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Retail development heats up in Baltimore

City's first Harris Teeter supermarket opens Wednesday

By Lorraine Mirabella, The Baltimore Sun

4:54 PM EST, December 5, 2011

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The shelves have been stocked and the cash registers tested for Wednesday's opening of Harris Teeter's upscale supermarket in Locust Point — part of a broader development push that is likely to bring Baltimore as much retail space as a regional shopping mall.

Harris Teeter, offering hundreds of gourmet cheeses, curbside pickup of online orders and cafe seating on a balcony, will anchor the mixed-use McHenry Row development, one of several shopping centers being built or planned in the city.

In Canton, developers of a proposed $50 million shopping center are talking to several large retailers as anchors. In Remington, the proposed 25th Street Station retail and housing development is to be anchored by Walmart. And along Pratt Street near Baltimore's harbor, national chains are eyeing space and hoping to serve a growing number of downtown residents.

The growth has been spread around the downtown area in smaller projects, too. Restaurants that have opened or will be opening include Panera Bread on West Baltimore Street near the Hippodrome theater, Chipotle on North Charles Street near the University of Baltimore, Starbucks on East Pratt Street, and Wit and Wisdom in the Four Seasons in Harbor East. Apparel and home-decor retailer Anthropologie is considering a Four Seasons site as well, according to proposals to the city.

"Downtown is ripe for additional expansion for retail companies that at one point dismissed coming into the city," said Mark Millman, chief executive officer of retail executive hiring firm Millman Search Group. "You'll continue to see more and more of this all over the country. Retailers are looking at cities closely as major profit areas."

Some retailers are expanding amid the recovery, and for many, urban sites are in high demand. Long after suburban retailers began tapping into urban markets, cities such as Baltimore still find themselves underserved in some areas, experts say, due in part to the slowdown in new development, store closures by struggling chains and the growth of downtown's population.

Such trends have prompted an uptick in openings or planned openings of new restaurants, groceries, drugstores and other retailers. From 2008 through March, about 371,000 square feet of retail space was built or renovated within a one-mile radius of Pratt and Light Streets, according to the Downtown Partnership of Baltimore. Combined space in several new developments, some of which could start within the next year, would amount to some 1 million square feet of retail space.

"To me, in an economy that is kind of floundering, we have exciting things happening in Baltimore City," said Geoffrey L. Mackler, a vice president with H&R Retail, a commercial real estate firm that specializes in retail tenants. Baltimore, to some extent, is feeling residual effect from demand in the Washington market, he said.

Discount stores, grocery stores, fast casual restaurants and drugstores are all among those in expansion mode, Millman said.

Retailers have expressed interest in sites along Pratt Street, where it has been difficult to find space large enough to accommodate some chains, said J. Kirby Fowler, president of the Downtown Partnership. Available individual spaces tend to be small, in the 3,000-square-foot range, while stores such as TJ Maxx or Bed Bath & Beyond typically build stores in the 30,000-square-foot to 50,000-square-foot range.

The Downtown Partnership is working with some Pratt Street property owners to find ways to expand available space, he said. And though the Inner Harbor will lose a retailer with the planned closure of Filene's Basement on Jan. 9, that store's exit might open opportunities for others, he said.

Canton Crossing would be one of the largest new retail developments in the city, one that Mackler sees as a "marquee project," with large anchors as well as smaller shops in a Main Street-style setting. The 500,000-square-foot shopping center on a former industrial site on Boston Street, just east of the current Canton Crossing office tower, will be built in two phases. Construction could start on the first portion, 325,000 square feet of retail and a 600-space underground garage, next summer, with the first stores opening in mid-2013.

Developers are talking with a number of potential anchors, including Target and Harris Teeter, but no deals have been completed, said Doug Schmidt, a principal with Chesapeake Real Estate Group. The company is building the project in a partnership with principals from Birchwood Capital Partners, which acquired the 31-acre site in June from Exxon Mobil Corp.

Plans call for a discount department store, a grocery store, medium-size big-box stores, and small shops and restaurants. Developers are negotiating with about 20 retailers, said Neil Tucker, another principal with Chesapeake Real Estate.

Tucker said the city has plenty of offerings in entertainment, arts, sports and restaurants, but "clearly does not have the best retail options in the region at this point. We hear from the community that they're tired of having to leave the city to go to Towson, Glen Burnie and White Marsh to shop."

With Canton Crossing, he said, "We as a company are taking a huge bet on the future of retail development in Baltimore."

McHenry Row developer Mark Sapperstein said many small retailers decided to move into Locust Point after learning that Harris Teeter had signed on. Nearly all the retail space has filled up, he said.

Harris Teeter, a North Carolina-based chain of 206 stores, has only two Baltimore-area locations: Columbia and Fulton. The development, with entrances off Fort Avenue and Key Highway on the former site of Chesapeake Paperboard, will include an additional 50,000 square feet of retailers such as Hair Cuttery and the Greene Turtle restaurant.

Harris Teeter saw so much potential in the area that it increased the size of the Locust Point store and decided to go ahead with construction before securing additional store sites in the area, Sapperstein said. For grocers, having more than one store in a region can be beneficial from an operational standpoint.

Harris Teeter spokeswoman Danna Jones said the company has been building its two-story locations in well-established yet growing city areas, with others in the Washington metro area and in Charlotte and Raleigh, N.C. She said the Locust Point store was designed with more glass and stainless steel to reflect the look and feel of the neighborhood.

Besides Canton Crossing and McHenry Row, some of Baltimore's bigger redevelopment projects include major shopping components.

At Lexington Square, a project on downtown's west side that has been stalled by legal challenges, developers hope to bring in 150,000 square feet of retail. And a proposal to reinvent the shuttered Mechanic Theatre on Charles Street calls for a 30-story, 400-unit apartment tower with street-level retail.

Canton Crossing's developers also have plans to bring in additional retail just north of Harbor East. In the next one to two years, Chesapeake Real Estate plans to redevelop the former Bohager's building on Fleet Street and Central Avenue and another nearby property, with about 40,000 square feet of new retail space. They expect to bring in restaurants, apparel stores and other shops, building on the success of Harbor East.

"We've found pent-up demand for retailers that are similar to what you see in Harbor East," Tucker said.

lorraine.mirabella@baltsun.com

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