Daily Record investigation: Seeking a new vision

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It was a glass-half-full day.

It was a time to celebrate cranes in the air — four of them — towering behind Johns Hopkins Hospital, where the stalled $1.8 billion East Baltimore redevelopment project was getting a jump start.

None of the project’s uncertainty was evident at the Sept. 10 groundbreaking for a 20-story graduate student tower with 321 apartments.

None of the public speakers mentioned the vacant fields surrounding the cranes where construction of an expansive biotech park has come to a halt. Or the dozens of acres of grassland that should be filled with hundreds of new homes by now. Or the unsightly streets beyond with 700 boarded-up row houses yet to be razed.

Instead, a pile of hard hats and shiny new shovels awaited the obligatory photo op as East Baltimore Development Inc.’s CEO, Christopher Shea, addressed a large crowd:

“Look at us here today in the midst of what is probably the worst recession any of us will ever see … celebrating a $60 million investment. I don’t think there is a project like this in the state that is privately funded,” he said.

Yet the Great Recession and other factors have taken a heavy toll on the nation’s largest urban redevelopment project. Plans for a world-class biotech park — envisioned seven years ago and used to persuade investors to purchase bonds and to get a federal loan in the early years of the project — have been largely shelved.

Now planners are seeking a new vision with a different mix of housing and more commercial development, including a hotel and restaurants as well as a state-of-the-art school, to attract middle-class residents.

At the same time, in hopes of keeping the project moving and protecting the public investment of more than $212 million so far, governments and institutions are stepping forward to steer building projects never envisioned in the original plan to the site.

Construction of the Hopkins graduate student housing tower, for instance, began last fall. Also, the state will use a lot once reserved for one of five planned biotech buildings as the site of a $175 million lab for the Department of Health and Mental Hygiene, replacing a facility in the state office complex on West Preston Street.

Whatever replaces the biotech vision, said Scott Levitan, senior vice president of the project’s developer, Forest City-New East Baltimore Partnership, “will be something that does not have all the bells and whistles. The whole world has changed.”

“To be honest, the biotech building is more filled up than I expected,” said Douglas W. Nelson, EBDI’s board chairman, who noted that he always questioned the potential of a life sciences park.

“Are we ready to build a second major high-tech lab this year? The answer is no. I never believed that the project intended biotech [to be] a home run,” he said.

Some who have observed the project since its inception say the shift from biotech is stunning.

“This is a bomb,” said Raymond A. Winbush, director of the Institute for Urban Research at Morgan State University. “Are you trying to tell me they’re not putting biotech there?”

Mayor Stephanie Rawlings-Blake said Monday she was unaware that EBDI’s plans to build a five-building biotech park at the site had been scrapped.

“I still have a commitment to expand the biotech in that area,” the mayor said. “I think we’ve seen on the west side that biotech development can be successful, and I’m still hopeful we will be able to have a strong biotech presence in the EBDI area.”

Biotech dream fades

In 2003, EBDI showed a PowerPoint presentation to business leaders at the Greater Baltimore Committee, predicting that East Baltimore would become one of “the world’s premier biomedical districts.”

The GBC was so enthusiastic that it raised $1 million in startup money from sources like the T. Rowe Price Foundation and Constellation Energy as a “show of commitment,” said GBC President and CEO Donald C. Fry.

The 2008 Tax Increment Financing bond offering from the city to investors predicted rapid-fire development: a second life sciences building of 277,000 square feet by 2011, a third in 2013, an office building in 2014 and one more life sciences lab building in 2015, for a grand total of 1.1 million square feet.

The project was to be an economic development engine creating thousands of biotech jobs.

Today only one life sciences structure exists — the handsome John C. Rangos Sr. Building on the 800 block of North Wolfe Street, which opened in 2008. The 278,145-square-foot structure, now 69 percent occupied, is scheduled to reach 80 percent occupancy in May when the Lieber Institute for Brain Development moves in.

Levitan, of Forest City-New East Baltimore Partnership, blamed “a sluggish biotech market” for the development’s lag.

Across town, however, the University of Maryland BioTech Park has experienced considerably more success.

The park opened in 2005 and has surpassed the East Baltimore biotech park with 465,000 square feet leased in three buildings, including 110,000 square feet for the Maryland Forensic Medical Center.

Ninety-three percent of those buildings is rented, and two more buildings are planned. Five hundred-fifty employees work there, compared to 422 in the Rangos building.

Levitan and University of Maryland officials declined to reveal their leasing prices.

But Matthew Seward, senior vice president for Cassidy Turley and the leasing agent for the Rangos Building, said that building’s pricing has been the subject of much debate. Seward said the base rent at Rangos is $30 per square foot, a cost that escalates with extras and property taxes.

“The building has a bad perception and reputation,” Seward said. “There is a perception that the rent is too high. In reality, it is an expensive building. The negative perception is that all of that is not necessary, that they should have built a lower-functioning building to have lower rent.”

One biotech startup, Fyodor Biotechnologies, chose the UM park over East Baltimore’s for economic reasons.

Anne M. Derrick, vice president of Fyodor, said her company decided against the Rangos Building because “of the monthly amount” of rent.

Derrick said both biotech parks “stood out for location and proximity to resources,” but the University of Maryland lab was cheaper and already outfitted with cabinets and counters, while the Rangos Building was not.

Fyodor, which is developing a urine test for the diagnosis of malaria, is run by Eddy G. Agbo, chairman and CEO, a former research fellow at the Johns Hopkins School of Medicine.

Despite the “sluggish biotech market” cited by Levitan, at least one expert questions why the project leaders are giving up on biotech.

Walt Plosila, a former president of the Technology Council of Maryland, is now an independent consultant in Ohio with expertise in biotech projects. He noted the difficulty inherent in building biotech projects in an urban environment.

“Medical research parks emerge from older neighborhoods, so there is a challenge for redevelopment and renewal,” said Plosila, who nevertheless wonders why more biotech buildings aren’t being planned in East Baltimore.

“Eighty percent leased is pretty good. Why are they acting like they can’t do any more of this?” he asked. “Urban research parks that succeed have patience and perseverance.”

‘Bullish’ on the future

Now, with only 25 percent of the biotech project built, EBDI and its developers are considering buildings with more office space and less lab space, Levitan said.

A letter of intent has been signed with a hotel company for a new structure on North Wolfe Street. Other commercial development not in the master plan is being considered.

The developers have hired a Baltimore advertising agency, Carton Donofrio, to “rebrand,” rename and promote the project.

EBDI’s leaders remain optimistic about the development’s potential.

In an opinion article in The Baltimore Sun on Nov. 11, Shea and Nelson, EBDI’s board chairman, wrote that the development “is making extraordinary progress and remains on track to achieve its goals.”

“The collapse of [the] commercial and residential real estate market, combined with the credit crisis, presents a new challenge. This financial tsunami has temporarily slowed the pace of building new and rehabbed homes to attract families of all economic backgrounds into the area,” they wrote.

“To be sure, leaders of the project had hoped that more new homes would be in place and occupied by now. But we remain optimistic that this will happen in the next few years as the economy recovers,” they added.

Baltimore developer David S. Cordish, who is not involved in the East Baltimore project, believes the location has excellent potential for development.

“It is a tough economy, but I think it [the project] can work. You have 40,000 workers there at the hospital; that’s your engine — and you have cleared land,” said Cordish.

“As a developer, you look for an anchor that isn’t going anywhere. And Hopkins Hospital is the anchor. … You’ve got to surround it with the right mix and if biotech isn’t the right thing, you’ll find the right thing. I’d be bullish on it.”