a 32-story building with parking and more than 270 apartments on 21 floors.   

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A proposal to build industrial space along Ebenezer Road in the Middle River section of Baltimore County faces strong community opposition, according to The Avenue. Developer Middle River LLC plans to build 3M SF of industrial buildings on the former LaFarge Quarry site.   

THIS AND THAT

The Baltimore Development Corp.'s Made In Baltimore program is accepting applications for its 2023 Home-Run Accelerator  cohort. The Home-Run Accelerator is a five-month small-business development program designed to help home-based entrepreneurs scale up their operations into commercial production space. Participants who complete the program are eligible for awards of $5K to $10K in seed capital to help move to a new facility. 

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Inc. Magazine listed Baltimore multifamily developer Chasen Cos. at No. 42 on its annual Inc. 5000 Regionals: Mid-Atlantic list. That list ranks the fastest-growing mid-Atlantic private companies in Maryland, Washington, D.C., Delaware, North Carolina, Virginia and West Virginia.