In October, discount retailer Filene's Basement signed a lease in downtown Baltimore's Lockwood Place; the 30,000-square-foot store was set to debut late March. In January, the SuperFresh grocery chain, owned by the Great Atlantic & Pacific Tea Co. Inc., opened an 11,000-square-foot urban prototype store at downtown's Charles Plaza retail complex.
Welcome to the new Baltimore. Condominium and apartment projects are popping up to cater to young professionals and Baby Boomers and the city is blossoming. As a result, even more retailers and retail developers are flocking to the city for opportunities. Retail observers hint Target, Wal-Mart, Pottery Barn, Crate & Barrel and Old Navy are all in the market shopping for their first downtown Baltimore locations.
“Baltimore used to be the classic downtown — at 6 o'clock you shut the doors and everybody left,” says Arthur Adler, vice president of Baltimore-based David S. Brown Enterprises Ltd. “Now, it's becoming much more of a 24/7 environment.”
In a survey released last year by the Downtown Partnership of Baltimore, 17 percent of the real estate professionals questioned said grocery and apparel/accessories were the types of retail needed most downtown, followed by bars and restaurants at 11 percent and general (think Target, Wal-Mart and Kohl's) at 9 percent. The survey also found retail was the most favored type of real estate development, followed by apartments and Class A office.
Real estate professionals in the region say the arrival of Best Buy in 2005 helped spawn retail activity in downtown Baltimore. Two years ago, the electronics retailer opened a 30,000-square-foot urban concept store — call it a mini-box, if you will — in Lockwood Place, a 90,000-square-foot retail center at downtown Baltimore's Inner Harbor.
Perhaps an even greater momentum-builder for downtown retail was the release in 2005 of an inaugural study on the Baltimore retail market. Data collected by economic development consulting firm McDearman Associates indicated Baltimore ranked eighth among the 25 biggest U.S. metropolitan areas for population density within a one-mile radius of the city's core (about 37,000 residents) and eighth within that same radius for households earning at least $75,000 a year.
“We were always confident that downtown was going in the right direction, but we had no concrete way of selling it,” says Kirby Fowler, president of the Downtown Partnership of Baltimore.
Adler says the Downtown Partnership has done “a phenomenal job” of disseminating the data, in addition to arranging bus tours for retail. Still, downtown promoters haven't been able to land a major department store. Nordstrom is the name that surfaces most frequently, but partnership spokesman Mike Evitts says the Seattle-based retailer hasn't made a commitment “one way or the other” on downtown Baltimore. Nordstrom Inc. spokeswoman Nichole Shell says: “While Baltimore is a great community and we're always willing to listen and learn about locations for potential stores, we don't have any current plans to build there.”
The retailer has four stores ringing Baltimore in Annapolis, Columbia, and two in neighboring Towson.
Landing the big one
A report from the Downtown Partnership says business and government leaders should continue to explore the possibility of luring a department store downtown, but shouldn't view that as a retail panacea. In the 1940s and '50s, department stores ruled the retail roost in Baltimore. “Department stores are not the 500-pound gorilla that they used to be in terms of driving traffic to a destination,” Evitts says. “We're not setting our sights on a department store.”
Rather, downtown boosters are concentrating on drawing specialty retailers.
“I think there will be other good, solid national retailers that see the success of these other national retailers and will work to open outlets downtown,” says Thomas Maddux, president of KLNB Retail, the Baltimore-based retail real estate brokerage arm of KLNB LLC. “It's a herd mentality. It always is.”
Joining the herd isn't simple. Entering an urban market like Baltimore involves a shift in philosophy by store designers and managers, says Maddux. “You're stepping outside of your box to make this happen,” he says. For instance, store hours and merchandising may need to be tailored toward city-dwelling young professionals and empty nesters.
Despite the challenges, increasingly retailers are adding urban markets to their mix as suburban markets become saturated, says Maddux. “The easiest thing is to go out to the next suburban corner and take your spot, line up next to all the guys that you're used to being next to and call it a day.”
With retail sales topping $1 billion a year, more than 2 million square feet of retail space has been developed in downtown Baltimore. As of December, nearly $250 million in mixed-use projects were underdowntown, with another $1.8 billion in mixed-used developments slated for completion between 2007 and 2010, according to the Downtown Partnership. Other projects include converting the Mechanic Theatre, a former performing arts center that will feature about 50,000 square feet of retail.
Adler says his company is hunting for other retail opportunities downtown. So, too, is Greenberg Gibbons Commercial Corp., a mixed-use developer based in Owings Mills, Md. Brian Gibbons, president and CEO, says his company is eyeing two potential projects in downtown Baltimore, which would represent its foray into the city.
Referring to retail real estate in downtown Baltimore, Gibbons says: “I think there's going to be significant demand over the next several years.”
More than 2,100 residential units have been completed since 2004 or are near completion in Baltimore, according to the Downtown Partnership. Ridership on the two commuter train lines between Baltimore and D.C. that are operated by the Maryland Transit Administration rose 6.6 percent from fiscal 2005 to fiscal 2006, the agency says. A 40-mile train ride separates the two cities, so people still can work in D.C. while living in less costly downtown Baltimore.
Complementing the retail rebirth: About 6,000 jobs are expected to be added this year by current downtown employers; the downtown labor pool exceeds 100,000. Also on the job front, Baltimore-based asset manager Legg Mason Inc. agreed in February to lease up to 400,000 square feet of office space at a mixed-use development being built in the city's Harbor East area by H&S Development Corp. and Struever Bros. Eccles & Rouse Inc. Legg Mason says the new headquarters will allow consolidation of operations in the Baltimore area, bringing several hundred employees back to the city when the offices are ready in 2009.
Moreover, the $300 million-plus, 752-room Hilton hotel at the Baltimore Convention Center is set to open next year. And, the 200-room Four Seasons hotel coupled with 120 condos is scheduled to open in 2008 at the same 38-acre Harbor East complex that Legg Mason will occupy. Those hotels are expected to boost the downtown tourist-conventioneer shopping contingent.
For Baltimore retail, the mantra now is “people, people, people” rather than the traditional “location, location, location,” the partnership's Fowler says. Yet incentives aren't being thrown at retail developers to attract them, he says. To shore up the downtown retail scene, Fowler says, the addition of shuttles and an improvement in existing public transit are being explored.
“Baltimore must directly market its strong demographics and other assets to retailers, and it must work with property developers that have the proven ability to attract desired retail to their projects,” the Downtown Partnership report suggests.