Amid setbacks, Baltimore’s downtown still has backers

Over the past five years, Baltimore’s central business district and the Inner Harbor have faced a variety of setbacks, from a retail exodus to rising office vacancies combined with aging infrastructure.

Compounding those issues has been a heightened perception of crime fueled by viral videos of fights and carjackings, which have deterred many tourists, suburbanites and business travelers from coming downtown.

Business leaders acknowledge that Baltimore’s historic central business district, or CBD, faces problems but believe they are not insurmountable.

“Retail suffered mightily during COVID, and a lot of mom-and-pop restaurants never reopened,” said Jim Grieves, vice president of MacKenzie Commercial Real Estate Services, which is located in the central business district.

The vacancy rate downtown remains high, Grieves said.

“Last year at this time we were at 31.5%. Now we’re at 30%,” he said.

T. Rowe Price’s move this year to a new, 550,000-square-foot headquarters in Harbor Point took about 2,000 employees out of downtown. The move left a significant vacancy at 100 East Pratt St., a 635,000-square-foot building that the investment management firm had occupied since 1975.

Newer areas in the city have attracted investors, while the Inner Harbor, with Harborplace and the National Aquarium, over time lost its sheen – though Baltimore voters last year approved zoning changes to allow a $500 million redevelopment of Harborplace.

“Submarkets like Harbor East, Harbor Point and Locust Point are performing well due to the fact that they have all the ‘check the box’ amenities businesses use to attract employees,” said Terri Harrington, managing principal of Baltimore-based Harrington Commercial Real Estate Services.

Recent sales prices have highlighted the area’s challenges.

“A number of properties have recently sold at record low prices,” Grieves said. “An office building at 201 N. Charles St. was in receivership. It went to auction and sold for $6 a square foot. Peter Angelos owned a property just one block south of that. He bought it in 1994 for $19 a square foot and it sold for less than $10.”

Harrington said that targeted incentives could go a long way toward revitalizing both the central business district and the Inner Harbor.

“A reduction in property taxes would give building owners more capital for improvements and tenant improvement allowances, which would help them compete with newer properties outside the CBD,” she said.

Transforming blighted properties and vacant lots would also help bring life back to the central business district, Harrington said.

“I have said for years that we should beautify the entrances to the main corridors running north through the CBD like Charles, Light and Calvert streets from Lombard to give the CBD a sense of place, but money has been allocated to other areas,” she said.

An influx of state employees

Brad Byrnes, president of Byrnes & Associates, a Baltimore-based commercial real estate agency, recognizes that the central business district and the Inner Harbor are facing headwinds. However, he is bullish on downtown’s future, especially now that about 6,000 state employees are set to relocate from the aging State Center complex to downtown, bringing foot traffic and spending to the area.

An added benefit, Byrnes noted, will be enhanced security.

Noting that Baltimore’s crime rate has dropped in the last two years, he said he expected that trend to continue with the State Center relocations because the Capitol Police will have jurisdiction within a 1,000-foot radius of each state-occupied building.

“We’re no longer ranked among the top 25 most violent cities in the country,” Byrnes said. “That hasn’t been the case now for about a decade.”

Byrnes said he’s never given up on downtown Baltimore.

“We’ve been buying property here for the past five years, meeting a demand for smaller spaces at less than 5,000 square foot. We prove our commitment by our track record of consistently investing in the community.”

He pointed out that within a one-mile radius of downtown there are 44,000 residents, 125,000 workers and 9,500 hotel rooms and that the convention center is bouncing back.

“We were one of only a few buyers in 2020,” he said. “We purchased 90,000 square feet of vacant office space at zero occupancy. We now have 70 office leases which are 90% occupied.”

Added Byrnes: “Everyone loves a comeback. That’s what Baltimore is poised to do.”