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S TAT E O F D O W N T O W N B A LT I M O R E R E P O RT
AN ANNUAL ECONOMIC ANALYSIS PRODUCED BY
DOWNTOWN PARTNERSHIP OF BALTIMORE, INC.
SUPPORTED BY
Downtown Totals
Employment 97,137
Students 17,724
Hotel Rooms 5,968
Mount Vernon Parking Supply 53,593
Employment 17,654 Residents (1-mile radius) 37,000
Students 7,579 Total Households 15,000
Multi-Family Residential Units 2,404
Hotel Rooms 187
Parking Supply 5,492
City Center
Employment 29,213
Students 4,509
Multi-Family Residential Units 1,375
Hotel Rooms 1,827
Parking Supply 17,437
Westside
Employment 28,017
Students 5,636
Multi-Family Residential Units 2,412
Hotel Rooms 1,268
Parking Supply 16,871
Inner Harbor
Employment 22,253
Students 0
Multi-Family Residential Units 1,649
Hotel Rooms 2,686
Parking Supply 13,793
About the Report
Downtown Partnership is pleased to present the
2006 State of Downtown Baltimore Report. This
annual assessment of Downtown’s economy
utilizes data collected by, or on behalf of, Downtown
Partnership and fuses it with the best external
research to create an objective look at the
conditions that most affect Downtown Baltimore’s
current and future health.
This year’s report includes additional data and
economic forecasts collected by The Partnership in
2006 as part of a separate but related report called parking supply, and development figures in this
Outlook 2012. That four-part analysis was released report is the same as last year so that year-to-year
in early 2007 and complements the 2006 State of comparisons are possible (see map on inside front
Downtown by providing three additional studies, cover).
each examining key elements of Downtown’s
employment and housing sectors, as well as a As with each State of Downtown Report, estimates
comprehensive Retail Strategy for Downtown. from previous reports are adjusted as more accurate
data becomes available. These adjustments are
Data for the 2006 State of Downtown Report was noted as they occur in the report. Also note that,
collected during the 2006 calendar year. To better with the inclusion of Outlook 2012, and interviews
enable comparisons among the many different The Partnership conducted of Downtown employers,
research components utilized for both the State the 2006 State of Downtown Report is the first to
of Downtown and Outlook 2012 reports, the include projections about future trends and growth.
geographic area studied in both reports extends in
a one-mile radius from the intersection of Pratt and This report was produced by Downtown Partnership
Light streets (see map, page 14). This represents of Baltimore, Inc., which is solely responsible for
a slight change from the study area used in the its content. Charts & graphs are property of The
previous State of Downtown Report, which was Partnership unless otherwise noted. Employment,
done on a neighborhood-by-neighborhood basis. development, and investment totals are estimates
However, the geographic area used for employment, with a +/- 3% variance.
Table of Contents
Executive Summary 4 Employment 15
Outlook 2012 6 Office Market 17
Housing and Residential 9 Hospitals, Healthcare, Education 19
Retail 11 Hospitality & Tourism 21
Development & Investment 13 Infrastructure 22
Map: One-Mile Radius 14 Conclusion 23
3
Executive Summary
The state of Downtown Baltimore in 2006 was strong, continuing the trends of healthy investment, high
employment levels, and growing residential demand that have marked the past several years. If there were
a headline that summed up the year’s economic development trends, it would be that there were no major
headlines. In this regard, the absence of drama was welcome. Instead, Downtown experienced steady
progress.
Outlook 2012
Included in the 2006 State of Downtown Baltimore
Report are key findings from Outlook 2012, a
four-part series of reports and recommendations
produced by Downtown Partnership, with support
from the Goldseker Foundation, that was released
in early 2007. Based on its research data,
Outlook 2012 estimates that over the next six
years Downtown can absorb more than 7,000 new
residential units. Within that timeframe, hospital
expansions, biopark creation, and the Federal Base
Realignment And Closure (BRAC) process will
create more than 17,000 additional jobs and more
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
than $3 billion in spin-off economic value.
Residential and Retail
Residential activity in established neighborhoods was
healthy and new housing development continued to
revitalize Downtown. Of the more than 900 apartment Development and Investment
units completed in late 2005 and throughout 2006, In 2006, $282 million in projects was completed and
leasing was brisk, rents rose accordingly, and waiting additional projects worth $1.5 billion were underway
lists appeared for the most popular properties. While with delivery scheduled for 2007/08. When
slower than in 2005, the for-sale market grew in terms considered with the 2005 investment level of $545
of sales and pricing. To keep up with demand, nearly million, and realistic near-term projections through
100 for-sale condos were delivered in 2005/06, and an 2010 ($2.76 billion), a total of $5.16 billion was in
additional 643 were under construction and pre-selling. various stages of development by the end of 2006.
Projects in neighborhoods adjacent to Downtown
Having an expanding base of residents made it add $4.6 billion to the total. Taken together, these
easier to market Downtown for retail investment, investments will translate into thousands of new
and 2006 saw many exciting retail announcements jobs, additional residential construction, and a
as regional and national retailers committed to welcome expansion of the City’s tax base.
Downtown. The leasing success at Lockwood
Place, Harborplace & The Gallery, Centerpoint,
Charles Plaza, and the growing number of boutiques
in Harbor East and City Center were signs of
Downtown’s budding retail climate and predictors of
future success.
4
Office Market Infrastructure
Several new leases and tenant expansions helped In 2006, $7.7 million in public and private capital
produce a favorable drop in Downtown’s office investments was completed, restoring parks and
vacancy rate in 2006, with substantial leasing plazas, upgrading streets and sidewalks, and
occurring in the Class A market and a tightening sparking long-delayed maintenance projects,
of the B market. This was a result of modest both large and small. When added to projects
employment growth in mid-size tenants (50-500 in planning stages and under construction, the
jobs) and conversions of traditional office space to total level of infrastructure investment Downtown
residential and hotel uses. was $67 million. In research conducted by The
Partnership, businesses, residents, and visitors
Employment have repeatedly noted that attractive and well-
After increasing in 2005, overall Downtown maintained infrastructure is vital to Downtown’s
employment remained steady in 2006 at an business climate and overall quality of life.
estimated 97,137. The Restaurant / Food Service
and Education sectors posted the largest increases
in jobs, making up for slight reductions in Finance,
Insurance, and Government. In Professional
Service businesses, new technologies helped
explain reduced staff counts, as did the tight labor
market for skilled professionals.
5
Outlook 2012
In 2006, Downtown Partnership commissioned Outlook 2012,
a four-part series of studies and trend forecasts supported by The
Goldseker Foundation. Released in early 2007, Outlook 2012
showed that Downtown Baltimore is no longer poised for success
but, instead, has transformed itself into a vital urban center with
strong prospects for a healthy future.
Outlook 2012 has four components:
2007-2012 Housing Demand Study by Zimmerman/Volk Associates
1
Demographic Profile of New Downtown Baltimore Residents by the Jacob France Institute
2 of the University of Baltimore
The Economic Analysis of Hospital Expansions, Bioparks, and BRAC - an employment
3 growth study by the Sage Policy Group
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
A Retail Strategy created by The Partnership to guide retail development and marketing.
4 The strategy was built on findings from The 2005 Downtown Baltimore Retail Assessment
by McDearman Associates.
Outlook 2012 estimated that, over the next six Following are summaries of each section in the
years, Downtown can absorb more than 7,000 Outlook 2012 report. The complete findings and
new residential units and that hospital expansions, recommendations may be downloaded from the
biopark creation, and the BRAC process will create Development section of The Partnership’s website,
a demand for more than 17,000 new jobs and result GoDowntownBaltimore.com.
in more than $3 billion in spin-off economic revenue.
6
1 Housing Demand Study 2 Demographic Profile
The Partnership commissioned Zimmerman/Volk To better understand the demographic makeup
Associates to identify the depth and breadth of of new Downtown residents, The Partnership
the demand for market rate housing Downtown. commissioned the Jacob France Institute of the
A similar study was performed in 2001 and University of Baltimore (JFI) to administer a survey
showed Downtown’s housing market could absorb of new Downtown residents (living within a one-mile
approximately 5,000 new residential units over radius of Pratt and Light streets).
five years. Since the release of the 2001 study,
approximately 3,000 housing units have been The survey found that new Downtown residents
delivered. Most leased quickly and nearly all are are young (48% are ages 25-34), single (49%),
at, or near, full occupancy. Rents and sales values highly educated professionals (94% with BA or
have increased accordingly. more) living in 2-person households. Most are very
recent residents (32% moved here within the past
The 2006 study reaffirmed the strong demand for three years) and 82% own their own homes. Of the
Downtown housing and projected continued demand residents who own their own home, the average
for approximately 7,430 new units through 2012, monthly mortgage is $1,574. Renters pay an
including 2,980 multi-family rentals, 2,200 multi- average of $1,171 a month.
family for-sale units, and 2,250 single-family for-sale
townhouses. Sixty-nine percent (69%) of new Downtown residents
work in Baltimore City and 21% of them walk to
work. Most have skilled jobs and 87% of Downtown
households earn $50,000 or more annually.
Photo credit: Frank Klein
7
3 Economic Forecast 4 Retail Assessment & Strategy
Outlook 2012 estimated the fiscal impact of To better attract retailers and plan for retail
hospital, biopark, and BRAC-related investments development, The Partnership initiated a multi-
in, and around, Downtown will include $3 billion in stage retail planning process in conjunction with
new construction by 2012. After the construction the Baltimore Development Corporation (BDC), the
phase, these three sectors are expected to increase Baltimore City Department of Planning, and the
Downtown’s job base by at least 13% and total Charles Street Development Corporation. The first
Baltimore employment by more than 17,000. By step of this process was the release of the 2005
the year 2012, these jobs will increase aggregate Downtown Baltimore Retail Market Assessment,
income opportunities in Baltimore City by nearly $1 which established baseline demographic information
billion and business sales by $2.2 billion annually. (within a one-mile radius of Pratt and Light streets),
examined key factors in retail location decisions,
and forecasted industry trends. The data found that,
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
of the top 25 U.S. metro areas:
• Downtown Baltimore ranked 8th for population
density (37,000) and in the number of
households (3,145) earning $75,000 or more;
• Downtown Baltimore ranked 6th for total
employment density; and,
• Baltimore City ranked 10th with a per capita
income of $35,556.
Using the Assessment’s findings, in early 2007 The
Partnership released a detailed Retail Strategy that
focused on the following areas:
• Demographics & Marketing;
• Retail Recruitment;
• Retail Clustering;
• Retail Building Program;
• Authenticity & Placemaking;
• Incentives; and
• Site-Specific Recommendations.
8
Housing and Residential
After a banner year for housing development in 2005, demand for Downtown housing continued to be
healthy in 2006. A total of 177 new residential units were delivered to the Downtown market in 2006,
49 of which were for-sale condos. An additional 431 units were delivered in neighborhoods adjacent to
Downtown. Although housing deliveries were down significantly from 2005, this was due to construction
cycles and the market regressing to a mean after several years of abnormally high growth in the for-sale
area.
Downtown’s rental market performed extraordinarily
well in 2006, with brisk leasing paces, increasing
rents, and waiting lists appearing at some
properties. This was in contrast to 2005 when the
rental market had lackluster performance because
many potential renters were pursuing for-sale
condos or townhouses. With the slowing of the
for-sale market, buyers returned to the rental market
in droves, another sign that demand for Downtown
living remained strong.
While housing sales slowed, demand did not
evaporate. Condos were still selling, particularly
those at lower price points. Downtown’s first major
all-condo project at 414 Water Street pre-sold 85% of
its 312 units thanks, in part, to moderate pricing (high
$200-$600k). Nevertheless, even the Ritz Carlton,
one of the most expensive projects underway in
2006, experienced a strong sales pace and had sold
65% of its units with prices starting at $1.5 million.
9
DOWNTOWN HOUSING UNIT DELIVERIES - AS OF 12/31/06
Planning
Housing Type Completed 2005 Completed 2006 Under Construction
(2007-2010)
Rental Apartments 798 128 702 1,430
Condominium 43 49 643 781
Townhouses 6 - 112 50
Total 847 177 1,457 2,261
As part of Outlook 2012, The Partnership collected better data on Downtown demographics and what residents
perceive as the positives and negatives of Downtown living. Below are tables representative of the findings.
WHAT IS THE REASON(S) THAT YOU CHOSE TO LIVE IN DOWNTOWN BALTIMORE?
Number of Responses Percent of Total
Urban Amenities 334 73%
Prefer urban environment 317 69%
Proximity to Work 263 57%
Cultural Attractions 251 55%
Friends / Family Nearby 115 25%
Cost of Housing 114 25%
Proximity to School 48 10%
Downtown Partnership Clean and Safe Team 22 5%
Other 43 9%
Source: JFI for Outlook 2012
WHICH CHANGES WOULD CAUSE YOU TO STAY IN DOWNTOWN BALTIMORE?
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
Number of Responses Percent of Total
Reduction in crime 142 93%
Improved public schools 111 73%
More open spaces / parks 76 50%
More shopping options 70 46%
More / improved public transit 56 37%
More private school options 46 30%
More charter schools 33 22%
More job opportunities 30 20%
Greater variety of housing 29 19%
More events / planned activities 23 15%
Other 34 22%
Source: JFI for Outlook 2012
LOOKING AHEAD
Over the next five years, Downtown appears to be headed into an extremely favorable period in terms of
residential growth. Demographic trends show increased numbers of Empty Nesters and Echo Boomers
(Generation Y) choosing to live Downtown. The Partnership estimated a total of 1,450 additional housing units
will be completed in Downtown in 2007 and close to 400 will come on-line in adjacent neighborhoods.
10
Retail
The retail gains posted in 2005 continued in 2006 as several regional and national businesses elected
to open or expand Downtown. Downtown ranked 8th in the nation in terms of both residential density
and household income, making it easier to market the area for retail investment. The leasing success at
Lockwood Place, Harborplace & The Gallery, and Charles Plaza, as well as the growing number of boutiques
in Harbor East and City Center were all signs of Downtown’s budding retail climate and predictors of future
success.
In 2006, Downtown had approximately 1,400 retailers, Also in City Center, the former Mechanic Theatre is
of which 90 were new businesses. By a two-to-one being converted into a new, approximately 80,000
ratio, Service retailers continued to outnumber Goods square foot retail destination called Mechanic
sellers. Food Services was the biggest sub-category Center, and there has been early interest expressed
within the Service sector, representing 83% of the in that location by a variety of national and local
total. stores.
The largest percentage of retailers opened on
Downtown’s Westside as projects at and around
Centerpoint opened, including Bedrock, California
Tortilla, Hippodrome Hatters, and Salsarita’s. The
Inner Harbor continued to be a top destination for
national brands. At Harborplace & The Gallery,
renovations improved existing stores and lured new
shops, including the announcement that Urban
Outfitters will open its first Baltimore City store at
the Light Street Pavilion in 2007. Lockwood Place,
where Best Buy opened in 2005, was almost fully
leased by year’s end thanks to commitments by
Filene’s Basement, P.F. Chang’s, and the Brazilian
steakhouse Fogo de Chao. Locally-owned Edible
Arrangements opened its first Baltimore location on
South Street while Café Gourmet opened two City
Center locations.
11
Retail Development Strategy
Throughout 2006, The Partnership continued its • Expediting the permitting process, especially
multi-stage retail planning process that culminated where signage and outdoor dining are involved;
in the early 2007 release of a comprehensive • Reviewing permitting costs to improve the retail
Downtown Retail Strategy, which will assist retail climate relative to surrounding jurisdictions;
attraction and investment. (See page 8 for more • Encouraging the inclusion of ground floor retail
information about the Strategy and the supporting components in development projects;
data provided in the Downtown Retail Assessment.) • Expanding retail marketing, especially to trade
groups such as the International Council of
The Retail Strategy includes several critical steps Shopping Centers; and
the public and private sectors should take to • Continuing to improve Downtown’s overall
increase Baltimore’s favorability to retail. These aesthetics and walkability.
include:
RETAIL ESTABLISHMENTS BY NEIGHBORHOOD
Neighborhood Number of Retailers / First Floor Percentage
City Center 360 26%
Inner Harbor 227 17%
Mt. Vernon 367 26%
Station North 54 4%
Westside 380 27%
GOODS VS. SERVICES
Total Percentage
Goods 390 28%
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
Services 998 72%
GOODS BY CATEGORY
Total Percentage
Consumable 86 22%
Non-Consumable 304 78%
SERVICES BY CATEGORY
Services Total Percentage
Consumer Services 210 21%
Entertainment 42 4%
Food 380 38%
Institutional 22 2%
Museum / Cultural 22 2%
Office 255 25%
Public Service w/Walk-in 67 8%
LOOKING AHEAD
The strong retail climate is expected to continue into 2007 with the delivery of a significant amount of new retail
space. Under new ownership in 2006, the Verizon Building at Pratt and Light streets will add approximately
22,000 square feet of retail after renovations are complete. The mixed-use Struever Brothers, Eccles and
Rouse project at 1209 North Charles will include substantial ground-level retail as well. And the much
anticipated SuperFresh opened City Center’s first grocery store at Charles and Saratoga streets in early
January of 2007.
12
Development and Investment
Downtown
Development and investment in Downtown While construction completions were down
continued at a positive rate in 2006. By the end of significantly from the prior year ($545 million in 2005
the year, more than $5.16 billion in projects was compared to $282 million in 2006), this was not
either completed, under construction, or planned. cause for alarm. The drop was offset, five-fold, by
This investment was spread across a broad range the heavy volume of construction underway by the
of project types (cultural; hospital; hotel; mixed use; end of 2006 ($1.58 billion). Additionally, projects in
residential; retail) in neighborhoods throughout the planning phases with construction anticipated to
Downtown. start between 2007 and 2010, totaled $2.76 billion.
DOWNTOWN INVESTMENT BY PROJECT STATUS - AS OF 12/31/06
Projects Completed Projects Completed Under Construction Planning (Construc-
Land Use
2005 2006 as of 12/31/2006 tion 2007-2010)
Cultural $150,000,000 $35,000,000 $24,000,000 $84,500,000
Hotel $24,000,000 $18,000,000 $334,000,000 $48,000,000
Infrastructure/Public Space $9,800,000 $7,708,000 $25,300,000 $23,984,000
Institutional $36,000,000 $169,000,000 $378,000,000 $366,500,000
Mixed Use $179,600,000 - $249,500,000 $1,749,537,000
Office Construction/Renovation - $29,255,000 $7,500,000 $36,000,000
Parking $11,000,000 $1,800,000 $20,000,000 -
Residential $112,281,000 $20,000,000 $535,700,000 $438,925,000
Retail $22,000,000 $1,000,000 $4,000,000 $12,000,000
Totals $544,681,000 $281,763,000 $1,578,000,000 $2,759,446,000
INVESTMENT IN DOWNTOWN AND ADJACENT NEIGHBORHOODS
Projects Completed $544,681,000 Downtown
2005 $29,400,000 Adjacent Neighborhoods
Projects Completed $281,763,000
2006 $272,400,000
Under Construction as $1,578,000,000
of 12/31/06 $621,600,000
Planning (Construction $2,759,446,000
2007-2010) $3,687,000,000
$0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B
(2006 Dollars in Billions)
Adjacent Neighborhoods
Historically, development in neighborhoods underway, and $3.69 billion in planning. This
surrounding Downtown has been modest by included large-scale, mixed-use projects in Westport
comparison. However in 2006, areas near and in East Baltimore at the Johns Hopkins Medical
Downtown had significant investment with Campus and surrounding neighborhoods.
$272 million in projects completed, $622 million
13
Downtown Management District
Employment
Downtown employment remained steady in 2006, with estimates showing employment at 97,137, a slight
but statistically insignificant decrease of 225 jobs (-0.23%) compared to the revised 2005 estimate (and
well within this report’s +/-3% margin of error). The business base was diverse both in terms of business
type and location.
LARGE TO SMALL BUSINESS RATIOS,
EMPLOYERS TO EMPLOYEES
More businesses opened (257) than closed (250),
and the new businesses accounted for more jobs
100%
(3,400) than those that left (2,500). Eighty percent Employers with 49
90% 17% Jobs or Less
(80%) of the new businesses were professional
80% Employers with 50
firms, with the rest in the Retail and Restaurant
70%
Jobs or More
sectors. For employers that either closed, moved,
or merged, the majority (72%) were in Retail, 60%
91%
Restaurant, and Professional Service sectors. 50%
40% 83%
Mid-sized employers (between 50 and 500 jobs) 30%
experienced the highest growth in 2006 with a 9.4% 20%
increase over 2005. Small employers (49 jobs or 10%
fewer) decreased by 13.1%. Downtown’s largest 9%
Employment Employers
employers (500+ jobs) were virtually unchanged
from 2005 levels. Mid-to-large employers continued
to dominate the job market, comprising just 9% DOWNTOWN EMPLOYMENT BY NEIGHBORHOOD
of the employer base but holding 83% of total
employment.
29,213 28,017
(30%) (29%)
Employment Sectors
The largest job increases were reported by
Restaurants / Food Service businesses as a result
17,654
of several new restaurants opening Downtown. 22,253 (18%)
(23%)
Expansions at the University of Baltimore and
University of Maryland, Baltimore accounted for
employment increases in the Education sector. West Side Inner Harbor
Mt. Vernon / Station North City Center
Government employment was down 1,500 jobs
(1.5% of the total job base), which accounted
for the largest drop. The second largest loss Neighborhood Employment
sector was in Finance and Insurance and resulted Of Downtown neighborhoods, only City Center
from out-migration, attrition, and industry-wide showed a job decline, due mostly to reductions in
consolidations. Other categories with slightly lower government workforces. All other neighborhoods
employment (e.g. hotels, law firms, architecture were up slightly over 2005 levels. The Westside
firms, accountants, etc.) reported openings that and Mount Vernon benefited from expansion in
went unfilled as a result of a tight labor market, the Education and Health Care sectors, while the
and reduction in clerical staff due to technological Inner Harbor grew from business expansion and
efficiencies. attractions, that included Professional Services firms
and Retail establishments.
15
EMPLOYMENT BY SECTOR / INDUSTRY GROWTH (OR DECLINE)
Government 1,515
20,858
Healthcare and Social Assistance 124
17,123
Finance and Insurance 583
12,636
Education Services 911
10,625
Professional Services 262
10,588
Accommodation and Food Services 901
9,587
Information and Communications 243
3,324
Retail Trade 13
2,949
Arts, Entertainment and Recreation 160
2,844
Other Services / Philanthropic / Charitable 6
1,765
Real Estate and Leasing 108
1,764
Admin Support / Waste Management 28
1,456
191
Net Growth / Decline - 2005 / 2006
Transportation / Warehousing 969
Total Employment by Sector
Utilities 41
437
Construction 95
87
Manufacturing 98
63
Mining / Petroleum 84
33
Wholesale Trade 10
29
(5,000) 0 5,000 10,000 15,000 20,000 25,000
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
Mergers and Acquisitions
Mergers, acquisitions, and new businesses
associated with the Legg Mason / Citigroup asset
swap, and the Stifel Nicolaus / Smith Barney spin-
offs, should ultimately prove to be beneficial for
Downtown. Both Stifel Nicolaus and Smith Barney
zeroed in on new office locations and planned future
Downtown expansion.
In August, Performax merged with Minneapolis-
based Corporate Benefit Services of America,
becoming the nation’s fourth-largest self-funded
health benefits provider. The new company, CBSA
Performax, will be headquartered in Downtown with
90 employees.
In the fall of 2006, PNC Bank announced its
decision to acquire Mercantile Bank and Trust and
the early indication was that Downtown would retain
a significant number of jobs with typical reductions
occurring in back office and suburban locations.
16
New Businesses
In addition to the new companies spun-out of the LOOKING AHEAD
Legg-Citi deal, Downtown welcomed several new Surveys by The Partnership of current Downtown
firms in 2006. Metastorm, a technology company, employers revealed that: 28% (659 employers)
relocated from Howard County to 500 East Pratt anticipated adding an average of 9.22 jobs
Street. The Baltimore Examiner and Neighborworks each; 45% (1,045 employers) anticipated no
America both opened next door at 400 East Pratt. change. This shows a net employment growth
by Downtown businesses in 2007 of over 6,000
potential jobs. In addition, The Partnership’s
Outlook 2012 report forecasts demand for an
additional 17,000 new Downtown jobs in the
Health Care and Biotech sectors over the next six
years as expansions at Johns Hopkins Hospital,
University of Maryland Medical System, Mercy
Hospital, and Kennedy Krieger begin to ramp up
operations.
2007 EMPLOYMENT FORECAST
DPOB Survey of Employers’ Anticipated Staffing
576 1048 659
(25%) (44%) (28%)
63
(3%)
0% 50% 100%
Unknown Stay Same
Decrease Increase
Office Market
Commercial real estate brokers reported good news,
finding Downtown’s 2006 office vacancy rate to be
down, and rents slightly higher from the end of 2005.
OFFICE MARKET DYNAMICS
Year End 2006 Year End 2005
Vacancy – Overall 11% approx. 13% approx
Rents – Class A $25-$30/SF $24-$28/SF
Rents – Class B $19-$22/SF $18-$21/SF
Source: aggregates of Downtown broker reports
The drop in vacancies resulted from the conversion
of close to 400,000 square feet of older office space
into new uses, new companies locating Downtown
and from normal business expansions. Buildings at
16 South Calvert Street, 207 East Redwood Street,
101 North Charles Street, and 39 West Lexington
Street were all being converted from office into hotel
or residential uses.
17
NOTABLE 2006 LEASE TRANSACTIONS
Company Address Sq Ft Action Neighborhood
Baltimore Examiner 400 E. Pratt Street 15,500 New Inner Harbor
Carter & Burgess One Charles Center 14,500 Relocation City Center
Carton Donofrio One Charles Center 5,600 Expansion City Center
Chase-Brexton Health Services 1120 N. Charles 6,000 Expansion Mt. Vernon
Citigroup/Smith Barney 100 Light Street 135,000 Sublet Inner Harbor
Design Collective 601 E. Pratt Street 37,000 Relocation Inner Harbor
Duane Morris 111 S. Calvert Street 12,500 New Inner Harbor
Euro RSCG 400 E. Pratt Street 17,248 New Inner Harbor
Fusion Sales Partners 500 Pratt Street 5,000 New Inner Harbor
Gebhardt & Smith, LLP One South Street 25,000 Relocation City Center
Mercy Medical Center 225 N. Calvert Street 19,000 Expansion City Center
Metastorm 500 E. Pratt Street 12,000 New Inner Harbor
NeighborWorks America 400 E. Pratt Street 10,000 New Inner Harbor
Semmes Bowen & Semmes 25 S. Charles Street 58,600 Relocation City Center
Stifel Nicolaus One South Street 76,000 New City Center
SunTrust Bank 120 E. Baltimore Street 55,400 Renewal City Center
Tydings & Rosenberg 100 E. Pratt Street 40,000 Renewal Inner Harbor
United Way of Central Baltimore 100 S. Charles Street 31,721 Renewal Inner Harbor
University of Maryland Biotechnology Institute Columbus Center 9,500 Expansion Inner Harbor
University Physicians, Inc. 250 W. Pratt 10,000 Expansion West Side
Vertis, Inc. 250 W. Pratt Street 52,000 Renewal West Side
Wilmington Trust Corporation 111 S. Calvert Street 9,000 Expansion Inner Harbor
Sources: Broker Reports, DPOB, BDC
At the end of 2006, one office building was under construction Downtown at 600 South Exeter Street (200,000
square feet) as part of the on-going mixed use Harbor East development. Most other office development was
in renovation projects such as the new Catholic Relief Services’ offices in the former Stewart’s department
store building and Bioanalytical Systems offices at 300 West Fayette Street.
NOTABLE 2006 BUILDING / LAND SALES
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
Building Class SF Price $/SF
201 E. Baltimore Street B 125,000 $10,200,000 $81.60
301 N. Charles Street B 76,204 $6,900,000 $90.55
207 E. Redwood Street B 70,826 $5,900,000 $83.30
300 Cathedral Street B 56,122 $4,300,000 $76.62
200 East Lexington B 100,000 $6,000,000 $60.00
28 Light Street B 16,700 $1,700,000 $101.80
10 South Street B 22,565 $1,500,000 $66.47
Land Size Location Price
300 E. Pratt Street 1 Acre Inner Harbor $27,500,000
414 Light Street 1.9 Acres Inner Harbor $25,000,000
Most sales occurred in the Class B market, where buildings were acquired for conversion or as opportunities
for tenant relocations due to conversions. Most buildings listed above sold in the late ‘90s for $10 per square
foot, and by 2004 had risen to the mid-$50s. The table above shows how significantly land values have risen
since.
2007 AND BEYOND
Approximately 200,000 square feet of existing office space will come back on the market as a result of
CareFirst, Chubb Insurance, and Thompson Prometric moving or expanding into other parts of the city, and as
a result of Eisner Communications permanently closing at the Bagby Building. These moves freed up office
space to allow for future expansion of other firms, muting the need for substantial new construction. Future
Class A space will likely come as one component of a mixed-use project, such as the 25-acre State Center
development by Struever Bros. Eccles and Rouse.
18
Hospitals, Health Care, and Education
Downtown has many institutes of medicine and These benefits continued in 2006 and are expected
higher learning that, for decades, have provided to expand in the coming years. Outlook 2012
significant amounts of investment and employment estimated that the fiscal impact of hospital, biopark,
and attracted top talent from around the world. In and BRAC-related investments in and around
2006, Downtown’s major medical systems were Downtown will include $3 billion in new construction
going through significant capital expansions and by 2012. After the construction phase, these three
improvements to ensure that their facilities and sectors will increase Downtown’s job base by at
equipment are cutting edge, to accommodate least 13% and Baltimore’s total employment by
patient demand, and to add needed space and more than 17,000. By the year 2012, these jobs
equipment for research and diagnostics. In addition will increase aggregate income opportunities in
to their direct economic benefit, medical systems Baltimore City by nearly $1 billion and business
and bioparks have driven residential growth, spun sales by $2.2 billion annually. The resulting capital
off related enterprises, and supported numerous and employment expansion will raise the city’s tax
vendors, restaurants, and retail shops. base by more than $49 million annually each of the
next six years.
ECONOMIC IMPACTS OF MEDICAL AND BIOPARK CONSTRUCTION AND OPERATIONS, 2004-2012 (ANNUAL EFFECTS, 2006 DOLLARS)
Jobs Supported Associated Income Business revenue/sales
Year
(full & part-time jobs) (millions) (millions)
2004 1,561 $80.3 $171.4
2005 2,046 $105.1 $223.3
2006 9,644 $499.7 $1,072.9
2007 12,657 $654.6 $1,406.5
2008 15,668 $807.3 $1,732.0
2009 21,278 $1,130.3 $2,490.8
2010 19,414 $1,082.0 $2,446.3
2011 16,357 $925.1 $2,086.4
2012 17,584 $987.5 $2,214.2
Source: Sage Policy Group for Outlook 2012
19
INVESTMENT IN HOSPITAL & BIOPARK PROJECTS (DOWNTOWN & ADJACENT NEIGHBORHOODS)
Institution / Project Sq Ft Investment
Mercy Medical Center Clinical Tower 729,000 $258,400,000
UMB Bio Park 1,100,000 $360,000,000
UMMS Ambulatory Care Center 500,000 $346,000,000
East Baltimore Bio Park 1,200,000 $800,000,000
JHH Wilmer Eye Institute Expansion 275,000 $88,000,000
JHMI Medical School Addition 150,000 $45,000,000
Johns Hopkins Hospital Replacement 1,200,000 $750,000,000
Johns Hopkins Medical Campus Upgrades 792,500 $317,000,000
Kennedy Kreiger - Admin Support Building 44,000 $10,000,000
Kennedy Kreiger - New Outpatient Building 115,000 $40,000,000
Estimated Totals 6,105,500 $3,014,400,000
Education
Professional schools at the University of Maryland, Baltimore (UMB) continued improving facilities and
expanding enrollment with the new Dental School building opening in 2006. University of Baltimore added a
new Student Center and announced it will expand its student body by accepting undergraduates for the 2006
- 2007 academic year. And the Maryland Institute College of Art (MICA) began further expansion with the
construction of a new building that will combine residences, studio space, and classrooms.
Educational Institutions Student Enrollment
Baltimore City Community College 3,224
Baltimore International College 478
Johns Hopkins University Downtown Center 807
Maryland Institute College of Art 1,865
Peabody Institute 741
University of Baltimore 4,948
University of Maryland, Baltimore 5,636
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
Shuler School of Fine Arts 25
Total 17,724
20
Hospitality & Tourism
Downtown’s hospitality industry is one of the Downtown had 5,968 hotel rooms and the
region’s top economic sectors and it was strong occupancy rate averaged 71% in 2006. To keep
again in 2006, setting new records for visitor pace with the demand, 1,301 new hotel rooms are
spending. The Baltimore Area Convention and under construction and an additional 794 rooms are
Visitors Association (BACVA) reported twelve slated to start construction in 2007.
million overnight visitors, up 7% from the year prior
and establishing a new seven-year high. Direct Redwood Street, once known as the Wall Street
spending from both overnight and day visitors was of the South for its many financial institutions, has
at an all-time high for Baltimore at almost $3 billion. emerged as Baltimore’s Hotel Row. Several office
buildings have been converted to hotels, starting
Overnight visitors and day trippers alike flocked with the Hampton Inn (in 2004) and the Marriott
to Downtown. In a poll by The Partnership, major Residence Inn (in 2005), and continuing in 2006 with
Downtown destinations (including visitor attractions, a new Marriott Springhill Suites under development
cultural institutions, and the ballparks) reported and the planned Hotel Indigo preparing to begin
attendance of approximately 9 million. construction.
PROPERTIES UNDER CONSTRUCTION
Name Neighborhood # Rooms
Convention Center Hilton Baltimore Westside 757
Harbor East Hilton Garden Hotel Inner Harbor 180
Harbor East Homewood Suites Inner Harbor 165
Staybridge Suites City Center 100
Marriott Springhill Suites City Center 99
Total 1,301
PLANNING PHASE
Name Neighborhood # Rooms
Four Seasons Hotel Inner Harbor 200
10 Inner Harbor Inner Harbor 200
Hotel Indigo City Center 130
One East Redwood Hotel City Center 125
Penn Station Hotel Mt. Vernon 90
Red Roof Inn Westside 49
Total 794
New attractions, exhibits, and promotions helped keep the interest in Downtown strong:
• The Geppi Entertainment Museum opened above Sports Legends Museum at Camden Yards, and the
Frederick Douglass / Isaac Myers Maritime Park opened in Fell’s Point.
• The Baltimore City Heritage Area unveiled the Inner Harbor Trailhead. Located next to the Visitors
Center, it is the starting point for 15 separate ‘trails.’ The initiative has invested $1.4 million in Downtown.
• The 77 cultural organizations that participated in the Free Fall Baltimore promotion reported more than
175,000 visitors during October and November.
• By permanently eliminating entrance fees, The Walters Art Museum and the Baltimore Museum of Art
both experienced higher visitation in the normally slow period during October and November – bucking a
national trend of declining attendance at art museums.
21
Infrastructure
In 2006, capital investments of almost $67 million Façade grants continued to help renovate buildings
in public and private funds improved Downtown throughout Downtown. Through its Façade
streetscapes, facades, parks, and plazas. Major Improvement Program in 2006, The Partnership
projects included the $7.5 million reconstruction of awarded more than $106,000 in City and State grant
Center Plaza in City Center, the completion of the money to Downtown property and business owners
$5.1 million West Shore Park at the Inner Harbor, who invested an additional $1.5 million of their own
and more than $5 million in ongoing streetscape funds.
improvement projects. In addition, the $13 million
Russell Street gateway project near M&T Bank
Stadium was on track to improve this major entry
point into Downtown. Preliminary steps had
been taken to transform Pratt Street into a more
pedestrian-friendly boulevard with significantly
improved landscaping and retail options.
In many ways, 2006 was the “year of the park”
in Downtown. Major upgrades and renovations
to Downtown parks and plazas totaled over $15
million. An additional $89,500 was invested in
smaller-scale projects that improved lighting,
installed irrigation systems, replaced landscaping
2006 STATE OF DOWNTOWN BALTIMORE REPORT • DOWNTOWN PARTNERSHIP OF BALTIMORE
and railings, and added flowerpots. More than
aesthetic, these improvements will be an important
part of Downtown’s long-term economic vitality. In
a variety of surveys conducted by The Partnership,
commercial and retail investors, residents,
and visitors all stress the importance of having
an attractive and well-maintained Downtown
environment.
Equally important was the approximately $5 million
invested in streetscape improvements, including
the initiation of a $2.8 million, year-long project
to improve Calvert Street between Lombard and
Baltimore streets.
IMPROVING PARKS & PLAZAS
War Memorial Plaza $1,600,000
West Shore Park $5,100,000
Center Plaza $7,500,000
Preston Gardens $885,000
Total $15,085,000
22
Conclusion
Health Care, Education, cutting-edge Technology companies, Tourism, and growing Residential and Retail
bases all contributed to Downtown Baltimore’s health and stability in 2006. Public and private investments
in infrastructure improved Downtown’s appearance. And new retail shops, restaurants, and a grocery
store improved its livability.
There was a time not too long ago when something for development happening in neighborhoods
like the sale of Mercantile Bank Trust or the asset adjacent to Downtown – projects such as Gateway
swap between Legg Mason and Citigroup would South, Westport / Middle Branch, Harbor Point, the
have been seen as a major blow to Downtown Johns Hopkins Medical Campus redevelopment,
Baltimore’s economy and its status as a business State Center, and the University of Maryland
location. Yet in 2006, Downtown’s overall strength BioTechnology park – the development total jumps
and increasingly diverse economy enabled it to to $9.8 billion.
weather both of these occurrences with barely a
ripple. Looking ahead, Downtown Baltimore is clearly
poised for continued economic, residential, and
Looking into 2007 and beyond, this success is employment growth. The challenge now is to
expected to continue. Surveys by The Partnership manage growth effectively, as the influx of more
of current Downtown employers revealed a potential and more people will generate demand for better
for 6,000 new jobs in 2007. Growth at Downtown public transit, more parking spaces, intelligent traffic
hospitals, bioparks, and from BRAC-related management, and improved public schools. But
investments will be sizeable and include $3 billion such challenges certainly are preferable to the
in new construction and a 13% jump in related challenge of attracting growth, and, like all other
employment by 2012. challenges we have faced, our community will
work together to find solutions to ensure the future
There were $5.16 billion worth of projects in the success of Downtown.
pipeline for Downtown in 2006. When you account
Acknowledgements
Downtown Partnership Staff Contributors Special Thanks To:
Robert Aydukovic Baltimore Development Corporation
Tashia Bagwell High Rock Interactive
Matthew Bear Morris Goldseker Foundation
Faith Deutschle Emery Pajer
Michael Evitts
Kirby Fowler We would like to thank our valued members for their
Kristi Halford continued support of Downtown Partnership, and
Lisa Keir taking the time to provide data, answer questions,
Linda House and share their insights.
Nan Rohrer
Interns
Mackenzie Paull
Maureen Kowzan
23
217 N. Charles Street, Suite 100
Baltimore, MD 21201
410.244.1030
www.godowntownbaltimore.com
SUPPORTED BY
36 S. Charles Street, Suite 1600
Baltimore, MD 21201
410.837.9305
www.baltimoredevelopment.com
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