Downtown Baltimore continued to add jobs and population last year, but its real estate remained stubbornly hard to fill, according to an annual report released Wednesday.
Employment downtown — defined as the area within a one-mile radius of the intersection of Pratt and Light streets — rose 1.4 percent, or about 1,600 jobs, to 123,879, according to the Downtown Partnership's annual State of Downtown study. The population increased 1.5 percent, adding 635 people, for a total of 41,606.
The Downtown Partnership's 2014 figures roughly follow trends across the city, where employment rose about 1.2 percent in 2014, according to annual Labor Department estimates, while population slipped a tenth of one percent.
Kirby Fowler, the organization's president, said downtown is on the right track, even though the 2014 increases are modest.
"We continue to see steady growth in those sectors," he said. "We'd love for it to be dramatic, but at this point it's not. At least it's heading in the right direction."
Downtown office vacancy rates hovered above 16 percent last year, while vacancy in retail space was 10.2 percent, both up slightly from 2013, according to the report.
The retail vacancy rate is double the average in the metro area and higher than the 7.1 percent national rate despite a growing number of wealthy residents — typically a draw for retailers.
The report identified 5,854 households with annual income above $75,000, up 8.6 percent from 2013 and up 25 percent from 2010. During that time, the overall downtown population has increased about 1 percent, according to the Downtown Partnership.
The increasing affluence is in keeping with national trends, but not nearly as pronounced as in some cities.
In downtown Washington, for example, the number of households earning more than $75,000 has more than doubled since 2010, while the population has grown 37 percent, according to the Downtown Partnership report.
Since 2010, Baltimore has slipped from eighth to 13th in a ranking of metro areas by the number of affluent households in their one-mile radius downtowns, overtaken by cities such as San Diego, Miami and Minneapolis.
While the number of well-off families is increasing, it masks great differences in the neighborhoods within the one-mile downtown boundaries, said Geoffrey Mackler, a Baltimore-based principal at real estate brokerage H&R Retail. The downtown tracked in the partnership report ranges from Pigtown to Harbor East, including parts of Old Town, West Baltimore, Mount Vernon and Federal Hill.
Without a broader local base — or more county residents willing to drive downtown to shop — retail will remain tough to support, he said.
"To date, we have not created a strong enough mousetrap to get people to come down from other places, so we're really relying on tourism and residents of the city," he said. "As the neighborhoods continue to gentrify, I think the rates will change, but I think a lot of the neighborhoods ... they're still in transition."
Outside of Harbor East, most of the leases signed last year were for restaurants.
Beadazzled, which opened on Charles Street in 1991, shut its doors in March. The store had survived competition from big-box stores and local shops, but founder Penny Diamanti said sales finally stopped covering increasing expenses, especially after the recession hit and online shopping became more popular.
"We just struggled through from year to year," she said.
Longtime store manager Cas Webber said pedestrian traffic has increased in recent years. But the improvement did not mean significantly more customers — and "when they do spend, it's low totals," Webber said.
Fowler said he would like to see more stores, but Baltimore continues to battle an "unfair reputation." Meanwhile, he said, the available spaces are often too small to meet the requirements of national retailers, yet landlords are hesitant to lease to smaller local players.
"We're just not seeing enough of that," he said. "We'd love to accelerate that trend."
Fowler said he expects to see a bigger change as more of the new apartment buildings fashioned from former offices are occupied.
In downtown's traditional core, several projects are underway, including apartments in the Equitable Building and at Calvert and Water streets. Demolition of the Mechanic Theatre started for a new apartment tower at 1 W. Baltimore St. last year.
"We expect to — overnight — have a different feel in the number of people walking around," he said.
Courtenay Jenkins, senior director at Cushman & Wakefield, said he believes things are improving. Stores and office space along Pratt Street, for instance, have strong occupancy rates, filled by companies that are new in town, such as Pandora Jewelry and Shake Shack.
"I would not be surprised if that has a ripple effect," he said, adding that his brokerage firm is working to build a retail division focused on Baltimore.
Steps to boost quality of life — such as more bike lanes and better public transit — also should help make the downtown area a draw in the future, he said.
"I think 10 years from now, we're all going to be amazed," Jenkins said.
Downtown by the numbers
Population
2013: 40,971
2014: 41,606
Employment
2013: 122,222
2014: 123,879
Office vacancy rate
2013: 16.1 percent
2014: 16.8 percent
Retail vacancy rate
2013: 9.7 percent
2014: 10.2 percent
Source: Downtown Partnership