SOUTHEAST SNAPSHOT, DECEMBER 2004

Baltimore Retail Market

Tom Maddux President KLNB Retail

Retail redevelopment activities are in full force throughout Baltimore City and the five surrounding counties of Anne Arundel, Baltimore, Carroll, Harford and Howard. The renaissance of Baltimore City can officially be traced to the early 1980s, with the opening of the two HarborPlace pavilions by The Rouse Company along the city’s waterfront. Today, a number of local developers are working feverishly to transform aging projects along the water into new retail, town center and mixed-use properties. As one of the most prolific retail markets in the country, Baltimore’s suburban markets have experienced their share of sprawl over the past 10 years, as new shopping centers were constructed to keep pace with residential growth. This, in turn, has resulted in a strain on local highways, water and sewer service, and the school systems. With most of the zoning gone for the creation of new retail centers, developers are focusing their collective efforts on redeveloping, re-inventing or repositioning properties that need a new lease on life.

In Baltimore County, the former Hunt Valley Mall is being re-invented as Hunt Valley Towne Centre, featuring 860,000 square feet of retail space including 250,000 square feet in an open-air "Main Street" environment and various pad site locations. Greenberg Commercial Corporation is undertaking this effort, after several false starts by other developers, and the project is expected to dramatically alter the dynamics of the northern Baltimore County market. This is due, in large measure, to the signing of the first Wegmans Food Market in Maryland. The major portion of this project is expected to open second quarter 2005.

Greenberg Commercial is also working its magic near the city of Annapolis in Anne Arundel County by transforming the former Parole Plaza into the $400 million Annapolis Towne Center at Parole. Recognized as the second oldest retail venue in the state, but unused for the past 12 years, the new design will include 650,000 square feet of retail space, 90,000 square feet of office space, a full-service hotel and 900 residential units. Demolition activities are underway and construction is slated for second quarter 2005.

Other notable redevelopment projects include the renovation and repositioning of Glen Burnie Mall by Petrie Ventures in Anne Arundel County; projects centered around Howard Street in downtown Baltimore City in the "west" side near the refurbished Hippodrome Theatre; a number of activities by Struever Bros. Eccles & Rouse including College Town near Johns Hopkins University; Harbor East, featuring residential and retail overlooking Baltimore’s waterfront; and Brewers Hill, which includes office, retail and residential in a former brewery building. Black Oak Associates also did a tremendous job of improving Bel Air Edison Crossing, highlighted by the addition of Forman Mills store.

Former industrial buildings near the Baltimore County/Baltimore City border on Washington Boulevard are being re-made into retail uses, the long-forgotten Randallstown market in Northwest Baltimore County is expected to attract Wal-Mart and The Home Depot into empty big box spaces, and the AAI surplus property will add some much-needed retail space in the York Road Corridor.

New developments are also on the drawing board, including the much-anticipated mixed-use project that surrounds the Owings Mills Metro Station, adjacent to Owings Mills Mall in Baltimore County. The soon-to-be-former Rouse Company project is getting a facelift of its own, as the Sears anchor at the mall is being demolished to make way for condominium and apartment units. Nottingham Properties is piggy-backing the success of the minor league baseball park — called Ripken Stadium — in Aberdeen in Harford County, with a complementary lifestyle retail center servicing baseball and non-baseball fans alike.

Retail redevelopment activities in the Baltimore metropolitan region are not isolated to any one specific market, as economic conditions continue to remain strong throughout the area. Baltimore is a beneficiary of the spillover effects of the greater Washington, D.C., retail market, which is recognized as the healthiest and most robust retail area of the country. There is a lot of buzz locally along Baltimore City’s waterfront as young professionals and empty nesters are rediscovering the virtues of living and working downtown. New condominium and townhouse products are trying to keep pace with the demand, and retail uses are emerging in former warehouses and historic buildings with waterfront views.

Active developers include Black Oak Associates, The Cordish Company, David S. Brown Enterprises, Greenberg Commercial Corporation, Kimco Realty, Mid-Atlantic Realty Trust, Nottingham Properties, Petrie Ventures and Struever Bros. Eccles & Rouse.

Baltimore has not experienced the likes of Wegmans Food Market, so it will be interesting to see the effect of the 130,000-square-foot supermarket when it opens next year at Hunt Valley Towne Centre. The grocery store war — dominated locally by Giant Food, Safeway Supermarket and Shoppers — is about to add a formidable competitor. Foreman Mills recently entered both the urban and suburban markets, and is performing well, and Chico’s, Ulta Cosmetic, Five Below, Lifetime Fitness and Second Swing Golf are also making inroads. A number of new restaurant concepts including Buffalo Wild Wings, Chipotle, Five Guys Hamburgers, Qdoba, Moe’s Southwest Grille and Cheeburger Cheeburger have entered the fray recently.

The retail vacancy rate for more than 5 million square feet of space in Baltimore City and Baltimore is 6.7 percent as of third quarter 2004, a figure that factors in 1.2 percent of available sublet space.

Howard County — which is equidistant between Baltimore and Washington, D.C. — has climbed to the Number 2 position nationally in terms of affluence among all counties. The region also features three other counties in the list of the "Top 10 most affluent" in Loudoun and Fairfax (Virginia) and Montgomery. The Eastern Shore of Maryland is also emerging as a major retail market, especially in the resort areas of Ocean City, Maryland, and Rehoboth Beach and Bethany Beach, Delaware. Affluent consumers in Maryland, Virginia and Washington, D.C., are spending their dollars on new beach houses, eating out and shopping at outlet centers.

—Tom Maddux, president, KLNB Retail


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