Center Maryland: Hot commercial real estate market: Reason to believe in Baltimore

Baltimore Maryland

Editor’s note: The following commentary appeared on CenterMaryland.org on October 9, 2015.

By Donald C. Fry

There’s no question Baltimore has taken it on the chin of late. The civil unrest this past spring to the rejection of the Red Line and then the spike in homicides led many to question if Baltimore is a city worth betting on.

Well, amidst all this unfortunate front page drama, something else has been happening. Something that tells a different story, a brighter tale.

You need to look no further than the new shining glass tower that will serve as the Exelon Energy headquarters fast rising on the waterfront in the Harbor Point development near Fells Point to begin to see this other story emerge.

The new Exelon headquarters, indeed the entire 27-acre Harbor Point development, are part of a much broader investment wave betting that Baltimore is indeed a city with bright prospects as a cool and vibrant business and economic hub on the East Coast.

Investment dollars flowing in are big. The Architect’s Newspaper, which follows urban projects and trends, recently noted there are a number of major development projects in either the proposal or development stage in the immediate Baltimore area which are valued at an estimated $1 billion each.

These include not only major projects underway like Harbor Point, which is being developed by Baltimore-based Beatty Development Group and will include 910 residential units, a hotel, retail shops, and more than 1.5 million square feet of Class A office space, but others in the planning or proposal stage.

Such projects include:

  • Corporate Office Properties Trust (COPT) has proposed a $1 billion development, called The Waterfront at Canton Crossing. If approved the project would include a 400-foot residential tower, a marina, retail shops and more at Boston and Clinton streets.
  • Sagamore Development, the real estate venture of Kevin Plank, CEO of the Baltimore-based sportswear-seller Under Armour, plans to redevelop 230 acres in Port Covington into an urban waterfront campus for Under Armour. It is expected to have a mix of office and manufacturing space with housing, recreational areas, and more.
  • Redwood Capital Investments is fast at work transforming the former Sparrows Point property, which sits just outside the city and in its glory days was home to the largest steel mill in the world, into a major new logistics, distribution and manufacturing hub. This 3,000 acre project is one of the largest commercial developments on the entire East Coast.

If that weren’t enough to sell anyone on Baltimore as a sure bet as a major player in the economy of the future, consider the office towers in the downtown core that recently have sold, or are expected to sell, for high valuations. This sales trend is driven in large part by high-occupancy rates, which is another way of saying there’s strong demand by businesses for offices in the city.

A few office towers worth noting:

  • COPT bought Baltimore’s tallest building, the 37-story Transamerica building located at 100 Light Street for $121 million.
  • COPT also bought 250 W. Pratt Street, a 24-story building which overlooks Oriole Park at Camden Yards, and houses Pandora’s corporate headquarters, earlier this year for $63.5 million.
  • One South Street sold this week for $64.25 million after the former owner boosted occupancy to about 80 percent from 60 percent.
  • H&S Properties Inc. is selling the Legg Mason tower in Harbor East. News reports note that local commercial real estate brokers are expecting the building to set a record price per square foot.
  • 100 East Pratt Street, another signature building that enjoys a significant occupancy rate and hosts major corporate offices including T Rowe Price and PricewaterhouseCoopers has also recently been placed on the market.

So what’s the point when you add all this up?

Well, the bottom line is this: Despite lots of talk by pundits and others locally and nationally that Baltimore is a city that can’t possibly shake off some big hits, the exact opposite is happening.

The people who make a business out of being smart with their money see big upsides in Baltimore today – and in the long term. That’s pretty hard evidence, if you ask me, that despite all the naysayers and skeptics the reality is that in recent years we have seen progress and there’s darn good reasons to believe in Baltimore. That doesn’t mean that we don’t have problems that need to be addressed or that we should rest on this recent real estate market uptick but let’s take a breath and celebrate the positive progress and good news that is also thrust on the City of Baltimore.

Don Fry is President & CEO of the Greater Baltimore Committee and a regular contributor to Center Maryland.

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