Downtown Baltimore added about 10,000 jobs last year, cut its office vacancy rate to nearly 16 percent and has more than 4,000 units of market-rate housing in the development pipeline, according to a new report.
The upbeat report to be released by the Downtown Partnership on Thursday measures a variety of economic health indicators in the one-mile radius surrounding Pratt and Light streets. And it compares Baltimore to the other top 25 downtowns in the country to measure where the area is succeeding or needs improvement.
“The percentage of people who live and work in our downtown is very, very high. Most of these residents who are fueling our growth are coming from outside of the market,” said Mike Evitts, vice president of communications for the Downtown Partnership. “They choose Baltimore because they’ve done their shopping. … They don’t want the price in New York, they see the opportunity here, and their young, and excited and want a city experience.”
An improving downtown would be good news for a city that has been troubled by drugs, violence and crumbling schools for decades. Even downtown and Inner Harbor, some of the most prominent areas of the city, have been negatively impacted by unflattering attention in recent years, such as a stabbing following the Ravens Super Bowl parade in 2013.
But in their report, downtown officials cited a number of trends they say show the city’s center is on the move.
Although Baltimore’s downtown is often viewed as primarily a commercial district, the city ranked eighth among the top 25 U.S. metro areas in residential population density. The city also jumped three spots to No. 12 in terms of employment with 122,222 jobs in downtown.
But the city did see a downward trend in factors retailers pay close attention to, including falling two places to No. 14 in average household income, and dropping one spot to No. 12 in the number of households making more than $75,000.
“A lot of people still think of Baltimore as an old factory town, and they think of us as a Cleveland or a Pittsburgh, and really we’re more like a Denver or a D.C.,” Evitts said.
The office market is beginning to show signs of rebounding even as market in the metro area remains tough.
Downtown reported its office vacancy rate was cut from 17.8 percent in 2012 to 16.1 percent last year. That rate is in line with the overall metro area’s vacancy rate of about 15 percent at the end of 2013, according to a report from MacKenzie Commercial Real Estate Services LLC.
The MacKenzie report anticipates the office market recovering because of anticipated job growth in the metro area, and the partnership reports a slight increase in the price per square foot for rent of both Class A and Class B office space downtown.
“Certainly with the renewals of T. Rowe Price and Wells Fargo we continue to be the focal point of commerce in the region,” said Kirby Fowler, president of the Downtown Partnership.
Fowler said he believes employment has been one of the strongest indicators of the economic health of downtown. For the past two years the number of jobs created in the area has increased by 10 percent.
There are more than 5,000 employers downtown, but jobs in the health care and social assistance sectors have the most workers, representing about 20 percent of all jobs downtown.
Baltimore improved three spots in its rankings for employment growth among the top 25 downtown areas in the nation. Downtown is now No. 12, with more jobs than similar areas of Dallas, Pittsburgh and Atlanta in the last year.
“The diversity of both the types of jobs, but also the types of employers, is a selling point for downtown,” Fowler said.
A recent survey conducted by the partnership, but not included in the report, found that 60 percent of the people moving downtown have come from outside Maryland.
Occupancy rates in residential buildings monitored by the partnership are at about 95 percent, and Fowler said that shows the need for more supply. Last year only two properties came online, adding 128 market-rate rental units downtown. But there are now 4,000 units in development in the downtown pipeline.
Some firms, such as the Dallas-based apartment data and market research firm Axiometrics Inc., have speculated that supply overall in Baltimore is outstripping demand. The firm argued that job growth may not be strong enough to support expanded supply, and that low vacancy rates may be driven by falling rents.
“According to our own projections, we still feel … that supply is not yet meeting demand. But that’s a projection, we certainly have many projects in the pipeline,” Fowler said. “So there might be a period of adjustment, but we’re happy to see a number of these older buildings being saved.”
More than 100 retailers in the report’s area signed leases in 2013. Although Michael Kors and Under Armour opened locations in the report’s area, about half of the businesses signing leases were restaurants.
Comparatively, Denver only saw 50 retail and restaurants open in its downtown area between July 2012 and September 2013, according to that city’s State of Downtown report.
But there is one glaring retail need downtown, and that’s proven to be hard to fill — a supermarket. A Fresh & Greens store in Charles Plaza closed at the end of December 2013.
Although there’s a rising demand because of more residents moving downtown, a lack of available spaces could make luring a supermarket to the center of downtown a daunting prospect.
“When you look around there aren’t too many opportunities at ground level in the heart of downtown for a 20-30,000-square-foot supermarket,” Fowler said.