Plans to create an upscale hotel with shops and restaurants on the edge of Baltimore's Harbor East neighborhood are reinforcing city leaders' belief that the thriving waterfront community will continue to spur growth east of the Inner Harbor.
A vacant cinder block warehouse at Central Avenue and Fleet Street would be transformed into a 205-room hotel with ground-level boutiques and restaurants under a plan by two area developers.
Baltimore-based Chesapeake Real Estate Group LLC, a retail developer that bought the one-story warehouse in November, has teamed up with Bethesda-based Englewood LLC and could start construction as early as spring 2013, Chesapeake partner Neil J. Tucker said Wednesday.
As city and business leaders have looked to waterfront redevelopment throughout the city to spur economic growth, Harbor East has emerged as a hot spot. In recent months, the area has attracted national retailers such as Anthropologie and J. Crew, and continues to add restaurants and other businesses.
"Certainly over the last number of years we have seen increased development activities and interest in the Harbor East area, and that certainly seems to be a very appealing location for investment right now," said Donald Fry, president of the Greater Baltimore Committee, a private business group.
He said preliminary plans by Chesapeake and Englewood indicate that cities remain desirable.
"That was the trend prior to the economic downturn, and as we come out of it that will continue again," Fry said. "Urban areas are places people are looking to move back to."
The hotel — which would be run under an undisclosed brand the developers described as "upper mid-market" — would join others built just outside Harbor East, which has grown in a decade from an industrial area into a mix of residences, hotels, shops and offices.
The area has attracted Legg Mason, which relocated its headquarters to the waterfront from the city's central business district, and a Four Seasons hotel.
Meanwhile, the adjoining Harbor Point project, located on the waterfront between Harbor East and Fells Point, is home to Morgan Stanley and is slated to get a total of 3 million square feet of development, including the regional headquarters of Chicago-based energy giant Exelon Corp. and up to 1,000 residences.
Albert Blattermann, an area resident for more than 70 years, said the changes over the last decade have been profound and he welcomes more.
"I remember when it was all trash down here," Blattermann said. Now he can easily walk from his South Exeter Street home to the 24-hour CVS pharmacy or to the Whole Foods Market, he said.
"To me, they've all been for the better," he said of the changes. "With progress always comes things people don't like, but I like it."
Developers of the new hotel and retail project, which requires design approval and permits from the city, believe it would extend redevelopment even farther east, build upon established retail and hotel offerings, and help enliven the area between Harbor East and Fells Point.
Chesapeake also redeveloped the Bagby Building on Fleet Street, a project of shops and restaurants that the developer says will be fully occupied next month with the opening of the 329-seat Fleet Street Kitchen.
"We believe the Harbor East neighborhood, as far as offerings and shops, needs to grow," Tucker said. "There's a much greater need within Harbor East and on the fringes of Harbor East. The demand is there."
Harbor East already has more than 1,520 hotel rooms, including the 256-room Four Seasons, the 730-room Baltimore Marriott Waterfront hotel and smaller hotels such as the Hilton Garden Inn and the Homewood Suites.
"Hotels in that area historically have done well," said Ken Finkelstein, president of Englewood. "It's a growing and dynamic area. There's been a lot of growth in the past and will be a lot more in the future. Long term, there's room for another hotel there."
Tom Noonan, president and CEO of Visit Baltimore, the city's tourism and convention bureau, said the Harbor East location should allow the proposed hotel to draw business from the city's convention center, as well as overflow business from the Marriott in Harbor East, which also books conventions in its meeting space.
A new hotel would benefit area restaurants and attract business and leisure travelers, Noonan said.
"They get the best of both worlds," he said. "I'm not surprised we're starting to hear stirrings about maybe building a hotel or two more. The economy is recovering, and with the [plans for] new residences and offices, it's probably a safe location to build another hotel."
Noonan said he hoped the hotel brand would be a new name for the city — he cited Westin, Loews Hotels, W Hotels & Resorts and Fairmont. That would help increase Baltimore's appeal for tourists and convention-goers, he said.
"That upper-middle [price range] is a reflection of the Harbor East neighborhood and that fits in there," Noonan said.
Demand for hotels, like demand for retail, office space and housing, has been shifting to the east side of the harbor, where hotels such as Courtyard by Marriott have been successful, said Rod Petrik, a managing director and lodging analyst at Stifel Nicolaus in Baltimore.
Urban locations have been a "growth engine" for many of the hotels that offer limited dining or meeting space and do well in areas near restaurants.
"The fact that you have another hotel going in there makes sense to me," Petrik said. "When you look at the activity down in Harbor East, particularly in the evenings with the restaurants, there's much more of a nightlife there, which I think would be appealing to visitors."
A spokesman for Mayor Stephanie Rawlings-Blake said the mayor was counting on continued investment in Harbor East, Harbor Point and surrounding neighborhoods as a key economic driver in reaching her goal of bringing in 10,000 families into the city over the next decade and creating jobs.
"There's no question that the existing development has spurred additional interest and investment in surrounding areas," spokesman Ryan O'Doherty said.
Chesapeake Real Estate Group would develop the 15,000-square-foot retail portion of the planned hotel and retail project and would jointly own the project with Englewood, which would develop the hotel, said Tucker. Plans for the project were first reported Tuesday by bmoremedia.com.
On Wednesday, residents from across the city, including many from nearby neighborhoods, strolled through Harbor East's dense retail center and along its waterfront.
Abi Jakubowski, a 34-year-old Canton resident who was shopping at Whole Foods, said Harbor East has become her go-to destination whenever family or friends are in town.
"If we want to go out for a nice dinner, we say, 'OK, where can we go in Harbor East?'" Jakubowski said. "I think it's just aesthetically pleasing, and it's not too high-maintenance. It's accessible."
New national retailers have recently joined Harbor East's mix of national, regional and local brands. Last month, J. Crew opened a store at the base of the Legg Mason Tower on International Drive and Anthropologie opened at the base of the Four Seasons hotel, also on International Drive. MAC Cosmetics recently moved in, and Lululemon Athletica plans to open soon.
Baltimore can still use more retail options, said Kirsty Gundry and Sophie Landry, two rising seniors at the Maryland Institute College of Art who live in Bolton Hill and said they were all for more development in Harbor East.
On Wednesday, they were in Harbor East for some end-of-summer shopping.
"This place is nice to walk around, but it's small," Gundry said.
Said Landry: "It's getting better, but it needs to spread past just this area."
Sun reporter Kevin Rector contributed to this article.