STATE OF DOWNTOWN REPORT 2014

ISSUED MARCH 2015

DOWNTOWN BALTIMORE

Station North

2 0 1 4 O N E - M I L E R A D I U S T O TA L S Employment ......................... 123,879 Residents ............................... 41,606 Office Space .........................28M S.F. Hotel Rooms ............................8,000

Bolton Hill

State Center

Johnston Square Mount Vernon

University of Maryland Medical Center Midtown

Kennedy Krieger Institute

Heritage Crossing Old Town

Seton Hill Preston Gardens

Cathedral Hill

Mercy Medical Center

Bromo Poppleton

Historic Jonestown

UMB Charles Center

VA Hospital of Maryland University of Maryland Medical Center

City Hall Fells Point

Royal Farms Arena

Little Italy

Inner Harbor

Ridgely’s Delight/ Stadiums

Harbor East

Otterbein Pigtown/ Washington Village

Johns Hopkins Hospital

Camden Yards

Harbor Point SharpLeadenhall

South Baltimore

Westport

One mile radius from Pratt & Light intersection

Federal Hill

Locust Point

Mario Polèse, author of The Wealth and Poverty of Regions: Why Cities Matter, has observed that, “Not so long ago, most urbanists were predicting the demise of downtowns. The data, after all, pointed unambiguously to declining central-city populations and expanding suburban ones in nearly every American metropolitan area between 1950 and 1980. But downtowns didn’t go the way of the dinosaur. In fact, most of them have begun to grow again.” He’s right. Nationally, employment in city centers is growing while suburban employment growth is beginning to decline. Citing numerous studies, Polèse finds that the keys to this growth include a resurgence in business services jobs, neighborhoods that are active 24 hours a day, and, perhaps most importantly, a mixed-use symbiosis created when people cluster where they work with where they live. Downtown Baltimore, in 2014, continued to capitalize on all these trends, growing its employment and residential base, adding retail, welcoming performance venues like Chesapeake Shakespeare Theatre, and seeing increased private sector activity that included high-value commercial real estate transactions and progress on long-awaited projects such as One Light Street, Mechanic Center, and the former McCormick site.

T O P 2 5 L A R G E S T U . S . M E T R O A R E A S : O N E - M I L E R A D I U S S TAT I S T I C S AVERAGE HOUSEHOLD INCOME

POPULATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

New York San Francisco Chicago Philadelphia Los Angeles Seattle Boston Washington, DC Baltimore (8) San Diego Denver Miami Minneapolis Houston Portland Atlanta Pittsburgh Orlando Dallas Charlotte Phoenix St. Louis Tampa San Antonio Detroit

188,496 119,707 92,316 80,406 77,013 61,211 49,620 44,120 41,606 40,486 38,873 36,819 34,856 24,144 22,787 20,163 18,145 17,986 16,488 16,202 15,313 12,231 10,627 9,061 6,881

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

New York Washington, DC Chicago Boston Charlotte Houston Philadelphia Tampa Dallas San Diego San Francisco Miami Minneapolis Seattle Baltimore (14) Portland Denver Pittsburgh Orlando San Antonio Atlanta St. Louis Los Angeles Detroit Phoenix

$157,807 $120,671 $119,862 $115,738 $97,266 $93,140 $91,570 $86,941 $82,168 $76,310 $74,371 $73,258 $71,870 $71,793 $71,625 $71,298 $68,751 $63,177 $58,120 $56,639 $56,269 $54,089 $44,781 $44,407 $37,922

HOUSEHOLDS OVER $75,000 ANNUAL INCOME 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

New York Chicago San Francisco Philadelphia Seattle Washington, DC Boston Denver San Diego Minneapolis Miami Los Angeles Baltimore (12) Dallas Portland Charlotte Houston Orlando Tampa Atlanta Pittsburgh St. Louis Phoenix San Antonio Detroit

67,566 31,114 21,141 18,243 12,811 12,790 12,685 7,924 7,892 6,566 6,321 5,916 5,854 4,111 3,708 3,215 2,977 2,614 2,413 1,726 1,655 1,597 817 736 706

EMPLOYMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

New York 1,193,065 Chicago 378,993 Washington, DC 308,639 Boston 244,628 Philadelphia 231,937 San Francisco 217,366 Seattle 211,125 Houston 199,186 Los Angeles 149,091 Minneapolis 135,186 Denver 133,089 Baltimore (12) 123,879 Dallas 121,460 Pittsburgh 110,539 Atlanta 99,413 Charlotte 81,047 San Diego 78,773 San Antonio 77,621 Detroit 65,011 Miami 59,944 Phoenix 58,689 Orlando 56,752 St. Louis 55,235 Tampa 43,145 Portland 38,896

( ) - last year’s ranking

*Source: Claritas

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01.

OFFICE SPACE There was a good deal of commercial activity in 2014 as international investors capitalized on Downtown’s growing market value, particularly in Charles Center where almost twenty major new projects were underway and companies such as Cigna and KAO announced they would be moving into Downtown and signed leases totaling more than 35,000 square feet. Three office towers sold for strong prices and multiple additional properties were listed by year’s end. Pratt Street office occupancy rates remained in the high 90th percentile last year in 2014, led by companies like R2Integrated (15,400 square-foot expansion) and Shapiro Sher Guinot & Sandler (new 15,000 square-foot lease). Last year also marked a significant turn-around for Downtown in terms of attracting large companies from suburban Maryland. Pandora, KAO, and MAIF were among the firms that departed locations in adjacent counties and relocated into Downtown to take advantage of its diverse and growing pool of worker talent. Downtown-wide, some commercial brokerage analyses saw vacancy rates rise modestly, while others observed a decrease. Averaging these out, the vacancy rate was up very slightly to 16.8% in 2014 versus 16.1% in 2013, with Class A lease rates remaining unchanged at $22-$27 per square foot.

NOTABLE LEASE TRANSACTIONS Name

Address

OneMain Financial

100 International Dr. Relocation

Financial Services Firm

Pandora Jewelry, LLC Maryland State Retirement and Pension System Downtown Partnership of Baltimore, Inc. Behavioral Health System Baltimore Cigna CBRE Group, Inc. Shapiro Sher Guinot & Sandler KAO USA Inc.

250 W. Pratt St. 120 E. Baltimore St. 20 S. Charles St. 1 N. Charles St. 111 S. Calvert St. 100 E. Pratt St. 250 W. Pratt St. 100 N. Charles St.

Jewelry Manufacturing & Distribution State Government Nonprofit Organization Nonprofit Organization Insurance Company Commercial Real Estate Firm Law Firm Beauty Product Manufacturing & Distribution

2014 VACANCY: NATIONAL & REGIONAL STANDINGS 5%

16.83% 14.97% 13.92% 14.56%

10%

15%

New Lease Renewal & Expansion Relocation Relocation New Lease Relocation Relocation New Lease

Business Type

Downtown Baltimore Baltimore City Baltimore Metro National

Sq. Footage

109,156 87,862 72,373 22,027 21,998 21,417 15,971 15,530 14,486

2014 OFFICE MARKET STATISTICS

20%

* Downtown Baltimore, Baltimore City, and Baltimore Metro Vacancy Sources: CBRE, Cushman & Wakefield, DTZ, JLL, MacKenzie, Newmark Grubb Knight Frank, and Transwestern * National Vacancy Sources: CBRE, Cushman & Wakefield, DTZ, JLL, and Newmark Grubb Knight Frank

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Type of Lease

Year End 2013

Vacancy Rents – Class A Rents – Class B

Year End 2014

16.1%

16.8%

$22-$27 $16-$19

$22-$27 $16-$20

* Class A/B Rent Sources 2013: Cassidy Turley, CBRE, Cushman & Wakefield, and Newmark Grubb Knight Frank * Class A/B Rent Sources 2014: CBRE, Cushman & Wakefield, DTZ, JLL, MacKenzie, and Newmark Grubb Knight Frank * Downtown Baltimore Vacancy 2013 Sources: Cassidy Turley, CBRE, Cushman & Wakefield, MacKenzie, Newmark Grubb Knight Frank, and Transwestern * Downtown Baltimore Vacancy 2014 Sources: CBRE, Cushman & Wakefield, DTZ, JLL, MacKenzie, Newmark Grubb Knight Frank, and Transwestern

02. EMPLOYMENT After adding 10,000 jobs in 2012 and more than 9,000 jobs in 2013, Downtown employment increased by approximately 1,600 jobs in 2014. With a total of nearly 124,000 jobs, Baltimore maintained its rank as the 12th largest downtown employment center among the top 25 largest metro areas in the U.S.

EMPLOYMENT BY INDUSTRY SECTOR: PERCENT OF TOTAL EMPLOYEES 5%

10%

15%

20%

19%

Healthcare & Social Assistance

14% 12%

Professional, Scientific & Technical Services Public Administration

11% 8% 6%

Accommodation & Food Services Finance & Insurance Information

4% 4%

Construction

4% 19%

Retail Trade

Educational Services

Other*

* The “Other” category consists of the following sectors: Agriculture, Utilities, Manufacturing, Wholesale Trade, Transportation and Warehousing, Real Estate, Management of Companies, Administrative, Other Services, and Arts Entertainment and Recreation. Each of these categories consisted of less than 5% of total employment * Source: Claritas

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03. HOUSING Downtown’s overall apartment occupancy rate was a strong 94%. A lack of available new units constrained supply, capping 2014 net population growth to just 635 people despite continued strong demand. Three large new buildings hit the market – 301 N. Charles (96 units), 520 Park Avenue (171 units), and The Lenore (102 units). Each has been leasing up ahead of schedule. Downtown’s overall population rose to just over 41,000. Despite the increase, Downtown’s national rank for population dropped one spot to 9th, as Washington, DC rose to number 8 with 44,000 residents. The rate of Downtown’s population increase is expected to rise more quickly as the pace of residential delivery speeds up. Almost 5,100 units are in the pipeline through 2017. Major properties expected to hit the market in 2015 include 10 N. Calvert (188 units), 10 Light Street (420 units), and 26 S. Calvert (167 units).

NOTABLE RESIDENTIAL OPENINGS Project Name

Address

Project Type

Housing Type

The Lenore

114 E. Lexington Street

Conversion

Rental — Market Rate

# of Units

102

301 North Charles 520 Park

301 N. Charles Street 520 Park Avenue

Conversion & New Construction Conversion

Rental — Market Rate Rental — Market Rate & Affordable Housing

96 171

FOR SALE HOUSING MARKET SUMMARY Housing Type

Properties Sold

Average Sale Price

Median Sale Price

Condo

101

$374,131

$280,000

Townhome

312

$298,931

$276,250

AT THE END OF 2014

93.7%

OF THE APARTMENTS

*Source: MRIS

THAT ARE AVAILABLE IN

DOWNTOWN

CLASS A APARTMENT BUILDING RENTAL RATES Apartment Size

Average Price per S.F.

Studio

$2.68

1 Bedroom 2 Bedroom 3 Bedroom All unit types

$2.21 $2.04 $2.29 $2.20

* Includes 13 buildings within the one-mile radius defined by the following criteria: built after 1995; 100 units or greater; building amenities and quality finishes in units

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BALTIMORE WERE RENTED

2014 DOWNTOWN HOUSING PIPELINE Residential projects that were under development at the end of 2014. Station North

Bolton Hill

State Center

Johnston Square Science + Technology Park at Johns Hopkins

Mount Vernon

University of Maryland Medical Center Midtown

Kennedy Krieger Institute

Heritage Crossing Old Town

Seton Hill Preston Gardens

Cathedral Hill

Poppleton

Mercy Medical Center

Bromo

Historic Jonestown

UMB

UMB Biopark

Charles Center

VA Hospital of Maryland University of Maryland Medical Center

Hollins Market

Johns Hopkins Hospital

Washington Hill

City Hall

Royal Farms Arena

Little Italy

Inner Harbor

Ridgely’s Delight/ Stadiums

Fells Point

Pigtown/ Washington Village

Harbor East

Otterbein

Camden Yards

Harbor Point SharpLeadenhall

South Baltimore

Westport

Residential properties in the pipeline through 2017 One mile radius from Pratt & Light intersection

Federal Hill

Locust Point

04.

HOSPITALITY & HOTELS The Star Spangled Spectacular and strong convention attendance improved hotel performance across indices, with an impressive average occupancy rate of 69% – nearly back to pre-recession levels. Once again, Downtown hotels outperformed the region and the nation in terms of occupancy, average daily room rates, and revenue earned per room.

NOTABLE HOTEL OPENINGS Project Name

Address

Hyatt Place – Baltimore / Inner Harbor

511 S.Central Ave. Conversion/Renovation

Project Type

No. of Rooms

208

DOWNTOWN *Source: Smith Travel Research

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ROOMS

149

REV PAR

$74.28

$115.32

ADR

OCCUPANCY

REV PAR

BALTIMORE METRO

64.4%

$121.36

65.6%

0

$114.60

$50 25%

69.0%

50%

$165.99

$100

$79.56

ADR

ADR

OCCUPANCY

75%

REV PAR

$150

OCCUPANCY

100%

492

HOTEL

UNDER CONSTRUCTION

HOTEL PERFORMANCE $200

IN 2014 THERE WERE

NATIONAL

MORE ROOMS IN

PLANNING

05. RETAIL

Photo by Mark Dennis

More than 90 restaurants and retailers opened, or signed leases, in 2014. With employment and residential densities that rank among the top 20 downtowns nationally, the most transit options within the region, and an average household income of $71,600, Downtown Baltimore is an increasingly strong retail location that should become stronger as new residents drive demand, national retailers look more aggressively for urban space, and office and apartment developments continue to add ground-floor retail space.

NOTABLE RETAIL OPENINGS AND LEASES Name

Address

Business Type

Status*

AGGIO

614 Water St.

Restaurant

Open

Blue Moon Café Chick-fil-A Chicken Rico Dinosaur Bar-B-Que Encantada Family Meal Floyd’s 99 Barbershop LUSH Fresh Handmade Cosmetics Madewell Maiwand Grill Nalley Fresh Shake Shack

1024 Light St. 400 E. Pratt St. 55 Market Pl. 1401 Fleet St. 800 Key Hwy. 621 E. Pratt St. 511 S. Central Ave. 1001 Aliceanna St. 811 Aliceanna St. 324 W. Baltimore St. 400 E. Pratt St. 400 E. Pratt St.

Restaurant Restaurant Restaurant Restaurant Restaurant Restaurant Retail Retail Retail Restaurant Restaurant Restaurant

Coming Soon Coming Soon Open Coming Soon Coming Soon Open Coming Soon Open Open Open Coming Soon Open

* Family Meal, Madewell, and Shake Shack opened in Winter 2015

RETAIL VACANCY RATES 2%

7.1% 5.0% 10.2%

4%

6%

8%

10%

THE TOTAL AMOUNT OF 2014 RETAIL SALES IN

DOWNTOWN BALTIMORE WAS National Baltimore Metro

1.58 BILLION D O L L A R S

Downtown* – Multi-tenant Projects

*Includes Lockwood Place, Harborplace, The Gallery, and Harbor East

*Source: Claritas

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WELCOME BACK CHARLES CENTER Charles Center is more than Downtown’s historic core. A host of development projects are adding new residents, theatres, restaurants, and employees. 2014 COMPLETED 1.

Chesapeake Shakespeare Company 7 S. Calvert Street Conversion to 260-seat theater. Developer: Chesapeake Shakespeare Company

2.

25 S. Calvert Street Landscaping and fencing of vacant lot. Developer: Downtown Partnership of Baltimore

3.

Water & Light Apartments 25 Light Street & 104 Water Street Conversion to 14-unit market rate apartments. First floor retail retained. Developer: Republic Investment Company

4.

Lord Baltimore Hotel 20 W. Baltimore Street Renovation of former Radisson hotel.

12. Calvert & Water Apartments 26-36 S. Calvert Street & 31 S. Grant Street Conversion to 189-unit market rate apartments and first floor retail. Q2 2015 delivery. Developer: PMC Property Group

13. Equitable Building 10 N. Calvert Street Conversion to 188-unit market rate apartments & first floor retail. Q2 2015 delivery. Developer: JK Equities

14. The Munsey Apartments 7 N. Calvert Street Elevator, lobby and unit renovations of market rate apartments. Ongoing. Developer: Village Green

Developer: Rubell Hotels

5.

The Lenore 114 E. Lexington Street Conversion to 102-unit market rate apartments and first floor retail. Developer: Baybridge Properties

6.

301 N. Charles Street Conversion to 97-unit market rate apartments. Developer: PMC Property Group

7.

McDonald’s Facade Improvement 101 E. Baltimore Street Restoration of historic building. Developer: McDonalds Corporation

IN PROGRESS 8.

Crowne Plaza Hotel 1 E. Redwood Street Conversion to 150-key Crowne Plaza Hotel and first floor retail. Q3 2015 delivery. Developer: Tran Group

9.

10 Light Street Conversion to 420-unit market rate apartments and 25,000 SF retail. Q2 2015 delivery. Developer: Metropolitan Baltimore

10. Mechanic Centre 1 W. Baltimore Street Mixed-use, 306-unit market rate apartments; 110,000 SF retail; 404 parking spaces. 2016 delivery. Developer: David S. Brown Enterprises, Ltd.

11. Wilkes Lane Landscaping, pedestrian lighting, Wi-Fi, and outdoor dining area. Developer: Downtown Partnership of Baltimore & adjacent owners

PLANNING 15. Hotel RL Baltimore 207 E. Redwood Street Conversion to 130-key hotel. Q3 2015 delivery. Developer: Red Lion Hotels

16. Courthouse Plaza 100 block of St. Paul Street Renovation and beautification. Q4 2015 delivery. Developer: Downtown Partnership of Baltimore & City of Baltimore

17. Preston Gardens St. Paul Street Reconfiguation, stabilization and beautification project. 2016 delivery. Developer: Downtown Partnership of Baltimore, City of Baltimore & State of Maryland

18. Liberty Park 144 W. Fayette Street New construction, 92 mixed-income apartments. 2016 delivery. Developer: New Urban Equities

19. Central Savings Bank 1 E. Lexington Street Conversion to 26-unit market rate apartments and 9,000 SF retail. 2016 delivery. Developer: Poverni Sheikh

20. 225 N. Calvert Street Conversion to 350-unit market rate apartments. 2016 delivery. Developer: Monument Realty

21. One Light 5-11 Light Street & 105-115 E. Baltimore Street Mixed-use, 362-unit market rate apartments; 287,000 SF office; 9,000 SF retail; 657 parking spaces. 2017 delivery. Developer: Metropolitan Baltimore

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Fayette St

Hopkins Plaza Royal Farms Arena

Lombard St

Grant St

Baltimore St

Calvert St

Wilkes Ln

War Memorial

Gay St

Lexington St

Holliday St

St

St Paul St

Preston Gardens

Guilford St

Fayette St

Center Plaza

Charles St

Lexington St

N. L iber ty

Clay St

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PATRON SPONSORS:

ARCHITECTURE

LANDSCAPE ARCHITECTURE

INTERIOR DESIGN

PLANNING

FRIEND SPONSORS: WRH Property Management, LLC

This report is produced by Downtown Partnership of Baltimore, which is solely responsible for its content. Data is collected by, or on behalf of, Downtown Partnership from multiple sources and covers activity within a one-mile radius of the intersection of Pratt and Light streets. Charts, graphs, maps, and images are the property of The Partnership unless otherwise noted. Downtown Partnership of Baltimore is a 501(c)(6) non-profit incorporated in the State of Maryland. It has approximately 650 member firms throughout the midAtlantic region from dozens of industry sectors. For more information about Downtown Partnership, its reports, or to become a member, please visit www.GoDowntownBaltimore.com, call us at 410.244.1030, or email us at [email protected]. You can also find Downtown Partnership of Baltimore on Facebook and twitter @DowntownBalt.

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