M&T Bank’s decision to relocate its regional headquarters to the 28-story 1 Light St. building currently under construction could provide new momentum to keep major companies in Baltimore’s traditional central business district.
The bank will relocate more than 500 employees from offices at 25 S. Charles and 111 Calvert streets. M&T has signed a 15-year lease with two five-year renewal options and expects to occupy the new property by late 2018.
“M&T’s commitment to Baltimore begins downtown, in the heart of the city — a great place to live and work and a great place to do business,” Augie Chiasera, president of M&T Bank’s Greater Baltimore region, said in a statement. “The future looks bright for Baltimore, and today we are saying that we want to be a part of that future both as an employer and as an involved corporate citizen.”
The bank’s move to Light Street has been widely expected. M&T Bank’s current regional headquarters at 25 S. Charles St. sold earlier this year after being on the market since 2016. Through the process the bank repeatedly said it was committed to remaining in downtown Baltimore.
1 Light St. represents the first new Class A office construction in Baltimore north of Lombard Street in roughly 25 years. The development by Madison Marquette, which also includes 280 apartments and 5,000 square feet of ground-floor retail, already represents a victory for downtown because it eliminates a long vacant eyesore at the heart of downtown, according to city officials.
“I stared at that hole in the ground for two decades wondering how anything would happen there,” Baltimore Development Corp. President William H. Cole said.
But M&T’s decision to relocate its offices also lends credence to critics who argue Baltimore’s office market cannibalizes itself with newer projects luring existing tenants from older buildings instead of attracting firms from outside the market.
That cycle has resulted in more hard-to-fill vacancies in the traditional downtown. According to a MacKenzie Commercial Real Estate report on the metro area’s office market’s performance in the second quarter, 28.5 percent of Class A, 20.3 percent of Class B and an average of 14.7 percent for all classes of office space in “city center” remains vacant in the midst of a nine year economic expansion. That’s also despite a mass of conversions from older office space into apartments and hotels.
Anirban Basu, economist and CEO of Sage Policy Group, said M&T Bank’s decision to lease space at 1 Light St. is a positive for downtown because a major tenant is making a long-term commitment to stay instead of pursuing offices at newer waterfront developments, such as Harbor East and Harbor Point. The fact that a new development in that section of town was able to secure a marquee tenant means it will make money.
“That’s a big deal because that’s what attracts development,” Basu said.
Cole disputed the notion that new buildings in Baltimore simply poach existing companies from the city creating more vacancies. It’s normal for leases to expire and tenants to find new homes, he said, pointing to jewelry maker Pandora and Morgan Stanley leasing large chunks of existing office space downtown.
“This is a fairly natural cycle,” Cole said.
Kirby Fowler, president of the Downtown Partnership of Baltimore, said that retaining offices along with developing residential and retail space all remain key ingredients in turning Baltimore’s central business district into a live, work and play community.
“The office market is critically important to this part of downtown,” Fowler said.