As the U.S. stock market plummeted on Monday with memories of the 2008 financial crisis still fresh, developers generally shrugged off worries the volatile market could signal a coming economic slump that could hinder building.
Developers with projects in the pipeline in Baltimore generally stayed calm, saying yesterday’s tumble and the past week’s struggles are a long way from seven years ago. They called the market cratering, then rallying in the afternoon and selling off before markets closed an expected correction. The S&P 500 finished 77 points down, the Nasdaq finished 179 in the red and the Dow Jones industrial average fell 588 points.
“I think our company… learned some very significant lessons in the last recession having to do with de-levering our portfolio, adjusting the amount of development that we do at a time with respect to the overall value of the portfolio,” said Scott Levitan, a senior vice president and development director with the Forest City-New East Baltimore Partnership. “Again, I think it’s just a correction and possibly an opportunity for investors.”
The company and its projects in East Baltimore were hit hard by the 2008 recession. After weathering the financial collapse, Forest City – New East Baltimore restarted development efforts in recent years. He said his firm adjusted investment criteria requiring significant preleasing before underwriting any development, taking a more cautious approach to initial investment and only moving forward with projects when they can sustain themselves.
The company is the master developer for the 80-acre, $1 billion Science + Technology Park at Johns Hopkins, which includes a $65.6 million, seven-story office and lab facility at 1812 Ashland Ave., and the proposed $81 million Marriott Residence Inn at Johns Hopkins Medical Campus.
Ernst Valery, president of Ernst Valery Investments Corp. and principal SA+A Development, said it was hard to tell what the chaotic market’s impact on development will be. He noted that many of his investors had already pulled out of the stock market.
His company’s latest proposal in Charm City — a proposed eight-story, $20 million market-rate apartment project at 20 E. Lanvale St. in the Station North Arts and Entertainment District — is scheduled to appear before the Urban Design and Architecture Review Panel on Thursday. He said if the economy tanks, his project would likely still be a solid investment because residents will rent space if they can’t afford to buy a home.
“It’s hard to predict how your lenders will react. It’s hard to predict how your investors will react. I mean the investors that I have, they’ve been anticipating a drop in the market, a correction, for the last six months,” Valery said. “Part of the reason I’ve been able to raise a significant amount of money for that project on the equity side is because a lot of these investors wanted to get out of the stock market.”