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Don’t diss the CBD, it won’t take it sitting down

Don’t put Baby in the corner.

Portraying downtown Baltimore’s commercial properties as second fiddle to the waterfront, as Harbor Point developer Michael Beatty did late last year in a sales prospectus for the 260,651-square-foot Thames Street Wharf, will result in a smackdown.

That’s what happened Thursday, when the Downtown Partnership of Baltimore Inc. fought back.

“The attributes of the building can be touted without making inaccurate and divisive comments about other neighborhoods in Downtown Baltimore,” it said in a statement.

“While it is understandable for a property owner to highlight the positive attributes of a property it wishes to sell, it is not appropriate for the property owner to make overly negative — and inaccurate — statements about other competitive properties in Downtown Baltimore. The prospectus is factually incorrect in numerous regards, particularly in asserting that Harbor East and Harbor Point have “far outpace[ed]” the Central Business District (“CBD”) and have become Baltimore’s premier business address.”

Kirby Fowler, president of the partnership, said Thursday that he called Beatty — who had just joined the Downtown Partnership board and had publicly advocated for a “one Baltimore” stance in commercial leasing — after a report in The Daily Record on Dec. 18 about the prospectus and the plans to sell the wharf. He said Beatty didn’t return his call.

“We all should be working together and not against each other,” Fowler said. “These kinds of statements are not helpful … to (pit one location against another) is inappropriate and divisive.”

What started it all was the claim in the sales prospectus that the Thames Street Wharf, where Morgan Stanley has leased office space, is “far superior to all other Class A office assets in Baltimore.”

“In terms of quality and location, there is only one asset in the same league as the subject and that is the Legg Mason Tower,” states the flyer, which came from the real estate company listing the property, CBRE.

“Baltimore’s Central Business District has no buildings that can realistically compete with these assets, and the CBD has experienced limited growth over the past two decades,” it said. “The result is tenants have very limited options for high-quality assets that have large floor plates, state-of-the-art HVAC systems, security, amenities and adequate parking.”

Marco Greenberg, vice president of Beatty Development Group LLC, declined to address Fowler’s charges specifically. Instead, he issued a statement via email Thursday afternoon.

“While we will enthusiastically market our properties, we believe it is important to promote downtown Baltimore as a whole, and will continue to work closely with the Downtown Partnership to do so,” Greenberg said.

Fowler said the CBD is defined as the area from Pratt Street to Centre Street and from President Street to Greene Street. Using current leasing data from the data group Cushman & Wakefield, he said, the CBD proves stronger that Harbor East and Harbor Point — both Beatty projects, developed in partnership with H&S Bakery owner John S. Paterakis.

“Out of the 28 office buildings in the central business district, 23 have better occupancy rates than 1300 Thames and 100 International Drive (office space at Harbor Point and Harbor East, respectively),” the partnership statement said.

And it doesn’t stop there, according to the statement:

-All of the Pratt Street office buildings (12 in total), from 250 West Pratt to 750 East Pratt, have better occupancy rates than 1300 Thames and 100 International Drive.

-Of the five Class A and Class B+ on Charles Street (north of Lombard), four have better occupancy rates than 1300 Thames and 100 International Drive.

-200 Saint Paul, 120 East Baltimore and 7 Saint Paul have better occupancy rates than 1300 Thames and 100 International Drive.

-CoStar, a national office leasing database, confirms that a majority of office properties on Pratt Street and Charles Street outperform the occupancy rates at 1300 Thames and 100 International Drive.

-According to the national database Claritas, the CBD has seen net employment growth over the last three years, whereas Harbor East has shown declines:

-The CBD has at least 65 percent of the jobs in downtown Baltimore (defined using the one-mile radius from Pratt & Light streets), whereas Harbor East has 5 percent.

-The number of jobs increased in the CBD from 2011 to 2012, from 71,710 to 72,869, while the number of jobs in Harbor East decreased from 2011 to 2012, from 8,012 to 5,590.

Fowler said the Downtown Partnership board is scheduled to meet for a retreat at the end of the month. It was unclear whether Beatty would show up.

“Now having corrected the factual record,” Fowler said, “we hope to discuss a coordinated marketing issue of promoting one downtown — like we had started to discuss before the prospectus was issued.”

STATEMENT FROM DOWNTOWN PARTNERSHIP OF BALTIMORE: JANUARY 9, 2014

On December 17, 2013, The Daily Record reported that H&S Properties and Beatty Development have listed for sale their jointly-owned property at 1300 Thames Street in Harbor Point (also known at Thames Street Wharf). The prospectus that promotes the sale of the building made the following statements regarding the building and its location:

• “Thames Street Wharf is far superior to all other Class A office assets in Baltimore.”

• “In terms of quality and location, there is only one asset in the same league as the subject and that is the Legg Mason Tower. Baltimore’s Central Business District has no buildings that can realistically compete with these assets, and the CBD has experienced limited growth over the past two decades. The result is tenants have very limited options for high-quality assets that have large floor plates, state-of-the-art HVAC systems, security, amenities and adequate parking.”

• “Filling the need for high quality office, the master-planned, mixed-use nature of Harbor East-Harbor Point, with its quality of construction, its ample parking, its abundant amenities and its reputation as a true “destination” have come together to position this submarket as Baltimore’s premier business address, far outpacing the CBD.”

While it is understandable for a property owner to highlight the positive attributes of a property it wishes to sell, it is not appropriate for the property owner to make overly negative – and inaccurate – statements about other competitive properties in Downtown Baltimore. The prospectus is factually incorrect in numerous regards, particularly in asserting that Harbor East and Harbor Point have “far outpace[ed]” the Central Business District (“CBD”) and have become Baltimore’s premier business address. For the purposes of this analysis, the CBD is defined as the area from Pratt Street to Centre Street, from President Street to Greene Street.

Many properties in the CBD have attracted and retained high-quality tenants because they have large office plates, state-of-the-art HVAC systems, security, amenities, and adequate parking. Many, like 100 Light and One East Pratt, have undergone major transformations with substantial investment in recent years to lure top-notch businesses. But the proof is in the comparison of occupancy figures and the employment numbers. Here are the facts:

• Using the latest available data from Cushman & Wakefield brokerage firm:

o Out of the 28 office buildings in the CBD, 23 have better occupancy rates than 1300 Thames and 100 International Drive.

o All of the Pratt Street office buildings (12 in total), from 250 West Pratt to 750 East Pratt, have better occupancy rates than 1300 Thames and 100 International Drive.

o Of the five Class A and Class B+ on Charles Street (north of Lombard), four have better occupancy rates than 1300 Thames and 100 International Drive.

o 200 Saint Paul, 120 East Baltimore, and 7 Saint Paul have better occupancy rates than 1300 Thames and 100 International Drive.

• CoStar, a national office leasing database, confirms that a majority of office properties on Pratt Street and Charles Street, each independently, outperform the occupancy rates at 1300 Thames and 100 International Drive.

• According to the national database Claritas, the CBD has seen net employment growth over the last three years, whereas Harbor East has shown declines:

o The CBD has at least 65% of the jobs in Downtown Baltimore (defined using the one-mile radius from Pratt & Light streets), whereas Harbor East has 5%.

o The number of jobs increased in the CBD from 2011 to 2012, from 71,710 to 72,869 jobs.

o The number of jobs in Harbor East, however, decreased from 2011 to 2012, moving from 8,012 jobs in 2011 to 5,590 jobs in 2012.

Thames Street Wharf is a tremendous building with an extraordinary (and growing) tenant, Morgan Stanley. It stands on its own as a trophy building, and it sits close to the booming and very successful Harbor East neighborhood. The attributes of the building can be touted without making inaccurate and divisive comments about other neighborhoods in Downtown Baltimore.