About 3,300 state employees will be moved to office space within the central Baltimore business district, a move that could help revitalize an area that has been battered by rising office vacancies and the overall economic impact of the pandemic.
The announcement from Gov. Larry Hogan and other officials comes as the state assesses its need for office space in a post-pandemic world and looks to continue efforts to shutter the aging State Center complex.
“Over the last four months, we’ve been laser-focused on putting shots into arms,” said Hogan, referring to the state’s COVID-19 vaccination effort. “Today we are here to talk about a shot in the arm for the recovery and revitalization of downtown Baltimore.”
The state Monday issued a request for proposals for 105,000 square feet of office space within the central business district. The plan calls for the relocation of about 700 employees of the Department of Human Services from space on West Saratoga near Lexington Market.
Ultimately, employees from 12 different state agencies would be relocated into the central business district.
Hogan said the move will be “a big boost for the revitalization and transformation of downtown Baltimore.”
The move will be paid for from about $50 million set aside in a supplemental budget agreed to by the governor and leaders of the House and Senate earlier this year.
The announcement comes as some high-profile downtown business tenants, including T. Rowe Price Group and Bank of America, said they intend to move out of the central business district to other locations in the city.
The state will also soon begin searching for additional space to house roughly 1,200 employees of the Maryland Department of Health, which has its headquarters in the State Center Complex. Hogan canceled a deal to redevelop the crumbling State Center complex that borders Upton and Midtown more than a year ago.
Lt. Gov. Boyd Rutherford said the pandemic changed the way state employees work and how agencies assess space needs.
“More importantly, we recognize that many of our state facilities are in such poor condition that it’s currently costing us more money to maintain those buildings than to … rent well-kept property downtown,” said Rutherford.
The state is currently embroiled in ongoing legal dispute with the former developer for the canceled State Center redevelopment project.
“The governor never mentioned the words ‘State Center’ today, making the governor’s latest betrayal of and callous indifference to midtown Baltimore all the more apparent,” said Michael Edney, an attorney for State Center LLC and partner at D.C.-based law firm Steptoe & Johnson. “The state of Maryland long ago committed to keep its employees at State Center, recognizing that anything else would leave a wasteland in midtown Baltimore that would impede the community’s growth for decades to come. By moving state agencies and employees from State Center, the governor has broken that commitment.”
In November 2019, Hogan announced the state would seek another master developer for the State Center project but would relocate 3,300 employees from about 1 million square feet of office space to the central downtown area.
“The governor also spoke about providing a healthier and more efficient workplace for state employees. Tragically, had the governor not stood in the way, the State Center Project already would have provided that years ago,” said Edney. “His action today further shows a continued and blatant disregard for the judicial process that is underway to address the future of State Center.”
Exactly how much space the state will ultimately need is unclear in a post-pandemic world that saw an increase in public- and private- sector employees working from home. About 47% of state employees were able to move to teleworking during the pandemic.
“The pandemic has shown us two things: First, in order to compete and attract workers and create a viable and effective state workforce going forward, we need to offer modern, functional, adaptable workspace and options to match the flexibility emerging in the private sector,” said Rutherford. “Second, the size and scale of the offices we utilize now may not be necessary going forward.”
Hogan’s announcement was hailed as a potential boon to an area of downtown Baltimore that is struggling with higher office vacancy rates.
Senate President Bill Ferguson, D-Baltimore, said the changes at State Center present an opportunity to revitalize the core business district.
“A city lives and dies on momentum,” said Ferguson. “When you invest in people, when you bring people to places like this place, that is what makes cities great.”
An annual report by the Downtown Partnership of Baltimore released earlier this month reported office space vacancies have grown to slightly more than 23%. The rate for the area — an area one mile in radius from the intersection of Pratt and Light Streets — is higher than the 15.5% citywide rate for 2020.
Driving that rate was the pandemic and ongoing economic issues within the city, according to the report.
Hogan, speaking Monday, said the current rate of office vacancies in the areas is up 34%.
Shalonda Stokes, president and executive of the Downtown Partnership of Baltimore, called the relocation of state employees “a crucial boost” for the city’s pandemic recovery effort.
“Relocating state agencies into the CDB will create an integrated, transit-rich, walkable complex with nearby amenities for state employees,” said Stokes.
Baltimore Mayor Brandon Scott, who was not at the announcement at McKeldin Square near the Inner Harbor, hailed the news but also called on the state to redevelop the emptying State Center complex.
“While this timely investment seeks to retain jobs and stimulate absorption in the downtown office market, my administration will work with stakeholders to ensure surrounding neighborhoods can also benefit,” said Scott, in a statement. “State Center investment has the potential to bind communities across Baltimore, and it is important that the state of Maryland and the city work together to achieve this.”