By Natalie Sherman, The Baltimore Su
12:58 PM EST, February 22, 2014
The gleaming new Horseshoe Casino Baltimore that greets visitors entering the city on Russell Street rises from gritty surroundings, flanked by a Holiday Inn Express and a concrete bunker-like block of storage units.
Those two neighboring properties tell different stories about the possibility of a casino-powered transformation of the gas station-lined corridor, which links the Baltimore-Washington Parkway and Interstate 95 with M&T Bank Stadium, Camden Yards and downtown.
The hotel owners and others say the $442 million casino will put the Carroll Camden section of South Baltimore on the map and hope it will bring spillover development to the largely industrial area. The owner of the storage business, content with a profitable operation in a convenient location, could not care less.
"There's a lot of potential in the area, and it could go in a few different directions," said Tom Stosur, director of the city's Planning Department, which is developing a master plan for the corridor that won't be ready until later this year. "We're very concerned and aware of keeping the existing job base there in the general vicinity and building on that."
To date only one project that plays off the casino has been announced: a plan to revive the music club Hammerjacks. But even that project is closer to the Ravens stadium than to the casino.
Casinos typically have a mixed effect on nearby businesses, a reflection of a business model that works to lure customers inside and keep them there.
M.J. "Jay" Brodie, who retired as head of the Baltimore Development Corp. in 2012, said the area has potential as an entertainment district, but he would not be surprised if the transformation takes time.
"Baltimore is not a right-away city. It's not where people rush in and say 'Oh, God, there's a casino. We've got $5 million, we're going to buy up all the property around it,'" he said. "That's not an ordinary Baltimore reaction."
Greenbelt-based Baywood Hotels spent about $6 million to buy and renovate the Holiday Inn Express Baltimore at the Stadiums several years before casino gambling was legalized in the state. It draws on customers headed to sports games or preparing to leave on a cruise, too far from the Inner Harbor to charge the top-tier rates commanded by the city's other hotels.
"For the longest time … we'd get feedback from guests saying there's really nothing around," said Beau Athia, Baywood's vice president of capital investments. "I think that with the casino being right next door, we're not going to be considered a second option, if you will. … Hopefully some residential goes in and some better retail, and we'll be considered part of the Inner Harbor landscape."
Baywood is sprucing up the hotel, adding fresh paint and landscaping the property.
It's not clear whether the casino will draw customers from out of town or have a primarily local base, Athia said, but if demand ticks up, the hotel, traditionally an inexpensive option, will raise its rates.
"Being right next door is helpful," he said.
Visit Baltimore President Tom Noonan was less hesitant about the hotel's prospects, and predicted the casino will spur creation of another hotel as well.
"I'm sure it's a dream scenario for them," he said. "They're going to do just great, and I think another hotel could survive there as well."
To the north of the casino, however, the owner of the three-story Public Storage said the casino next door will not affect its plans.
"Our strategy is once we build it, we own it forever," said Clemente Teng, vice president of investor relations for Public Storage, a real estate investment trust that owns and runs about 2,200 storage facilities across the country and in Europe.
The company "never" sheds property, unless it is taken by eminent domain, Teng said. "Everybody always says 'highest and best use,' but we never sell our facilities because nobody wants to pay the clearing price."
The operator of the other nearby storage facility is more open.
"If an offer comes along that sounds very attractive, I'm sure they'd be willing to listen, but at this point it's kind of a wait-and-see," said Michael Belanger, general manager of the privately owned U-Store Management. "Pretty much we're happy the way things are going."
A few signs of property speculation exist.
After the casino was announced, Athia said an out-of-town broker approached Baywood about buying the hotel, but the company wasn't ready to sell.
Now, he said, property values depend in part on the casino's success.
"Anything is available in our portfolio at the right price," Athia said.
The casino has reserved the right to buy city-owned parcels at 1411 Warner St. and another at 701 W. Ostend St. for development.
And developers have contacted Baltimore Development Corp. about the area, but no specific projects are in the pipeline, said Karyn Riley, the organization's chief of staff.
Other deals suggest the casino might have a more limited impact.
The former Horstmeier Lumber warehouse at 1600 Ridgely St., across Russell Street not far from the casino, sold in November for $3.4 million, $1 million below its $4.4 million asking price.
Tyler Boykin, a vice president at Colliers International, who is marketing a property on the industrial side of Russell at 1925 Bush St., said the casino hasn't resulted in a rush of interest in the site, which is up for $525,000. The sale is a result of company consolidation and the owner's move from the area, and is not casino-related, he said.
"It's way too early to tell what's going to happen," he said. "I think it's wait-and-see."
Brodie said he expects Russell Street to act as a dividing line.
"Once you cross Russell Street, it may not be beautiful, but you're into a fairly solid industrial area and it's hard for me to see that changing much," he said. "There should be a vision from the [I-95 off-ramp] to M&T Bank Ravens Stadium and from Russell Street to the water so that there is some sort of unified idea about what should happen there."
For now, the proposal to build a new Hammerjacks on stadium parking at 601 W. West St. remains the only significant one near the casino. It stalled after the Carroll Camden Business Association expressed reservations about opening up the industrial area to entertainment use.
"There's nothing wrong with Hammerjacks," said Len Bush, owner of Len the Plumber and a member of the organization. "We just want to wait to see what happens. … We don't see the sense in significantly expanding an entertainment zone until the current entertainment zone is filled to capacity."
District 10 City Councilman Ed Reisinger, who introduced the measure to change the zoning for Hammerjacks, said he paused it after hearing community feedback and does not intend to introduce any other development-related bills until the casino opens and the master plan is complete.
"Before we do any new development in that area, we want to step back and make sure it's right," he said.
Ideas for the Hammerjacks project initially included a hotel. Mark Renbaum, a prinicipal at MLR Partners who is involved with the Hammerjacks portion of the development, referred questions about a hotel to developer Mark Sapperstein, managing partner of the property owner, who did not return a call for comment.
Hammerjacks is still in the works, Renbaum said, with a goal of opening in 2015. He does not expect his development to be the last in the area.
"You have hundreds of millions of dollars between the two stadiums and the casino. That kind of speaks for itself," he said. "It wouldn't surprise me to see other developers come up with other ideas."
Managers of the Russell Street gas stations, which have been hurt by road closures tied to casino utility work, said they hope the casino will bring additional customers.
"Definitely there is big expecation," said Mazhar Hayat, the new manager of the Russell Street Shell station, adding that the company expects to upgrade parts of his station.
Ian Neuman, managing partner of the nearby Gaslight Square offices and a member of the Carroll Camden Business Association, said it is not clear what the casino's impact will be, but it ought to make things better.
"Right now, half the city doesn't know that area exists," he said. "All of a sudden, out of the ground comes this great big building. You have an area that looks like it's up and coming."
Amir Ali, manager of the Russell Street Citgo station, who has watched the construction progress on a daily basis, said he has his own idea for how the casino can change his fortunes.
"First day," he said, "I will go."
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