Two developers of high-profile urban projects in major U.S. cities have joined Sagamore Ventures’ effort to create a mini-city in South Baltimore’s Port Covington and will lead the next phase of development.
As five buildings near completion in the waterfront neighborhood south of Interstate 95, Sagamore and investment partner Goldman Sachs on Tuesday announced new partner firms, both of which invested undisclosed amounts in the project.
MAG Partners, a New York-based woman-owned firm, and MacFarlane Partners, a San Francisco-based Black-owned development and institutional investment firm, will leverage decades each of national experience in taking the reins from Weller Development Co. for leasing, marketing and “placemaking” campaigns for the current $500 million, 1.1 million-square-foot phase, Sagamore said.
MAG and MacFarlane will lead all future development outside that initial phase. The vision for the massive project, which spans 235 acres along Cromwell Street, includes up to 14 million square feet of shops, restaurants, office space and housing, plus 40 acres of parks, across 45 new city blocks.
The arrival of the two prominent developers marks the biggest shake-up in the ambitious project’s leadership since Under Armour founder Kevin Plank’s private investment firm, Sagamore Ventures, began anonymously acquiring parcels on the partially vacant, former industrial peninsula in 2012.
Marc Weller, founding partner of Weller Development and a longtime friend of Plank’s, had been involved before Sagamore pitched the idea for Port Covington to city officials in 2016. Weller, who had previous experience in Washington-area real estate, headed what was then Sagamore Development Co.
Weller Development will complete the construction of the current buildings, which include the centerpiece Rye Street Market with a food market, restaurants, retail, office space and a rentable events venue, as well as four additional buildings for apartments, offices, parking and retail.
Plank touted the new development team members’ proven national experience and scale, while praising efforts so far to shape the new community.
“Getting the project to this point has been nothing short of herculean by Weller Development Company and the entire Port Covington Development Team,” Plank said in the announcement. Now, “Port Covington is poised to attract top-tier commercial tenants and fulfill its potential for Baltimore and continue creating a new model for equitable and impactful urban development.”
Buildings are sprouting amid existing businesses, including Sagamore Spirit rye whiskey distillery and The Baltimore Sun, which recently shut its printing plant there. While the newsroom and business offices remain there, the sprawling Sun plant soon could be available for redevelopment.
No leases have been signed yet for any of the first-phase buildings, but tenant negotiations are underway, officials said.
Sagamore and Goldman decided to turn to nationally experienced developers to direct future phases, said Michael Lohr, managing director of Goldman Sachs Asset Management, which includes the investment bank’s urban investment group.
“The growing development team reflects both our ambition for Port Covington and commitment to delivering a world-class project that will drive renewed community investment and revitalize South Baltimore’s waterfront,” Lohr said in Tuesday’s announcement.
Jody Clark, Sagamore Ventures’ chief real estate officer, said many members of Weller Development will join the MAG development team.
“This is an opportunity for us to build and bring new capital and new expertise into the project,” Clark said in an interview. “We’ve always looked for additional investors in the project.”
The heads of both MAG and MacFarlane, neither of whom has worked in Baltimore before, said in an interview that they were attracted to the project through personal ties and because of a belief in the untapped potential of U.S. cities and Baltimore in particular.
MaryAnne Gilmartin, founder and CEO of MAG Partners, and Victor MacFarlane, chairman and CEO of MacFarlane Partners, said they each found a niche pursuing against-all-odds types of development work.
The developers acknowledged Baltimore’s challenges but said they were impressed with accessibility along I-95, a strong labor pool, relative affordability for an East Coast city and expansive undeveloped waterfront land, all in an urban setting. That’s a recipe to draw companies, small businesses, residents and visitors, they said.
Key benefits, they said, include Under Armour’s commitment to build a five-story global headquarters for 1,700 employees on 50 acres it owns across Cromwell Street in Port Covington, along with a track and field facility and a flagship retail store. Port Covington also has buy-in from the city and the community after it funded a community benefits agreement that has funneled $19 million to South Baltimore neighborhoods.
“When we thought about all these ingredients, we thought there’s real possibilities here,” Gilmartin said. “We believe in cities as a company. ... We started MAG partners so we that could demonstrate that you could build beautiful buildings and create value not just for partners and investors but for the communities in which we build.”
The Port Covington project, valued at an estimated $5.5 billion, is backed by $660 million in tax increment financing, which means property taxes generated by the project will repay city bonds sold to pay for its infrastructure. It is Baltimore’s largest such deal in history.
MacFarlane, who first went into business as an institutional investment manager in 1987, said his company looks for high-impact investments in key gateway cities. He is considered a pioneer in urban development for making investments in inner-city Los Angeles after the 1992 riots and has led urban revitalization projects both in urban and high-density suburban submarkets.
“Port Covington perfectly aligns with our vision of smart, urban growth,” said MacFarlane, calling it a “model of sustainability, inclusivity and forward-thinking development that is vital to the lasting success of our urban communities nationally.”
His firm was a development partner in the mixed-use Time Warner Center along Central Park in New York. MacFarlane is partnering with another developer on a $2 billion, twin-tower luxury hotel project in downtown Los Angeles. Over the past decade, he said, he has focused on large urban projects “that can make an impact.”
“I’ve never really had an opportunity to do much in Baltimore, and the attributes that MaryAnn discussed about his project are very compelling,” he said during an interview. “We think with Port Covington we can place-make, which will not just cannibalize, as a lot of these projects are doing to themselves, but create an expansion of the employment base in Baltimore and make it more attractive overall.”
Gilmartin started her career as an economic developer under former New York Mayor Ed Koch and worked as an executive for Forest City Ratner Cos. before founding her own firm in 2020. She said she was brought into the Port Covington project by Clark and first met with Plank just over a year ago at his Sagamore Farm in Baltimore County, site of Plank’s former thoroughbred racing operation.
While at Forest City, Gilmartin spearheaded development of some high-profile New York City projects, including the Barclays Center in Brooklyn, and, in the wake of the 9/11 attack of the World Trade Center in 2001, the New York Times building in Times Square.
Gilmartin said her first step after signing on to Port Covington was to reach out to MacFarlane, who she met years ago while doing work in San Francisco for Forest City.
The developers say they intend to capitalize on Plank’s talent for brand-building with Under Armour and promise he will be a “strong voice” in selling the Baltimore story and rebranding the project.
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“It was super important to us that we be able to call on Kevin,” Gilmartin said. “He is such a believer in Baltimore. He is very much going to be an active part of this endeavor.”
Port Covington is a “canvas,” she said, and the construction so far “really allows us now to start talking about Port Covington as a place to be, a place to go, a place to have fun, a place to raise a family, a place to grow your business. Yes the city has challenges ... but it’s a very affordable alternative to some expensive bigger cities.”
Future development will be market-driven, with design of office and residential buildings influenced by new ways of working that emerged during the pandemic, the developers said. They see Baltimore’s multifamily, for-rent market as healthy, with demand for both market-rate and affordable housing. Residential leasing is expected to start by the end of this year when model apartments will be available.
And commercial leasing, after a disruption during the pandemic, is getting back on track, with about 100,000 square feet of office space and 60,000 square feet of retail under negotiation and buildings expected to be ready for occupancy later this year and into early 2023. Developers said they expect the project to appeal to a diverse sector of businesses and will cast a wide net for tenants.
Baltimore Mayor Brandon Scott said in the announcement that he was encouraged by news of the latest partners. Port Covington is expected to be transformational, he said, generating “thousands of jobs and economic opportunities for the city and our residents for generations to come.”
Weller said the work to date on the site has “exceeded expectations.”
“As the project evolves,” Weller said in Tuesday’s announcement, “we are excited to pass the reins to MAG Partners and MacFarlane Partners to develop future phases.”
This article has been updated to correct the name of Sagamore Spirit Distillery. The Sun regrets the error.