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Construction starts on next round of Port Covington building

Margaret Anadu, managing director of Goldman Sachs Urban Investment Group, said her firm believes in Baltimore despite the "negative narrative." Her fund's stake of $250 million in the project is the group's single largest investment. (The Daily Record / Adam Bednar)

Margaret Anadu, managing director of Goldman Sachs Urban Investment Group, said her firm believes in Baltimore despite the “negative narrative.” Her fund’s stake of $250 million in the project is the group’s single largest investment. (The Daily Record / Adam Bednar)

A dump truck let loose a blast of its air horn and construction equipment tore into the soggy ground at Port Covington on Monday, celebrating the start of construction on a portion of the $5.5 billion redevelopment.

It’s the start of work on the most significant building on the south Baltimore peninsula to date. The price tag for this round of construction, according to Weller Development Co., totals $700 million.

“Putting shovels in the ground and having big iron moving around out here really signifies that the project is here and going. It’s probably the No. 1 question (about Port Covington) is, ‘When is it starting?’ It’s starting today,” said Marc Weller, founding partner of the eponymous lead developer.

The first new buildings included in the round of construction that started Monday are expected to be delivered in the Fall of 2021. The first structure expected to be complete is the mixed-use Rye Street Market featuring a market/food hall anchor in 39,000 square feet of ground floor retail space, with roughly 180,000 square feet of office space and a rooftop events space. The overall space in the building is 243,000 square feet.

When “Chapter 1” of construction is completed, it’s planned to include, 976,667 square feet of residential, 337,450 square feet of retail, 1.38 million square feet of office space, and 285,000 square feet of hotel space. The first chapter also included construction of the Sagamore Spirit Distillery, Rye Street Tavern and City Garage, all of which are already completed.

In October 2018, cybersecurity startup studio DataTribe, the world’s largest cybersecurity venture capital firm AllegisCyber, and investment bank and Columbia-based corporate advisory firm Evergreen Advisors were named as the first office tenants in this round of building.

There are currently 15 “highly likely prospects”  considering leasing space, Weller said. Those potential tenants include international, out-of-state, and local firms. About 50% of the office space in one of the office buildings is pre-leased, and “getting there” in the second building.

Marc Weller, founding partner of Weller Development Co., said the latest round of construction at Port Covington expects to cost $700 million. The first buildings are expected to be delivered in the fall of 2021. (The Daily Record / Adam Bednar)

Marc Weller, founding partner of Weller Development Co., said the latest round of construction at Port Covington expects to cost $700 million. The first buildings are expected to be delivered in the fall of 2021. (The Daily Record / Adam Bednar)

Steven Seigel, a partner at Weller Development Co., said tax increment financing bonds funding public infrastructure work on the project are expected to be issued in January. Currently, the firm and its partners are covering construction cost with private equity and expect be reimbursed for expenses eligible for public financing.

“We’re funding it to move forward with the project. We want to stay on schedule, and we’re continuing to spend equity,” Seigel said.

Baltimore in 2016 awarded the Port Covington development team $660 million in tax increment financing. Essentially the public financing tool allows the city to issue debt to pay for infrastructure work, which, if all goes as planned, is repaid by property tax increases stemming from the development.

There have not been recent discussions about purchasing the Locke Insulators Inc. facility at 2525 Insulator Drive, Weller said. Locke Insulators said it plans to close close the manufacturing site in July 2017.

The nearly 25 acres and the building on the site, which dates back to 1920, according to state property records, represents the last large parcel of land on the peninsula not under the developer’s control.

“I don’t know much about Locke Insulators. We talked to them many years ago, and we haven’t had any new conversations in a while,” Weller said.

Overall the redevelopment of the 235 acres of underutilized industrial land along the city’s waterfront will include up to 18 million square feet of mixed-use building.

Under Armour independently intends to build a global headquarters at Port Covington. Plans for that development released in 2016 call for building 4 million square feet of space on 50 acres of property, providing work space for 10,000 of the athletic apparel brand’s employees.

A spokeswoman for Under Armour on Friday said the company still intends to pursue building the campus. The firm, which already converted a former Sam’s Club building at Port Covington into office space, does not have a timeline.

Under Armour’s CEO Kevin Plank is a major investor in the project, and his Sagamore Development firm led the effort to secure public financing for Port Covington.

Goldman Sachs Urban Investment Group’s Margaret Anadu, managing director of the fund, which made its single largest investment of $250 million in Port Covington, said she believes in the city despite the violence and ethics scandals that have plagued Baltimore.

“We don’t care about the negative narrative. We don’t care what people have to say about this city. We believe in it, we believe in this community and all that it has to offer,” Anadu said.


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