Caves Valley Partners has reached an agreement with the Baltimore Public Markets Corp. to take over Cross Street Market, renovating the building and managing the market, said partner Arsh Mirmiran.
Cross Street Market will finally get a makeover under a deal reached between the city and a real estate firm active in South Baltimore that is designed to revive the tired Federal Hill institution with new tenants and a $6.5 million renovation.
The long-awaited agreement between Caves Valley Partners and the Baltimore Public Markets Corp. comes nearly two years after the nonprofit, which runs the city's six public markets, formally sought bids for managing Cross Street.
Neighbors have called for years for improvements to the dated market, where foot traffic has dwindled and vacancies have increased.
"It has fallen down tremendously from where it used to be," said Martha Thompson, 61, a longtime patron who visited the market Monday with her husband and a friend for lunch. "Renovation might help bring it back."
Caves Valley plans to start the overhaul of the 31,000-square-foot market this spring, adding more natural light to the building, reconfiguring the interior layout and shaking up the tenant mix, said Arsh Mirmiran, a partner in the Towson-based company, which is leading the Stadium Square redevelopment in nearby Sharp-Leadenhall.
The goal is to produce a welcoming space with a main eating area, and about two dozen "super-stalls" with eateries, fresh food products and food-related accessories along the lines of San Francisco's Ferry Terminal, he said. Hours will be extended and some room will be left for seasonal pop-ups.
The city, through the public markets corporation, is contributing $2 million to the renovation, said Kaliope Parthemos, Mayor Stephanie Rawlings-Blake's chief of staff, who described the agreement as a "win-win" that will address capital repair needs and help the market meet neighborhood tastes, while acting as a catalyst for further neighborhood improvement.
"The focus should be on continuing to create an environment that is open to the public, that provides diverse food options and still serves as an anchor for the community," she said.
Merchants, who met with officials about the plan Monday, said they are eager to see investment but apprehensive about what the plans mean for them.
Significant portions of the market will close during the renovations, which are likely to last eight to 12 months and will bring increased rents, Mirmiran said.
Several merchants said they expect to have individual conversations with the new management team to see if they will stay. The leases, many of them month-to-month, will remain in place until construction starts, around April.
"Something had to be done," said John Nichols, whose family has run Steve's Lunch in Cross Street Market since 1964 and who hopes to stay. "I just hope it works out."
The city will work with merchants on relocations, Parthemos said.
The agreement with Caves Valley for Cross Street Market is likely to be the first of several private-sector partnerships for the Baltimore's public markets, as officials look to bring the decades-old facilities into the 21st century and make them engines of economic development.
The public markets corporation is gearing up to lead a major renovation of Lexington Market, after making investments in the Northeast and Avenue markets.
It also is considering options for Hollins Market in West Baltimore and Broadway Market in Fells Point, which could include private ownership, said Kirby Fowler, who chairs the public markets board and heads the Downtown Partnership.
"There's been progress around the markets, and to some extent the markets have not kept pace with that progress," he said. "In those particular neighborhoods, it's important for the public markets corporation to see if the private sector could do a better job."
With Caves Valley, the city has opted to work with a company that has a significant stake in the neighborhood. In addition to Stadium Square, the firm owns 1111 Light Street and is involved in Horseshoe Casino.
It also was one of the firms that pushed the city to open the market up to private management. (The other, Scott Plank's War Horse LLC, initially partnered with Caves Valley but has since withdrawn from the plans and has been linked to Hollins Market, around which Plank has been buying property.)
"We've invested a bunch of money and time in South Baltimore, and over the last decade, one of the big desires of residents … as well as merchants in the market is to see the market revitalized," Mirmiran said. "We thought it would be important … to take it on."
Under the agreement, Caves Valley, through its CSM Ventures affiliate, will make an annual lease payment of $120,000 to the public markets corporation. The firm will split profits with the markets corporation 50-50, after paying its bank loan and an 8 percent return on Caves Valley's initial equity investment.
The deal, which goes to the city's Board of Estimates for approval Wednesday, would take effect Jan. 1. If approved, the lease would run for 15 years, with the potential for renewal in five-year periods for up to 50 years.
Fowler and others said the deal reflects substantial "give and take" as a plan to finance the renovation was developed.
Upgrades to the market must occur within two years, Parthemos said.
The renovation plans have been scaled back since Caves Valley made its first proposal, with a greater public contribution and a greenhouse and roof deck removed. The city also is getting a smaller fee than the $275,000 minimum payment first proposed.
"In the end, our goal as a public markets board was to create a better market for the neighborhood," Fowler said. "If it meant that the city had to contribute more capital dollars, then that's what it took."
Federal Hill has housed a public market since 1846. The current building, with its red tile floor and exposed ceiling, dates to the 1950s.
Martha Thompson's husband, Ray, 61, remembers frequenting the market's food stalls as a junior high-schooler, when the eateries brought a crush of midday business to the area.
But the neighborhood has changed, losing its rough edges and gaining younger households without families.
The vacancy rate at Cross Street Market started climbing a few years ago, said Robert Thomas, executive director of the public markets corporation. Today, there are just 18 active tenants in Cross Street Market, leaving half the space empty.
Merchants said they know the market needs help competing with the new restaurants and supermarkets in the area.
"We're not the only guy in town anymore," said Peter Pittas, the owner of The Sweet Shoppe, who has sold chocolates at the market since 1988 and hopes to stay. "The whole area is more competitive."
Caves Valley is working with BCT Architects on the design and with MacKenzie Commercial Real Estate Services on leasing.
Customers, even regulars who have stuck with the market, said they think it would benefit from greater variety and a better building.
"I don't care what management it is," said Kenneth Rorie Sr., as he prepared to eat a sandwich Monday afternoon. "I think the whole market needs a face-lift."