The number of employees and residents in downtown Baltimore began to slowly rebound during the second year of the coronavirus pandemic in 2021, but the hard-hit retail and hospitality sectors continued to struggle.
A report released Monday by the Downtown Partnership of Baltimore on the urban core’s health points to a still-recovering economy but says the heart of the city is poised for rebirth.
Downtown “is trending in the right direction in so many categories that I think it positions us well for this collaborative growth that we’re looking to achieve,” said Shelonda Stokes, president of the Downtown Partnership.
The annual report, released Monday morning during the Downtown Partnership’s State of Downtown Baltimore event at the Hyatt Regency Inner Harbor, tracks downtown’s office, employment, residential, hospitality and retail sectors. It looks both at an area within a 1-mile radius of Pratt and Light streets as well as the smaller, central business area that makes up the partnership-managed special benefits district.
Several hundred people from area businesses, institutions and nonprofits as well as elected officials attended Monday’s event, the partnership’s first in-person annual meeting since 2019 before the pandemic.
Mayor Brandon Scott acknowledged what he said is an unacceptable increase in violent incidents over the past few weeks. But he said the city’s “renaissance” is “on the horizon,” with transformative projects on the way such as the planned acquisition of Harborplace and redevelopment of Lexington Market. Scott unveiled plans Monday to commit an additional
$1 million from the city toward re-imagining Harborplace.
“With this kind of strong public and private partnership, I am certain that together we can transform our city’s core into a thriving center for commerce, residential growth and tourism,” Scott said, noting that downtown did not lose residents during the pandemic as other cities did. “More people live in our downtown core than ever. ... We are working together to transform downtown into an area where everyone feels welcome.”
He said his administration is working to implement a public safety strategy that combines targeted intervention with “violence interruption.” He said he has asked the police commissioner to increase foot and bicycle patrols in anticipation of more young people and teens gathering at the Inner Harbor.
“I recognize and have heard and understand the concerns of our downtown community with respect to public safety,” Scott said. “The events of the past few weeks have not set well with me. ... I will not, have not, and will never tolerate any behavior by anyone that threatens the public safety of anyone else.”
The Downtown Partnership’s report showed some gains. Employment in the 1-mile radius increased to 125,246 workers from 117,970 in 2020, the report showed. Downtown Baltimore contains more than a third of the city’s jobs, with health care, public administration and professional services making up the top job sectors.
But the number of higher-wage jobs in the more compact central business district, those in finance, insurance, management and scientific services, has not grown, according to a separate analysis by the partnership in collaboration with The Jacob France Institute at the University of Baltimore.
Office vacancy rates, which generally took a hit from increased remote work during the pandemic, improved downtown, dipping to 19.83% last year from 23.2% in 2020 and outperforming national and regional markets, the study said.
And housing occupancy in the 1-mile radius rose to 95.2% last year from 93% in 2020, even as new housing units hit the market. Some 42,478 residents live in that 1-mile radius, which takes in Harbor East, Harbor Point, Little Italy, Federal Hill, Otterbein and much of Mount Vernon.
Newly completed projects included Redwood Campus Center, a rental conversion on West Redwood Street; Four Ten Lofts rentals on North Eutaw Street; 22 Light Street, a rental housing conversion; and Prosper on Fayette, a newly built apartment building on West Fayette Street. In the Bromo Arts District, nearly 600 new market-rate and 76 affordable housing units came online.
Future residential building conversions include the Fidelity & Deposit Building and the Holiday Inn/Radisson Hotel, which developers recently announced that they planned to convert to market-rate housing. Rents for “Class A” apartments downtown ranged from $1,571 to $3,746.
Though the central business district is being transformed into one of the city’s most populated residential neighborhoods, increased public investment is necessary to serve residents, according to the partnership’s analysis with the university, led by Richard Clinch, executive director of The Jacob France Institute.
“Without a full complement of retail and dining options, open spaces and infrastructure investments, these residents could depart, exacerbating Baltimore’s population decline,” one of the key findings in that study says.
The State of Downtown review showed that office occupancy improved as average rents decreased slightly. Rents for “Class A” buildings, those with more upgrades and amenities, ranged from $24 to $30 per square foot in 2020 but last year fell to a range of $23 to $27 per square foot, the report said.
Newcomers signing leases in the business district included Ballard Spahr, ConnectRN, and Silverman, Thompson, Slutkin, White, while Design Collective and Nelson Mullins Riley & Scarborough plan to recommit to downtown office space. Spark has expanded with additional technology and startup space in the Power Plant. The office market is expecting another boost from a state plan, announced last year, to move 3,000 State Center workers to the central business district.
Stokes acknowledged that keeping and attracting businesses and residents alike requires a turnaround in a city struggling with record-high rates of homicide and other crimes. A third of the Downtown Partnership’s budget goes toward supplemental services to enhance safety, she said. And the partnership’s $11.5 million share of a $166 million state investment in downtown groups and attractions announced last month will be used to create green spaces and public safety initiatives.
“If people don’t feel safe, then it prevents us from having a vibrant downtown neighborhood,” Stokes said. “It is an extreme focus for us.”
Downtown also has struggled with a drop in retail sales as a result of closures and fewer visitors during the pandemic, and that trend continued last year. Sales fell to $961 million in 2021 from more than $1 billion in 2020.
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Downtown’s hospitality sector has been hurt too during the pandemic, with a sharp drop-off in business and international travel that has not rebounded, the report said, though conventions and conferences have begun to return. Occupancy rates at downtown hotels averaged nearly 43% last year, below the national average of 57%, according to Smith Travel Research, which estimates that the city overall lost about $7 million in hotel taxes due to the pandemic.
Holiday Inn Inner Harbor and Baltimore Plaza Hotel both closed, while others are being converted to housing.
During Monday’s event, the partnership unveiled recommendations by a panel of Urban Land Institute fellows who were called in to suggest ways to improve the city’s core.
The panel recommended creating an area-wide tax increment financing district that includes the traditional central business district, the Inner Harbor and Harbor East. It would create “an ongoing source of revenue for redevelopment in that it would potentially include both incremental city property and state sales taxes generated within the district,” the panel said.
Tax proceeds would be deposited in a designated Downtown Baltimore Impact Investment Fund and allocated to specific projects and programs recommended by the city and partnership, the panel said, noting that a similar strategy has worked in cities such as Cincinnati.
The partnership’s report said it believes a “renaissance” is looming, with the state’s $166 million effort to revitalize top attractions downtown, the planned acquisition of Harborplace, and development projects at Lexington Market and Baltimore Arena.
“This is the time for us to lock arms and figure out how do we re-imagine this downtown that is inclusive, that is vibrant, that is this destination that people are flocking to,” Stokes said. “We’re in the best position to make this happen in the history of this organization.”