Developers discover charms of Baltimore

The townhouses rising quickly under the baking sun are like so many popping up in popular suburbs. Brick facades. Two-car garages. A project of a national builder that's priced at more than $600,000.

But these aren't in the 'burbs - they're in Baltimore.

Pulte Homes' McHenry Pointe, near the harbor, is just one wave in a regional sea change.

In the five decades since people began heading in droves for new frontiers cut out of farmland, homebuilders barely gave cities a passing glance. Now, as suburban communities pile on restrictions to rein in growth, development-friendly cities are getting a second look - helped along by new demand for urban living from young professionals and aging baby boomers.

Baltimore issued permits for 735 units of new residential construction in the first six months of this year, a sevenfold increase over the first half of 2000, according to Census Bureau estimates. That's as many units as were approved in all of last year - and nearly as many as in much larger Baltimore County.

That number will balloon, assuming developers deliver projects they have announced. More than 7,000 new homes in major projects are in a planning pipeline that seems to swell every day as developers scramble to assemble parcels of land.

And those numbers don't even include the aging commercial buildings in and around downtown being converted into hundreds of condos and rentals.

As the city's development has accelerated, the suburbs' has declined. Last year, the five counties surrounding Baltimore issued permits for a total of 9,200 homes, almost 2,000 fewer than in 2000, the census reported.

"We see more and more builders who used to only be in the county, and who quite frankly always downplayed the city ... being very eager to enter the city now," said Sandy Marenberg of Marenberg Enterprises Inc., a local developer-builder that also advises others in the industry.

"Slowly but surely, we're retaking the neighborhoods that were abandoned."

Pulte, based in Michigan, Atlanta-based Beazer Homes and Greenbelt-based Bozzuto Group are among the large builders working on their first new-home projects in the city. Ryland Homes is in the middle of its first Baltimore project in a decade, 34 townhouses in the mixed-use Clipper Mill development in Woodberry.

All want to do more, and this is why: Demand for the new homes is so strong that builders are raising their prices midstream - sometimes doubling.

Many of the buyers are not current city residents. So far, seven out of every 10 people who bought a Camden Crossing townhouse in Washington Village, for instance, came from the suburbs or farther afield.

Critical point in desire

"We've reached a critical point where ... you feel if you're not there, you're missing something," said Tom Bozzuto, chief executive of the Bozzuto Group, which is building the mixed-use Spinnaker Bay in Harbor East. "The more bodies there are on the street, the more people want to be on the street."

E. Neil Tabor, a partner with the local Ashley Custom Homes, rarely used to work in the city. Now six out of every 10 units he builds or renovates are in Baltimore. He has moved his office there - even moved his family from the suburbs to Fells Point.

"Land is near drying up in the county, and there's a lot of infill work closer in," he said. "It's hard to find an area in Baltimore City that isn't on the rise."

Builders who venture in from the suburbs are setting foot in a city of old homes. Three-quarters were built before John F. Kennedy took office, according to the Census Bureau. Nearly 40 percent predate World War II.

When firms did construct new residences in the more recent past, they asked for - and got - government grants, tax breaks or other public assistance half the time, said city Housing Commissioner Paul T. Graziano. Now fewer are asking, he said, and those who receive are being subsidized "at a much lower rate per unit."

"When I got here 4 1/2 years ago, it was virtually impossible to talk to anybody about any development activity without them immediately starting with, 'We need free land, we need a ton of subsidies and we need tax relief,'" he said. He thinks the city's role in the future will be to assemble land with blighted housing, clear it and let developers do the rest.

Singles, empty-nesters

The boom in new homes hasn't spurred population gains in Baltimore yet; census counts last summer still show a downward trend. Demographers say average household sizes are declining, which could explain it - the typical Baltimore newcomer is single or part of an empty-nester couple.

But it means money for the city all the same. Transfer taxes. Recordation taxes. Property taxes. Income taxes. Graziano credits the residential boom, new homes and otherwise, for the unexpected $59 million budget surplus.

And the new homes are changing the face of Baltimore. Most are far pricier than the average residence here, which sells for about $150,000. The Ritz-Carlton Residences, under construction on Key Highway, top out at $5 million.

"It used to be that everybody - just about - was moving out of the city," said John McIlwain, an Urban Land Institute senior fellow. "Now you're seeing a trend where there is a group of middle-class and upper-middle-class people starting to move back."

Marshall Caggiano, a judge advocate in the military, will be relocating from Dayton, Ohio, to one of the McHenry Pointe townhouses next summer and counts himself lucky. First in line to sign up, he bought at the original list price of $546,000. Now the cheapest model sells for $100,000 more.

"You know, Baltimore has a lot of charm," said Caggiano, who has a 7-year-old daughter and was pleasantly surprised by what he has seen of the local public elementary school. The only off-putting point for him is the city's high property tax rate, though owners of new homes are eligible for a five-year phase-in starting at 50 percent.

He expects to work in Washington after he moves, which puts him in good company. Because many of the new homes aren't far from a train station, builders say as many as a third of their buyers are D.C. commuters who don't want to pay D.C. home prices - or simply prefer its northern cousin.

"I'm attracted to all those things that make Baltimore great: the architecture, the culture, the neighborhoods," said Scott Sherman, 38, a Washington attorney moving to a Ryland townhouse in Woodberry.

Whatever the reason, builders say demand is strong.

"We have sold out each time we have released a building - virtually overnight," said David S. Meacham, Baltimore region general sales manager for Beazer Homes, which is building about 400 units for sale and rent near Little Italy.

Compare that to Struever Bros. Eccles & Rouse's experience three decades ago, when it won an award for townhouses in Federal Hill but couldn't interest buyers. Struever - which doggedly stuck with urban revitalization - doesn't have that problem anymore.

Its new projects run the gamut from Clipper Mill - 190 condos, apartments, townhouses, duplexes and single-family houses alongside offices - to the 170-condo Village Commons in Charles Village.

Caroline G. Moore, Struever's chief operating officer of development, hopes more developers and builders go beyond the waterfront - where activity is concentrated - into marginal sections of Baltimore. "There's plenty left to do," she said.

Some are doing just that, to great bottom-line effect. The most recent people to reserve one of the 32 Station North Townhomes in the 1700 block of N. Calvert St. will pay $370,000 for a standard unit, a third more than the earliest buyers - and sales just started two months ago.

"It's a pretty depressed neighborhood, yet it's near the train station, and there's a lot of potential," said Nancy Hooff, principal of the Washington-based Somerset Development Co., which is developing the site with another Washington company. "The market has changed drastically since we first got the development rights ... in 2002."

That's also the story of Washington Village, which has been discovered by D.C. commuters in particular. On the upside, new development - including the 150-townhouse Camden Crossing - is bringing residents with more disposable income, which could attract businesses to the boarded-up buildings on Washington Boulevard.

Renters being displaced

But the price ripple effect is starting to displace renters who were there first, said Gwenyth Padow of Tri-Churches Housing Inc., a local nonprofit.

It's an issue city officials have tried to address by negotiating for some affordable units when developers do business with them. Housing advocates say more must be done because the problem will only grow.

"This is the time," said Nolan V. Rollins, vice president of economic and community development for the nonprofit Greater Baltimore Urban League. "We're at the beginning of that [displacement], and I think we still have an opportunity to do some things that will prevent a gentrification that turns this city into something that it was never meant to be - and that is a city that isn't for everyone."

Graziano, the housing commissioner, said help could come soon from a proposed $59 million affordable-housing fund the City Council will vote on this month. Though the money was offered in an effort to win support for the contentious convention center hotel, Graziano insists it wouldn't have been possible without the sharp increase in home values and homebuilding.

"We as a city will be in a healthier position to address the most needy," he said. "A city that is seeing a downward spiral of disinvestment is not a city that's livable."

Smart Growth groups such as 1000 Friends of Maryland agree. They think the homebuilding is great for the region, not just the city, because it means less sprawl and driving everywhere.

That's T.J. Madden's life in a nutshell. He drives into the city every workday from his home in Baltimore County's Windsor Mill community, plus whenever he wants to watch the Orioles or visit friends or go to nice restaurants. Meanwhile, he has watched prices on waterfront property soar.

So Madden, 41, is buying one of those new brick townhouses in McHenry Pointe. He'll be able to bike to his corporate accounting job at Laureate Education Inc. He'll have close-by nightlife. He might even meet someone nice and get married.

He wishes he had moved into the city a few years ago.

"Better late than never," he said.
In the works

Some of the large residential projects in the planning stages for the city -- both private efforts and public-private redevelopments:

  • East Baltimore redevelopment, 1000 N. Broadway -- 1,500 units.

  • Uplands, 4601 Lawnpark Road -- 1,100 units.

  • Greektown project, 820 S. Oldham St. -- 1,000 units.

  • Port Covington development, Cromwell Street -- 975 units.

  • Park Heights initiative, 4750 Park Heights Ave. -- 800 units.

  • Chapel NDP, 101 N. Chapel St. -- 584 units.

  • The Residences at Canton Crossing, 3301 Boston St. -- 500 units.

  • The Rotunda, 711 W. 40th St. -- 300 to 500 units.

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