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Under Armour’s scaled-back headquarters raises questions about the future of Port Covington

How it started: Under Armour’s vision for its headquarters campus, first presented in 2016, showed three gleaming glass towers and other buildings arrayed around a riverfront stadium, all set against the backdrop of a redeveloped Port Covington.

How it’s going: The Baltimore-based athletic apparel company’s plans for the campus today are considerably less ambitious. The towers are gone, replaced instead with a few squat office buildings surrounded by a sea of parking, much like a suburban office park.

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Reality bit into the vision Under Armour and its founder Kevin Plank had for the company’s future home. When the once high-flying Under Armour’s sales faltered later in 2016, plans for the headquarters were placed on hold as the brand reorganized and restructured. Then the coronavirus pandemic struck, closing stores and upending the economy.

2016 PLAN: An initial rendering of the proposed Under Armour campus at Port Covington as seen from the water. The initial proposal, showing the campus fully built out, included a series of modern glass buildings, including several towers, a stadium for 5,000 fans and an innovative stormwater-based cooling system.
2016 PLAN: An initial rendering of the proposed Under Armour campus at Port Covington as seen from the water. The initial proposal, showing the campus fully built out, included a series of modern glass buildings, including several towers, a stadium for 5,000 fans and an innovative stormwater-based cooling system. (Bohlin Cywinski Jackson Nelson / Baltimore Sun)
2021 PLAN: The revised plan for Under Armour’s global headquarters campus at Port Covington has been scaled back and there's no talk of future phases. Plans include a new five-story office building, two low buildings in converted big box stores, and a multiuse field and track with seating for 1,400.
2021 PLAN: The revised plan for Under Armour’s global headquarters campus at Port Covington has been scaled back and there's no talk of future phases. Plans include a new five-story office building, two low buildings in converted big box stores, and a multiuse field and track with seating for 1,400. (Bohlin Cywinski Jackson)

But last month, Under Armour said it would proceed with the plan to move its global headquarters from Locust Point to South Baltimore’s Port Covington, where it would anchor a new waterfront neighborhood of offices, shops and homes. But the reality of Under Armour’s headquarters plan is a far cry from what Plank and the development’s backers presented to persuade the city to approve $660 million in bonds to support the overall Port Covington’s infrastructure needs.

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That’s understandable, say some city leaders who applaud Under Armour’s commitment to Baltimore, despite the company’s difficulties and pandemic-related shifts to more remote work.

Others say the brand overpromised its role in the larger development from the start and question whether it’s time to reevaluate the Port Covington vision. Construction got underway in March for more than 1 million square feet of offices, apartments, shops and parking, plus parks.

Both Baltimore Mayor Brandon Scott and City Council President Nick Mosby have called for a review of the larger Port Covington project. That could mean reexamining the development’s size and scale to fit the modern landscape, which has changed considerably in the past year alone.

As a City Council member in 2016, Mosby voted to float so-called tax-increment financing bonds to build Port Covington’s infrastructure, which the project would repay through future taxes. But Mosby said support going forward will hinge on evaluating Under Armour’s downsizing.

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“The [Port Covington] plan was based on a tremendous amount of economic growth, job creation, a lot of minority-owned and women business participation and community benefits,” Mosby said. “Knowing the current Under Armour portion will be significantly scaled down, what are the implications for everything else? Do we see the same proportional representation?

“These are two separate and distinct developments [Under Armour and Port Covington], but the idea that they were never supposed to have a symbiotic relationship was never realistic.”

Scott, who also voted for the Port Covington deal while on City Council, has said his administration is exploring the implications of Under Armour’s new plan. That includes conferring with outside legal counsel to ensure that TIF bonds are issued “appropriately in the best public interest,” the mayor said.

(Only about $137 million of the bonds have been issued so far, in a first so-called tranche; other tranches would be issued later as the project requires more city investment.)

Comptroller Bill Henry said his office will conduct an audit into Port Covington’s local and minority hiring practices, an agreed-upon condition of the development.

Marc Weller, a founding partner of lead developer Weller Development, said developers have worked closely with city officials “every step of the way to ensure that everything regarding the TIF has been handled appropriately” and “we are proud of the significant participation by minority-owned and women-owned businesses.”

Under Armour was growing rapidly in 2016 when it envisioned becoming a corporate anchor for the new Port Covington community. Sales growth exceeded 20% per quarter and the company was adding 300 people a year to its staff in Baltimore. It estimated the campus, when fully built out, eventually could host 5,000 workers.

Under its recently unveiled four-year plan, the company said it will consolidate its 1,700 workers at the site in smaller buildings on the 50 acres it owns. Plans include a new five-story office building and using the former Sam’s Club and Walmart stores there as offices. It reflects Under Armour’s projections for slower growth as it completes a multiyear restructuring to rein in costs as well as lessons learned about remote work during the pandemic.

Gone are the towers. Gone is the stadium for 5,000 fans, replaced by a multiuse sports field, track and seating for 1,400. Gone is an innovative stormwater impoundment designed to both filter runoff and cool campus buildings before releasing water into the river. There’s no talk of future phases.

Baltimore architect Klaus Philipsen called the new renderings a “very pedestrian, very basic, go-with-whatever you can fit in” vision.

COVID, obviously, threw a wrench into the equation, he added, changing what qualifies as sensible development.

“What is the driver for this many-million square-foot development as it was shown in the original master plan?” Philipsen said. “Absent a driver, it will be much harder to develop all this.”

Under Armour’s re-imagined vision is a hybrid workplace with people working from home as well as the office. At any one time, only about 1,000 people, or about 65%, are expected on campus.

Before the pandemic, Under Armour “was not a remote work company,” said Neil Jurgens, Under Armour’s senior vice president of real estate. “Everything has always been about having everyone at work all the time. But we learned we can do it and can do it well.”

With leases set to expire at Under Armour’s manufacturing facility at City Garage in Port Covington and offices at the Cheer Building at Tide Point, the company began planning to consolidate last year, Jurgens said. Remote work requires less space not only for offices but also for manufacturing and display.

The 2016 plans called for 100,000 square feet of studios, for instance, where the brand shows products to salespeople and wholesale customers. But increased use of digital studios around the world means the company only needs an on-site studio a quarter of that size, he said.

“I’m happy we didn’t build the initial phase one,” Jurgens said. “We can leverage technology in a much more efficient way.”

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The idea to relocate to Port Covington came initially from Plank, who in 2013 and 2014 spent more than $100 million through his personal Sagamore Ventures investment vehicle to acquire about 200 mostly vacant acres on the peninsula. (The purchases included The Baltimore Sun’s printing plant, for which the news organization has a long-term lease.)

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Under Armour acquired its 50 acres from Plank in 2016 for $70.3 million, and a development team led by Weller, backed by Sagamore and the Goldman Sachs Urban Investment Group, began work on the adjacent mixed-use project.

In 2016, as Under Armour’s then-CEO, Plank sought to sell his idea of the mini-city on the Middle Branch of the Patapsco, saying he envisioned creating a gateway to the city that would be seen by millions of travelers along Interstate 95. Baltimore would gain investment, opportunity and employment.

Under Armour, meanwhile, was out of space at Tide Point.

“We need to grow somewhere,” Plank said in an open letter to the city in September 2016. “We want to invest in Baltimore, hire in Baltimore, live in Baltimore.”

Plank’s letter also advocated for the city bond package to pay for streets, parks, sewers and utilities.

Under Armour’s rapid growth skidded to a halt later that year amid intense competition, closures of key retailers and changing consumer tastes in sports apparel. Despite struggling through COVID-related store closures last year, the brand reported a profitable and stronger-than-expected financial performance in late 2020 and early 2021, boosting online sales of apparel and footwear and reining in costs.

Weller called the company’s headquarters plan the “next milestone for Under Armour and for the city of Baltimore,” but he declined to comment on the potential impact on the Port Covington project.

He said builders are actively pursuing life sciences tenants and committed tenants include Conscious Venture Lab, Olive, CoFactor Ventures and LINQ.

Ray Jackson, a developer whose Stonewall Capital firm purchased land in Westport from Plank for redevelopment, said Under Armour’s announcement signals “positive momentum” for Port Covington.

“Physically moving there is going to create life and activity, and is going to spur retail and help with the housing over there. Without the campus moving there, it would really delay the overall growth.”

Despite the city’s commitment to finance Port Covington’s infrastructure, Colin Tarbert, president and CEO of the Baltimore Development Corp., the city’s quasi-public economic development arm, said “there is no risk for the city.”

Even if the project’s growing property taxes fail to cover debt service on bonds, the property owners would be responsible for special taxes to make up the difference, he said.

Additional rounds of the bonds will be issued “driven by the public infrastructure needed and the market demand for the private development [that] is built,” Tarbert said.

Yet some officials said they continue to have reservations about the project. Henry, a former City Council member before he was elected comptroller, abstained from the Port Covington TIF vote in 2016.

“I wasn’t sure we had all the information we needed and thought additional time could’ve [produced] a better deal,” Henry said. “I thought they were rushed through.”

Now, he said, it’s uncertain the developers will qualify for federal affordable housing tax credits, which could mean the project won’t meet affordable housing requirements.

“I thought we should’ve pushed further and harder to get a real commitment,” he said.

Mosby questioned whether the city backed Port Covington with a TIF commitment at the expense of projects with greater immediate impacts.

“TIF capacity is a real thing, it’s not a limitless checkbook,” Mosby said. “We have to put everything on the table and develop something that’s going to be best suited for Baltimore.

It’s still unclear how much pandemic-related changes to the way people work and live will affect mixed-use projects such as Port Covington. But its developers have the benefit of being able to design for a post-pandemic world in terms of space and safety features, Tarbert said.

“The pandemic has shifted the way people work, but I don’t think we know what that means in terms of physical office space and changes to physical offices,” he said. “We’re still in the pandemic. A couple of years from now, things may be back to ‘normal.’”

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