The Time Group, a Baltimore-based real estate developer that also manages apartment buildings, is spending $30 million to convert the Hochschild, Kohn & Co. department store warehouse on Park Avenue in Mount Vernon into 171 apartments.
Dominic Wiker, the project's development director, said people started calling to be on a waiting list for 520 Park as soon as a sign went up on the side of the building last month, even though it won't be ready until next summer.
The Time Group has two other buildings within blocks of the six-story former warehouse that are full and have waiting lists, justifying its investment, Wiker said.
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520 Park Avenue, Baltimore, MD 21201, USA
521 Saint Paul Street, Baltimore, MD 21202, USA
Wiker called the push for apartments "more sustainable" and "more supported by demography" than the condo boom of the mid-2000s. He thinks the Hochschild, Kohn building will attract people in their 20s and 30s, largely drawn to Baltimore because of its universities and hospitals.
"This generation is less interested in driving; they're more mobile" when it come to jobs, said Michael Evitts, who leads research for the Downtown Partnership of Baltimore Inc. "They don't want to be tied down on the weekends with maintaining a property."
The apartment plans in the pipeline, Evitts said, are "not going to come close to meeting" the demand for housing over the next few years in Baltimore's core as projected by the partnership.
In addition to 520 Park, major apartment projects are under way at the 34-story 10 Light Street office building; the former Baltimore Life Insurance Co. building at 301 N. Charles St.; and the former Federal Reserve building near the courthouse complex on East Lexington.
"We've had a significant amount of interest in the apartments, sight unseen," said Ahmad Hajj, a principal at Broadwater Capital LLC, a Washington-based real estate company that is finishing up a conversion of the Odd Fellows Hall at 300 Cathedral St.
Many of the red-brick building's 59 apartments are being leased to medical residents at the University of Maryland Medical Center and Johns Hopkins Hospital, who don't have the time or live too far away to tour the property before signing a lease, Hajj said.
The universities and hospitals are significant drivers of Baltimore's rental market. That could be a problem if developers are not cautious about overbuilding, said Jake Wittenberg, vice president of Harbor Development LLC, a general contracting and construction company. His Baltimore firm has been hired to convert a commercial building across from the Hochschild, Kohn warehouse into 15 apartments.
"The renter market around institutions is going to be strong always, but that's a limited pool," Wittenberg said. "I think there's a cap on the number of units required in Baltimore City."
Another cause for caution is that our culture supports home ownership, he said. As the economy improves, there's a likelihood that rental demand will decline. There's no mortgage interest deduction for an apartment, Wittenberg noted.
"Doomsayers fear that households who deferred purchasing a home while prices and mortgage rates remained flat may now begin to buy homes and siphon demand for rentals," said Victor Calanog, REIS' vice president of research and economics.
Steven Bloom doesn't see cause for concern. He runs Baltimore operations for PMC Property Group, which manages hundreds of apartments in converted buildings in the city center. They are all at or near capacity, and the company's newest project, near Mercy Medical Center on St. Paul Street, opened Thursday with 30 of the 40 available units leased.
"My vision is all of Charles Street will be more residential," Bloom said at the opening. "There's so many 22-year-olds out there, and they want to be downtown. They don't want to be in a garden apartment off York Road."
As he said this, Lauren Hutchinson, a 22-year-old from Frederick, was moving into what PMC calls 521 St. Paul Street. She's starting law school at the University of Baltimore and wanted a place near there, she said. She won't have a car and wanted to be in a walkable location near public transit.
The building's "walking score" was a prime selling point for Bianca Stacey, who also was among the newcomers Thursday. She works for Microsoft and her fiance recently started his residency at Johns Hopkins Hospital. The couple, in their mid-30s, moved from New York, and Stacey marveled that the rent on their brand-new, two bedroom apartment is only about $1600 a month.
"This is a really great place for the price," Stacey said. "In New York, it would be a steal."