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Port Covington developer unveils ‘Chapter 1’ and Rye Street Market

Adam Bednar//Daily Record Business Writer//September 12, 2018

Port Covington developer unveils ‘Chapter 1’ and Rye Street Market

By Adam Bednar

//Daily Record Business Writer

//September 12, 2018

Weller Development Co. officials unveiled plans for 3 million square feet of building in 'Chapter 1' of the $5.5 billion Port Covington development. (Rendering Courtesy Weller Development Co.)
Weller Development Co. officials unveiled plans for 3 million square feet of building in ‘Chapter 1’ of the $5.5 billion Port Covington development. (Rendering Courtesy Weller Development Co.)

Developers leading the $5.5 billion Port Covington project will first deliver the mixed-use Rye Street Market in the newest phase of vertical construction.

Rye Street Market will include 242,000 square feet of space, with a first-floor market. It is part of the planned 3 million square feet of building developers on Wednesday called “Chapter 1.”  That segment of building also involves a 277,000-square-foot Rye Street Market residential building.

“The market is going to almost be a combination of a farmers market meets a maker space with some very interesting retailers in there,” said Marc Weller of Weller Development Co. LLC during a briefing with reporters at the Rye Street Tavern restaurant. “Then it will also have some really interesting food stalls in there as well. When you think about Baltimore, I mean you just think about all the markets and sort the connectivity there. … There (aren’t) any markets from here over through the (South Baltimore Six neighborhoods) … we want this to be a gathering place for everyone.”

Baltimore’s Urban Design and Architecture Advisory Panel is slated to review the first chapter’s streetscape on Thursday.

The developers intend to seek the first tranche of $660 million in public financing bonds for infrastructure work by the first half of 2019. Once the debt has been issued, the developer will begin work on infrastructure allowing for vertical construction of “Chapter 1.”

Currently, the Rye Street Market is anticipated to be the first property to deliver in late 2020 or early 2021.

Commercial real estate investment and development firm Network Realty Partners, in partnership with Weller Development Co., started marketing properties in the past few weeks.

The project, Weller said, has already drawn “robust” interest from potential tenants. Firms already in Baltimore, companies from other parts of Maryland, and businesses from out of state have inquired about moving to Port Covington.

“There’s been a tremendous amount of inbound calls of people interested in coming to Port Covington. What we’re seeing is … a trend, area-wide, where many of the younger workers that many of the best companies want to attract really want to be in a more urban environment,” Weller said.

Renderings of the site show 15 individual buildings in “Chapter 1.” The plans include intended uses for the properties. But Weller said those uses could change depending on demand.

Residential buildings in the first phase of Chapter 1 are expected to provide about 260 units. Steve Siegel, a partner at Weller Development Co., said some of those apartments will be affordable housing units. But the exact mix of cost-efficient and market-rate units hasn’t been established.

“We’re working through now how we implement the affordable housing units and how many we build, where, and which buildings, and so we are committed to building affordable housing in the first phase,” Siegel said.

Timelines for delivering individual buildings are also not set in stone. Depending on the needs of tenants the delivery timeline of certain properties could be accelerated. Additional investment in other portions of Port Covington, Weller said, could also speed up the timeline for building in additional sections.

There’s already been some building in Port Covington. The property is home to Sagamore Spirit Distillery, Rye Street Tavern, and a former bus depot across South Hanover Street converted into City Garage makerspace and offices. The Baltimore Sun recently consolidated its operations in Port Covington.

Redeveloping Port Covington has been in the works for several years. Rumblings of a massive new development on the South Baltimore peninsula date back to at least 2014. That’s when public documents revealed a limited liability corporation associated with Weller had purchased properties on the peninsula.

The project is owned by Sagamore Development Co., which was formed by Weller and Under Armour CEO Kevin Plank in 2013, and Goldman Sachs. That firm invested $233 million in the project via its Urban Investment Group in 2017. Additional investors are expected to be brought on during the 25 years it’s expected to complete build-out.

Sports apparel company Under Armour also intends to independently build a 3.9 million-square-foot global headquarters at Port Covington. None of the public financing, or investment from Goldman Sachs, will be used in the construction of that project.

Port Covington is the largest redevelopment effort in Baltimore since the overhaul of the Inner Harbor roughly 40 years ago. At completion, not including the Under Armour campus, the development will total about 14 million square feet of vertical construction.

The Port Covington redevelopment has not been without controversy. Activists initially opposed the city using public financing for infrastructure improvements. Eventually the developer and activists reached a deal.

In exchange for the developer receiving tax increment financing it agreed to a citywide Community Benefits Agreement providing $100 million in direct benefits. The benefits agreement also requires the developer to set aside 20 percent of residential units for affordable housing and hire 30 percent of its workforce from the city.

“We’re open for business,” Weller said on Wednesday. “We have a plan. We have a schedule, and we’re marching ahead pretty fast.”

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