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Co-Chairs
• Kirby Fowler, Downtown Partnership of Baltimore, Inc.
• Colin Tarbert, Mayor’s Office
Members
• David Benn, Cho Benn Holback Associates
• Claire Bonner, U.S. General Services Administration
• M.J. “Jay” Brodie, Baltimore Development Corporation
• Kimberly Clark, Baltimore Development Corporation
• William Cole, Baltimore City Council, 11th District
• Jane Delashmutt, Maryland Department of Transportation
• Michael Gaines, Maryland Department of General Services
• David Gillece, Cassidy Turner
• Mark Herbkersman, Craig Brown Turner Architects
• Alex Hoffman, Department of Planning
• Courtenay Jenkins, Cushman Wakefield
• Jill Lemke, Department of Planning
• Bob Manekin, Manekin, LLC
• Chris Mattingly, LEED AP, U.S. General Services Administration
• Chris Moyer, Baltimore Development Corporation
• Molly Moyer, Greater Baltimore Committee
• Chris Patusky, Maryland Department of Transportation
• Bob Quilter, Department of Planning
• Nan Rohrer, Downtown Partnership of Baltimore, Inc.
• Tom Sadowski, Economic Alliance for Greater Baltimore
• Latoya Staten, Downtown Partnership of Baltimore, Inc.
• Tom Stosur, Department of Planning
• Bryce Turner, Craig Brown Turner Architects
• Irene Van Sant, Baltimore Development Corporation
1
I. INTRODUCTION
In December 2010, Mayor Rawlings-Blake convened a Downtown Task Force. The Downtown
Task Force was comprised of a diverse range of professionals and stakeholders including
office brokers, architects, downtown leaders, and key policy-makers from federal, state and
city agencies, to study the existing Downtown office market, with the recognition that a
strong Downtown core is critical to sustaining growth city-wide.
While focused primarily on office vacancy, the overarching goal of the Mayor’s Task Force
was to develop recommendations that will also serve as part of a larger strategy aimed at
strengthening Downtown with a new vision for the future. That vision includes Downtown
becoming an ever-evolving mixed use neighborhood, which includes business, a diverse
population of residents, hotels, thriving retail and restaurants, and expanding anchor
institutions. The Task Force recognizes the success of Downtown, including its office market,
is based on many factors, including, but not limited to, addressing public safety perceptions,
attracting new residents, supporting retail initiatives, and providing open space and other
public amenities. The Task Force’s analysis and recommendations acknowledge these
challenges, but focus on the Downtown office market, most specifically in the traditional
Downtown core – roughly the area bound by Lombard, Eutaw, Saratoga and Gay Streets.
The Mayor’s Task Force findings and recommendations have been incorporated into the
Downtown Partnership’s soon-to-be released Downtown Strategic Plan, which was the result
of nearly two years of analysis and input from Downtown stakeholders in conjunction with
several key City agencies.
The findings and recommendations outlined in this report support a two-prong strategy for
addressing the Downtown office market. The two-prong approach is required to address
two fundamental, yet different, office vacancy challenges: 1) cyclical office vacancy; and 2)
structural office vacancy.
2
II. SUMMARY OF OFFICE VACANCY TYPES
Baltimore City has approximately 46 million square feet (SF) of total office space. Currently,
the office vacancy rate is approximately 17% and average rental rates are approximately
$20.00 per SF city-wide.
Downtown Baltimore (measured as a 1 mile radius from Pratt and Light Streets) contains
nearly 25 million SF of office space – approximately 10 million SF of Class A space, 10
million SF of Class B space, and 5 million SF of Class C or other office-type space. This
represents over 50% of the total office space inventory in the City.
At the end of the fourth quarter of 2010, the Downtown office vacancy rate was
approximately 19%. Given this office vacancy rate, Downtown Baltimore ranks 28th (out of
59 cities) for the highest vacancy rate, which is comparable to Seattle, Fort Lauderdale, and
Los Angeles but ranked superior to cities like Chicago, San Diego, and Cincinnati. Recent
rental rates for Downtown office space range from $23.00 to $25.00 per SF for Class A
space and from $16.00 to $18.00 per SF for Class B space. Within the Downtown core,
office vacancy rates are slightly higher, estimated to be approximately 23%.
Cyclical Office Vacancy refers to the ebb and flow of market trends both nationally and
locally. A healthy office market typically reflects a 10% vacancy rate. Currently, Baltimore’s
Downtown office vacancy rate is estimated between 19-23%. This vacancy rate is a
reflection of the national economy, which has been challenged since late 2008. Over
the last several years, the national economic downturn has resulted in the consolidation
of corporate functions, reduced employment levels, and less demand for office space
as more employees are being concentrated into smaller, shared spaces. Despite these
national trends, Baltimore’s Downtown has remained stable and a strong employment
center adding nearly 6,000 jobs from 2009 to 2010. Nonetheless, attracting new business
and leasing Downtown’s existing vacant office space remains a challenge and demands
attention.
Structural Office Vacancy describes vacancies caused by factors not directly related to
market trends, but rather the physical characteristics of building types, distressed
properties, and/or property owners unwilling to invest in or reposition their properties.
For such buildings, office use may not be the highest and best use given physical constraints
and the growing demand for other types of uses, such as residential and mixed use.
Today’s office users demand the latest telecommunication infrastructure, large open floor
plates, abundant natural light, and highly-efficient building systems. Several Downtown
buildings do not meet today’s standards and are considered functionally obsolete for
office use, even with substantial investment. Many of these buildings are experiencing
high vacancy rates driving up the overall office vacancy rate for Downtown. The Task
Force identified six (6) buildings that meet these criteria. Buildings experiencing high 3
vacancy due to delayed development plans were not included.
To address both cyclical and structural office vacancy, the Mayor’s Downtown Task Force has developed
a series of recommendations to create a multi-faceted and integrated approach to reduce the office
vacancy rate in both an immediate and long-term manner.
4
III. TASK FORCE RECOMMENDATIONS
RECOMMENDATION #1
Initiate a collaborative marketing effort, organized by the Downtown Partnership of
Baltimore Inc. and the Economic Alliance of Greater Baltimore, with strong participation
and cooperation from the private sector and the City to promote Downtown’s office market
and attract new businesses from outside the City. Establish clear roles and responsibilities
among partners for business marketing, retention and attraction efforts.
RECOMMENDATION #2
Review and evaluate the effectiveness of existing federal, state and city incentive programs
and develop new incentive programs, based on national best practices, to attract and retain
businesses in Downtown.
RECOMMENDATION #3
Partner with major Downtown corporations and institutions to identify service providers to
those entities that may have a desire for a Downtown presence to better serve their clients.
RECOMMENDATION #4
Establish and convene a committee of federal, state and city government representatives to
strategically plan existing and future government office space in order to be a catalyst for
economic development and private investment in Downtown.
RECOMMENDATION #5
Create a plan, including potential new incentives programs, aimed at repositioning under-
utilized and obsolete Downtown office buildings for reuse as residential or mixed use
developments.
A detailed analysis of each recommendation and the assumptions on which they are based
follows in this report.
5
RECOMMENDATION #1
Initiate a collaborative marketing effort, organized by the Downtown Partnership
of Baltimore Inc. and the Economic Alliance of Greater Baltimore, with strong
participation and cooperation from the private sector and the City to promote
Downtown’s office market and attract new businesses from outside the City.
Establish clear roles and responsibilities among partners for business marketing,
retention and attraction efforts.
A. Office Marketing Initiative
Given the increase in both new employment and residents in Downtown, marketing efforts
to date have focused on informing individuals already working and living in Downtown
about the many events, programs and initiatives taking place. In order to be successful,
the marketing campaign must be embraced and fully-supported by the private sector.
The campaign should focus on attracting new businesses from outside of the City, from
places such as Washington, D.C., to Downtown. Such campaigns have been launched in
the past with apparent success. It has been several years since marketing efforts have
targeted companies outside of the City.
It is recommended that DPOB and EAGB take the lead in organizing the effort, but key
private sector partners must be involved and committed to developing the marketing
campaign to ensure buy-in and success. Key government agencies and partners, including
the City of Baltimore Development Corporation (BDC), Mayor’s Office, Baltimore City
Department of Planning, Maryland Department of Economic and Business Development
(DBED), and the Greater Baltimore Committee (GBC) should participate.
6
B. Coordinating Business Marketing, Attraction and Retention Efforts
The retention and attraction of businesses is at the heart of the City’s economic
development strategy. A collaborative approach among the responsible economic
development partners is necessary for success. The City depends on BDC, DPOB, DBED
and EAGB to serve this function.
Business retention and expansion efforts are coordinated on a regular basis. The BDC
Business Retention and Expansion Committee meets monthly and includes external
partners such as DPOB, DBED, EAGB, GBC and the Mayors Office of Employment
Development (MOED). These meetings include the discussion of active retention projects
throughout the City, including Downtown.
The City relies on both DBED and EAGB to assist BDC and other City agencies with the
attraction of new businesses to Baltimore and its Downtown. As the state agency on
economic development, DBED attends international conferences and works with site
selection consultants to highlight Maryland and Baltimore’s strengths. EAGB focuses on
marketing the region to new business and complies relevant data on the Baltimore region
(including industry profiles, development activity, and economic growth statistics) that
companies consider when selecting a location.
The City is fortunate to have multiple strong partners working in different capacities
to retain and attract new business, however, effective communication, coordination
and collaboration are sometimes difficult due to the fact that various organizations are
involved.
Next Steps:
• It is recommended that clear roles and responsibilities be established by having a
shared dialogue among the partners to answer the following questions:
1. What is the core role that each organization plays in retaining and attracting
businesses?
2. What strengths and weaknesses exist for each organization?
3. Where do areas of overlap exist and how can better collaboration and effective
communication be established in these areas?
4. Is it clear who the “lead” organization is during the stages of the retention and
attraction process?
5. Should a Memorandum of Understanding (MOU) be established among
organizations to clarify roles and responsibilities?
• By answering these questions, the City and its partners can streamline and strengthen
its business development efforts.
7
RECOMMENDATION #2
Review and evaluate the effectiveness of existing federal, state and city incentive
programs and develop new incentive programs, based on national best practices,
to attract and retain businesses in Downtown.
There are currently a variety of incentives offered to businesses seeking to locate in the
Downtown. However, these incentives are not exclusive to Downtown and may exist city-
wide depending on the type of incentive. In some cases, certain incentives may not be offered
in certain areas of Downtown (e.g., Enterprise Zone tax credits), but elsewhere in the City.
In addition, some incentives are based on criteria created by the State of Maryland, which
may only be applicable to companies relocating from outside of Maryland. A summary and
evaluation of each incentive type follows:
The One Maryland Tax Credit Program (“One Maryland”) provides businesses that invest
in a specific economic development project for Project Tax Credits of up to $5 million
and start-up tax credits of up to $500,000. Baltimore City is the only jurisdiction in the
Central Maryland corridor that qualifies for this incentive. One Maryland is an important
tool in attracting companies to Baltimore City and Downtown. One Maryland can provide
large companies the level of incentive required to move to Baltimore City. Companies
participating in One Maryland must meet the employment criteria of creating 25 net new
jobs within a 24 month period.
Next Steps:
• Explore allowing companies in certain industries such as information technology and
biotechnology to claim a refund significantly earlier than six years after the project
commences.
• Explore allowing companies to add fewer jobs and/or extend the current two-year
qualifying period for adding jobs in growth sectors as designated by the State, such as
cybersecurity, biotechnology, and green technology.
• Explore creating a “headquarters” provision which would allow significant economic
8 development projects, (e.g., those adding 50 or more new jobs) to receive additional
benefits from One Maryland.
A business is eligible for the Enterprise Zone (EZ) tax credit program if it makes a capital
investment in its property (i.e., constructs or renovates a building, or expands an existing
facility) or hires at least one new employee in the Enterprise Zone. Commercial, retail
and industrial projects are eligible. Residential properties are not eligible for any of the
EZ tax credits. There are thirty three (33) projects in Downtown that currently receive
EZ benefits.
9
Figure 1: ENTERPRIZE ZONE
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Next Steps:
D.
• Allow for the employment tax credit to be reimbursable rather than being a carry-
over tax credit.
A Payment in Lieu of Taxes is an agreement between the City of Baltimore and a developer,
business, or landowner (“applicant”) that substitutes the annual real estate taxes due on
a property for an established time period with a negotiated payment. The purpose of a
PILOT is to provide for a certain exemption from Baltimore City property tax for certain
real estate located in Baltimore City to foster economic development.
Section 7-504.3: Economic Development Projects in Baltimore City (1999 PILOT Law)
The 1999 PILOT law permits Baltimore City to provide an exemption from Baltimore
City real property taxes for economic development projects located in Downtown urban
renewal areas for a PILOT term not to exceed 25 years if the property owner pays, at a
minimum, “the sum of the taxes on the property before the construction or rehabilitation
of the project and 5% of the Baltimore City real property taxes that would have otherwise
been due absent the agreement”. The amount rebated cannot exceed 95% of the
incremental real property taxes. Baltimore City real property taxes prior to development
cannot be rebated.
Eligibility Criteria
• Projects must be newly constructed or rehabilitated commercial office, hotel, retail,
parking facilities, or multi-family residential projects that receive a Certificate of
Occupancy after January 1, 1999.
• The projects must be located in one of the following Downtown Urban Renewal Areas::
Camden Station Area; Central Business District; Inner Harbor East; Inner Harbor
Project 1; Inner Harbor West; Market Center; Market Center West; or Key Highway.
• The project must satisfy the specific use criteria as shown in the table below.
Minimum
Private $20 Million $20 Million $10 Million $2.5 Million $5 Million
Capital
Investment
(Equity
and Debt)
Required
11
Section 7-504.2, PILOT provisions for vacant and under-utilized commercial buildings in
Baltimore City, is discussed under Recommendation #5.
4. Parking Subsidies
Since 2000, a significant number of structured parking facilities have been constructed
in Downtown in response to market demands for additional parking. Today, the existing
parking inventory meets market demands, however, companies considering relocating
to the City from a suburban location still have a negative perception of parking costs and
convenience.
With mass transit services, including Light Rail, Metro Subway, local and regional bus
lines, MARC, the recently established Charm City Circulator, and the proposed Red Line,
Downtown is the area’s most accessible employment center. Furthermore, employees
are choosing alternatives to driving to work, including mass transit, biking or living
in Downtown. These factors are changing the perceptions companies have regarding
Downtown parking.
Next Steps:
• While the City has not made a consistent practice of providing parking subsidies, the
potential for incentives, including subsidized parking in City-owned garages, may be
considered for significant job creation and/or retention efforts.
• Any consideration of a parking subsidy should be balanced with the City’s transit
initiatives.
The TI Loan Program can only be used for capital expenses – tenant improvements
including furniture, fixtures, and equipment (FF&E). Over the years, the City has made
loans to businesses of all sizes and industries, from restaurants to biotech firms to
multinational financial services firms. In certain cases, the City may waive a full or partial
loan repayment. TI loans provided by the City may serve as an effective tool in attracting
start-up companies Downtown as private capital has become less available to smaller,
less established companies.
All TI loans provided by the City contain provisions that a business must meet City MBE/
WBE requirements and adhere to the Baltimore City Residents First (BCRF) program.
Next Steps:
• BDC should explore the use of TI loans when appropriate and when funding is
available. Special consideration should be given to companies that may be unable to
obtain a commercial TI loan in today’s market.
12 Tax Increment Financing (TIF) provides the opportunity to leverage limited public
financing of public infrastructure and site preparation in order to maintain and attract
private investment.
TIF provides funds for activities such as public land acquisition and improvement,
construction of streets, utilities, and other infrastructure, pre-development costs, and
other permitted costs. A TIF functions by pledging real property tax increments gained
(over the pre-development year) as a result of the new development within the Tax
Increment District. TIF Bonds are issued based upon the expectation of increased real
property taxes and typically upon the guarantee of one or more developers. Proceeds
from the sale of the TIF Bonds finance specific publicly-owned capital improvements.
Baltimore City, by City Council Ordinance, designates the TIF District and subsequently
the assessable “baseline” of all real property within that District. A special fund is created
into which all “incremental” real property taxes are placed. Withdrawals are made from
this special fund to cover debt payments on the TIF Bonds. The City is not otherwise liable
for the bonds as the City’s full faith and credit is not pledged. In addition, the developer
will guarantee TIF Bond debt payments through a Special Tax District to cover any short
fall between the real property taxes collected and the TIF Bond debt service. Any taxes
collected above the amount required for the TIF Bond debt service is dedicated to the
City’s General Fund.
In addition to issuing TIF Bonds based on projected future real property tax increment, a
“pay-go” approach may also be used whereby funds are spent as they are collected. This
approach avoids any risk involved with repayment of TIF Bonds and also saves considerable
costs by eliminating bond issuance costs and interest payments. Furthermore, a Special
Under the Downtown Partnership’s TIF proposal, public spaces in Downtown, such as
McKeldin Plaza, would be significantly enhanced using TIF funds. 13
Tax District is not required under a “pay-go” model, since funds are not borrowed against
future real property tax projections.
Next Steps:
• DBOP is currently exploring the potential for a Downtown TIF district that would be
smaller than the one-mile radius of Downtown and cover the area in most need of
new public space investment. Specifically, the proposed district would be bordered
by Pratt Street on the south, Paca Street on the west, Centre Street on the north, and
Guilford Avenue/South Street on the east. With the TIF funds, work could begin on
many of the public spaces identified in the recently released Downtown Open Space
Plan. In addition to the “pay-go” TIF model, TIF Bonds could be issued for the purpose
of making more immediate improvements to significant, transformational parks,
plazas, or public buildings.
• DPOB is considering the following spaces as the top three candidates for potential
TIF funds: (1) McKeldin Plaza/Pratt Street; (2) Hopkins Plaza/possible park on the
current arena site; and (3) Lexington Market renovations and park space connection
to University of Maryland, Baltimore.
• A Downtown TIF District would be subject to City review and approval by the Baltimore
City Board of Finance and City Council Ordinance.
While the incentives noted above may persuade large companies to relocate to Baltimore
City, in many cases these incentives have an even greater impact in keeping businesses in
the City. Retaining existing businesses is perhaps the most important factor in creating job
growth. While attracting new businesses is certainly a much needed effort, ensuring existing
and new start-up companies remain and expand in the City is a fundamental component in
successful on-going economic development.
Next Steps:
• It is recommended that BDC review all existing incentive programs for effectiveness and
compare them with national best practices to ensure that Baltimore is competitive and
innovative in retaining and attracting businesses. Special consideration should be given
to attracting entrepreneurs and start-up companies to Downtown.
14
B. Attracting Start-up Businesses to Downtown
Research shows that most office leases are for less than 10,000 SF. More and more companies
are looking for smaller spaces as telecommuting, rising costs, and the demand for greater
profits are forcing businesses to downsize and maximize efficiencies. Many of the City’s
greatest success stories have begun as small entrepreneurial ventures in just a few thousand
square feet. Baltimore-based companies like Under Armour, Sylvan Learning Systems, and
Cyberpoint are examples of major employers that started as small business ventures.
In order for Downtown to continue as the leading office market, it is imperative to attract,
retain and foster entrepreneurial and growth companies. Targeted incentives aimed at
attracting entrepreneurs and start-up companies to Downtown should be explored. Fostering
entrepreneurial ventures can create buzz and a sense of momentum. It also creates a pipeline
for job growth.
The City’s incubator program at the Emerging Technology Center (ETC), with locations in
Canton and Better Waverly, has proven to be successful for creating new businesses and
strong job growth. The ETC, a venture of the BDC, is a non-profit business incubator focused
on growing early-stage technology and biotechnology companies. The ETC promotes
economic development, providing business, technical, and networking connections to help
these companies grow and prosper – adding to both the job and tax base of Baltimore City.
To date, ETC client companies have received over $1 billion in funding and have been issued
nearly 200 patents. Since 1999, ETC has provided assistance to 218 companies of which 74
are current companies. 83% of its graduate clients are still in business. It is estimated that
ETC companies have created in excess of $273.5 million in economic activity for the City.
Not only are the ETC statistics impressive, but entrepreneurial companies attract talented
young professionals that can fuel neighborhood change by creating excitement and attracting
others like them. Private building owners looking to reposition their office property may be
interested in attracting such companies as a long-term strategy to fill office space. While
providing incubator services can be costly, it may be a concession building owners are willing
to consider. Even if typical office amenities are modified to cater toward start-up businesses,
building owners may be able to attract growing businesses.
Next Steps:
• TI Loan Programs
For such new businesses, some incentives may be more attractive than others. One such
incentive program is the TI Loan Program. Given the current market, large corporations
with strong credit will likely not have difficulty obtaining a TI loan. Furthermore, interest
rates are currently at historic lows. Therefore, low interest loans from the City to a
credit-worthy tenant may not be as a significant incentive as it would be to small start-up
company unable to access such capital. Strategically providing low-interest TI loans to
start-up businesses that wish to locate in the Downtown should be considered.
16
RECOMMENDATION #3
Partner with major Downtown corporations and institutions to identify service
providers to those entities that may have a desire for a Downtown presence to
better serve their clients.
Downtown is home to a multitude of large corporations and both public and private
institutions. These entities spend millions of dollars in service contracts with a variety of
businesses. It is unknown how much of this economic activity directly benefits Downtown’s
office market by creating demand for office space specifically to service these Downtown
clients.
One example is the medical institutions in Downtown. The Downtown hospitals including
the University of Maryland Medical Center, Maryland General Hospital and Mercy Medical
Center generate significant economic activity through contracts to service providers ranging
from marketing to food services. Continued economic vitality in Downtown is important to
these thriving institutions. Partnering with these institutions to identify service providers
who may have a desire for a Downtown presence will provide a proactive business outreach
approach.
Next Steps:
• BDC should conduct interviews with major companies and institutions to determine
which service providers may be likely candidates to locate in Downtown. Attracting new
companies is not an easy feat. However, targeted and proactive business outreach makes
attracting new companies more efficient and potentially more successful.
• Financial Services and Non-profit sectors should be a priority.
17
RECOMMENDATION #4
Establish and convene a committee of federal, state and city government
representatives to strategically plan existing and future government office space
in order to be a catalyst for economic development and private investment in
Downtown.
Federal, state and city governments occupy a significant portion of Downtown’s office space
and are integral to maintaining employment in the Downtown core. Combined, government
use accounts for approximately 8.5 million SF of office space in Downtown. Of that space,
approximately 5.8 million SF is in government-owned buildings, while approximately 2.7
million SF is leased from private owners. Figure 3, below, provides a chart of the federal,
state and city office space square footage in both public and private buildings.
Figure 3: FEDERAL, STATE AND CITY OCCUPIED OFFICE SQUARE FOOTAGE IN BOTH PUBLIC
AND PRIVATE BUILDINGS
Government Type Publicly-Owned Privately-Leased Total (SF)
Space (SF) Space (SF)
Federal* 2,100,000 500,000 2,600,000
The U.S Federal Courthouse located on West Lombard Street is one of several major
federal buildings in Downtown that provide significant employment and generate
18 ancillary economic activity.
While government agencies at all levels are facing budget cuts and shrinking staff levels,
those agencies located in Downtown Baltimore, as a whole, do not appear to be dramatically
affected. In fact, the U.S. General Services Administration (GSA) is looking for additional
office space for their federal agency customers.. As a policy, GSA looks to give consideration
to the Downtown area when looking for space in the greater Baltimore area, in concert with
our customer agency’s mission-related needs.
In addition, the Maryland Department of General Services (DGS) and the Maryland Department
of Transportation (MDOT) have committed that, while plans are moving forward for the
State Center project (which will improve state office space north of Downtown), the existing
State of Maryland office presence in Downtown will not decrease. Both DGS and MDOT are
also considering additional future opportunities to locate state government functions in both
private and public buildings, existing or newly constructed.
The City is undergoing a full evaluation of its office space and building inventory to maximize
efficiencies, consolidate where possible, and make strategic investments in City-owned
properties. In addition to approximately 1.4 million SF of office space in City-owned buildings,
the City also leases its buildings for special-use purposes such as the Bromo Seltzer Tower
and Babe Ruth Museum. A number of City-owned buildings are also planned for economic
development projects such as Westside Initiative and mixed use development near the
intersection of Calvert and Lombard Streets.
In a few cases, City-owned properties are vacant without immediate plans. Those properties
include 210 Guilford Avenue – formerly the Health Department building – and 15-25 North
Gay Street. GSA is also in the process of disposing of the Appraisers Store, located at 103
South Gay Street, which is no longer needed for federal office use. Careful consideration
should be given to the reuse of these buildings by either public or private users.
With increased security measures at public facilities, building designs have become more
complex and highly-scrutinized from a public safety perspective. While government activity
can have a positive effect on Downtown, special attention must be paid to new facility
designs. Active street facades, such as main entrances on public streets and the incorporation
of retail storefronts, are key elements to properly integrating government buildings into
Downtown. Architectural and urban design standards must be of the highest standards.
Clearly articulating appropriate design criteria to all levels of government will ensure that
the vision for Downtown as an active mixed use district is achieved.
Next Steps:
• In order to facilitate government coordination, it is recommended that a committee
comprised of federal, state and city representatives meet quarterly to discuss plans 19
and new initiatives that may affect Downtown. The committee should be led by BDC
and comprised of representatives from the GSA, Maryland DGS, Baltimore City DGS,
MDOT, DPOB, Baltimore City Department of Planning, Baltimore City Department of
Transportation and Mayor’s Office.
MDOT has also launched a TOD initiative, which provides MDOT assistance and incentives.
TOD is a development approach that encourages intensifying and inter-mixing land uses
(residential, office, retail, and entertainment) around transit stations, integrating public
amenities (open spaces and landscaping) and improving the quality of walking and bicycling
as alternatives to automobile travel.
Successful TOD projects also address ways to ensure personal security and safety, encourage
economic and community development, respect the area’s cultural history, and strengthen
the connections between transit and surrounding neighborhoods.
In 2008, a newly created State of Maryland law was passed, designed to facilitate the creation of
TOD in Maryland. The legislation, recorded at Section 7-101(m) of the Transportation Article,
defines TOD to be a “transportation purpose”, thus authorizing MDOT to use departmental
resources, including land, funds, and personnel, to support “designated” TOD projects (the
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2008 TOD Law). The “designation” provides several potential tools that are described below
to help projects advance. In 2010, the State named 14 Maryland transit stations as designated
sites for TOD including State Center, which is adjacent to Downtown’s northwest boundary.
Next Steps:
The Task Force recommends that two (2) TOD designations be considered in Downtown:
Lexington Market is served by multiple modes of public transit including Metro Subway,
Light Rail and local bus routes, making it an ideal candidate for TOD designation. 21
Howard Street is critical north-south link from mid-town to Downtown and beyond.
Although the Light Rail runs along the corridor, development has not been successful as
seen in other cities with Light Rail infrastructure. Many factors have affected this outcome.
Potential incentives through TOD designation may assist in improving the streetscape,
public safety, and economic development initiatives and serve as a catalyst for attracting
new development along the corridor.
• Charles Center
Charles Center is at the heart of the Downtown. The first major project of the City’s
revitalization efforts in the 1960’s, Charles Center has remained an important center for
Downtown. Recent public investments in the Charles Center area include Center Plaza
and Hopkins Plaza renovations. Key development opportunities also exist including
the redevelopment of the former Morris A. Mechanic Theatre planned as a mixed use
development consisting of 30-story building with 140,000 SF of retail and 250 residential
units.
The former Morris A. Mechanic Theatre is located along the Metro Subway and future
Red Line and planned as a mixed use development. Office buildings along the Baltimore
Street corridor could benefit from the TOD designation and new private investment.
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RECOMMENDATION #5
Create a plan, including potential incentives programs, aimed at repositioning
under-utilized and obsolete Downtown office buildings for reuse as residential or
mixed use developments.
Baltimore’s Downtown has evolved significantly over the last decade from primarily an office
building district into a 24/7 mixed use neighborhood. Downtown’s future depends on this
continuing trend in order to create a more sustainable urban environment consisting of a
growing residential population and activities beyond the “9 to 5” work day. The recent 2010
Census data illustrates this positive shift in Downtown’s character, showing an increase of 7%
in the number of people living in the Downtown core. Since 2006, the area within a one-mile
radius of Light and Pratt Street has seen 11.6% growth in residents. In two census tracks –
primarily comprising City Center and the Westside - the increase is even more dramatic at a
57% increase from 2000 to 2010. This change is the result of a variety of factors including the
expansion of higher education, increased employment, and people’s desire to live in urban
areas in close proximity to their workplace, cultural amenities, and public transportation.
The residential demand in Downtown is evident not only in the recent census data, but in
the fact that most apartment occupancy rates are above 96%. The conversion of eight (8)
Class B office buildings into apartment buildings over the past two decades, creating more
than 850 residential units, is a proven success model. As the demand for more residential
choices continues to increase, the success of these conversion projects should be indicative
for under-utilized office buildings in today’s market.
Based on this data, the Baltimore City Department of Planning, Baltimore City DGS, and DPOB
conducted a rigorous analysis of all Downtown office buildings including vacancy rates, existing
tenants, systemic deficiencies, development plans and potential for conversion candidacy.
Based on the analysis, the Task Force identified six (6) high vacancy office properties that
may be considered for conversion as depicted in Figure 6 – Map of Under-utilized Downtown
Office Properties.
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Figure 5: UNDER-UTILIZED DOWNTOWN OFFICE PROPERTIES
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1. 10 Light Street – The Bank of America Building
10 Light Street, located at the intersection of Light and Baltimore Streets, is one of the City’s
most iconic buildings, being a prominent feature of the City’s skyline since its construction
in 1929. The property is listed as Class A office building and consists of 360,000 Rentable
Square Feet (RSF) with typical floor plates averaging 10,000 RSF. The building is 35% vacant
with the law firm Miles & Stockbridge occupying the majority of the building’s space with
120,000 RSF. Much of the vacant space is held by Bank of America under a long term lease.
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2. 2 Hopkins Plaza - PNC Bank Building
Located at the intersection of Hopkins Place and Baltimore Street, this 22-story tower consists
of approximately 379,000 RSF with a floor plate of 17,245 RSF. The building is listed as Class
A office space and is 42% vacant. The potential relocation of the signature tenant PNC will
significantly increase the vacancy of this building. With the potential for a large open space
across the street and the greening of Hopkins Plaza, this building could become a jewel.
26
3. 114 East Lexington Street – Provident Bank Building
This historic property, located at the intersection of East Lexington and Calvert Streets,
consists of approximately 110,000 RSF with a typical floor plate of 10,000 RSF. It is currently
65% vacant with an M&T Bank office and branch on the first floor. It is currently listed as
Class B office. The building lends itself to a residential or mixed use conversion. Given its
close proximity to the municipal center and Mercy Medical Center, it could serve as office
space for functions related to the judiciary or health care.
Task Force Recommendations:
• Consider residential or mixed use.
• Consider for government-related or healthcare office use.
• Maintain ground floor retail.
• Retain architect or development consultant to evaluate a conversion.
• If the conversion option is feasible, promote the opportunity and evaluate potential
incentives.
• If the property is to remain office, highlight on new office website and other
marketing mediums.
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4. 225 North Calvert Street – Bank of America Building
225 North Calvert Street, located at the intersection of North Calvert and Saratoga Streets,
consists of approximately 395,000 RSF with a floor plate of 30,500 RSF. The building is listed
as Class C office space and is 87% vacant due to the relocation of Bank of America’s back
office operations, which previously occupied the building. The building is currently occupied
by several office users leasing minimal square footage. Given its long and narrow floor plate,
the building may lend itself to residential conversion.
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5. 10-12 North Calvert Street – The Equitable Building
10-12 North Calvert Street, the Equitable Building, located at the intersection of North Calvert
and Fayette Streets, was constructed in 1891 and most recently renovated in 1985. It is a
Class B office building and consists of approximately 178,000 RSF with typical floor plates of
20,000 RSF. The building is approximately 35% vacant with most of the 79 building tenants
consisting of spaces between 2,000 and 6,000 RSF.
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6. 10 North Charles Street – Johns Hopkins Downtown Center
10 North Charles Street, lcoated at the intersection of Charles and Fayette Streets, formerly
the Johns Hopkins Downtown Center, served as the main location for the Carey Business
School. It is approximately 35,000 RSF with 10,000 RSF floor plates.
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B. Existing Incentive Programs for Conversion Projects
These incentive programs primarily focus on the conversion of properties from an office use
to a residential use, either owner-occupied or rental.
In 1989, the Baltimore City Department of Housing and Community Development and
DPOB proposed a PILOT law that would permit the City to provide exemption from City
real property taxes to vacant and under-utilized buildings that are converted to rental
residential housing.
Eligibility Criteria
Project must be located in the Downtown Management District and meet two of the
following criteria:
• Improvements on the property must be older than 25 years.
• The property was last used as commercial space.
• The property has been 75% vacant for more than three years.
• 75% of the total leasable square footage must be used for rental residential housing.
• Developer must contribute $500,000 in private capital.
A PILOT under Section 7-505.2 requires approval by the Board of Estimates only.
Since its inception the program has yielded eight (8) conversion projects producing
over 850 residential units in Downtown. Despite this success, the program is not widely
promoted to building owners or developers.
Next Steps:
• DPOB to identify buildings meeting the
criteria and work with property owners,
developers, BDC and the City to promote this
PILOT program.
2. Other Incentives
BDC and DPOB currently offer funds to property owners or tenants to improve their
facades. Under the program, the applicant can receive up to 50% reimbursement of
their expenses, but not exceeding $20,000. This program has proven very successful
in leveraging private investment and making Downtown more attractive for retailers,
employers and residents.
To attract new office tenants, it is important to have diverse and appealing residential
options for employees. Increasingly, people want to live near their workplace. This trend
indicates that if Downtown is going to grow as an employment center, viable housing
options must also continue to grow in close proximity.
The Baltimore City Live Near Your Work Program is a partnership between
employers and the City of Baltimore. The purpose of the program is to provide
direct financial assistance for eligible employees’ first home purchase in
Baltimore City and to encourage homeownership near the place of employment.
Next Steps:
• In addition to incentives A-C listed above, it is recommended that DPOB and BDC, working
with the Baltimore City Finance Department, review other cities’ programs to determine
if existing programs can be enhanced or if new programs should be created. In particular,
the City of Philadelphia was noted for further study on its revitalization efforts to create
32 residential investment in its downtown through a 10-year tax credit program.
C. Encourage Private Investment
A key role that the City and advocate groups, such as DPOB, can play is encouraging
property owners of under-utilized properties to invest in their properties to maximize
a property’s benefit to themselves, Downtown and the City. The six (6) properties
identified in this report are in need of particular attention. In most cases, these buildings
may need to be converted to another use to maximize their potential. However, not all
office properties experiencing high vacancy rates must be converted to another use.
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IV. CONCLUSION
For more than 280 years, Downtown Baltimore City has continued to adapt and reinvent itself.
The recommendations set forth by the Mayor’s Downtown Task Force serve to reinforce the
many positive efforts being made today and ensure that Downtown continues to thrive in
the future. Attracting new business and helping existing companies expand in Downtown is
imperative. However, recognizing that Downtown is not only a major employment center,
but a growing neighborhood is essential for sustained success. Encouraging new residential
development, attracting start-up companies, retaining major employers, working with
institutional and government partners to leverage major public and private investments and
encouraging private investment by commercial property owners are key essentials to making
Downtown’s future vibrant.
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