414 Light Street is the newest, and perhaps the fanciest, apartment building to open in Baltimore in a while. (Kenneth K. Lam, Baltimore Sun video)
The gleaming 44-story apartment tower overlooking the Inner Harbor has an expansive terrace with a pool and garden, not to mention a theater, game room and pet spa — and penthouses advertised at more than $8,000 a month.
Developers of the $160 million high-rise called 414 Light Street said they wanted to push the boundaries of what people in the city and beyond can expect from an upscale apartment.
“We want to create a very special landmark and be part of the urban renaissance of the city,” said Stephen Gorn, president and CEO of Questar Properties, a local development firm that has been planning the building since 2011, when it bought the former headquarters site of the McCormick spice company for $11.5 million. “This is a beautiful city. People should believe in it.”
Questar will need more than belief in Baltimore to fill a building with such rents in a competitive market and a pipeline of upscale residential buildings, both downtown and in other waterfront communities. The number of projects has some wondering whether there are enough well-heeled people in the city, surrounding areas and Washington who will pay for the views, nearby nightlife and really nice countertops. They wonder how the city’s crime issues and lack of substantial job growth might affect demand for urban rentals.
Gorn said 414 Light is in category of its own, a “trophy” that will show that demand for this level of luxury, resort-style living is deeper than people may think. Already, he said, 20 percent of the 394 units are pre-leased and residents recently began moving into units on the first seven floors. Gorn said he plans to eventually erect another tower of some kind — perhaps more apartments, offices or both — on the site.
Studies have shown there is demand to live in the greater downtown area. A 2017 Downtown Partnership analysis found room for 7,000 more apartments at all price points in the next five years. Partnership officials say the occupancy rate of 93 percent suggested it would not be hard to absorb the 1,400 units added in the greater downtown area in the year since the report and more in the immediate pipeline.
The group’s analysis also found that an average of 418 units a year could rent for $2,000 or more, with increased interest from empty nesters and not just young adults.
It’s taking developers an average of 18 months to fill these buildings, said Kirby Fowler, the partnership’s president. That makes him feel good about demand, though Fowler said he’s heard about rent concessions and residents hopscotching between buildings to take advantage of them.
“Competition between apartment buildings seems strong.” he said.
Jason Center, who is in his 40s and in banking, said he and his wife, Marie, looked at a couple of buildings in Harbor East and Federal Hill before picking 414 Light back in March. He said the proximity to his work downtown, the ballparks, and amenities such as the gym, pool and dog park swayed them. They needed a dog-friendly place for their 1-year-old golden retriever, Henry.
The Centers had rented a large rowhouse in Little Italy for two years after moving from South Florida. He said they just didn’t need three floors and a basement. And they liked the security of the high-rise.
They also wanted to keep renting in case work takes them to another city.
“We liked 414 from the beginning,” he said just after moving into a two-bedroom unit on the fifth floor. “We wanted to be close to our friends and my work. … It’s a beautiful building and the amenities are great and we’re looking forward to meeting our neighbors.”
The two-bedroom units are listed at just under $3,300 a month to more than $4,700 a month. That’s expensive for Baltimore, but it’s the costliest units that have given observers the most pause. The 11 penthouses are not available for lease yet, but the entire project is expected to be completed by year’s end.
“Absurd,” was David Fick’s first thought when he heard about $8,000 penthouses.
Fick, who teaches real estate finance at the Johns Hopkins University, said people would be hard pressed to spend as much buying a pricey suburban mansion, which would come with tax breaks not afforded renters. A $1 million condo in nearby Harbor Court could have a $3,500 a month mortgage payment — $5,000 with property taxes, he said.
There is a limited group of potential residents who would or could pay such stratospheric rents, he said.
“The amount of new supply is clearly running ahead of job creation at the high end,” Fick said about new apartments in the neighborhoods that ring the Inner Harbor. “A thousand new luxury apartment units are under construction right now in Harbor East alone, with several other projects in planning. That’s just nuts.”
But housing decisions are often made with the heart. Fick, a retired real estate finance executive who fits the demographic some upscale buildings are seeking, almost moved to a pricey waterfront neighborhood himself a few years ago. He decided on a dream home on the Eastern Shore near his oyster farm and a second suburban house close to Baltimore and the airport.
Greg Willet, chief economist at RealPage, which provides property management software and services, said Baltimore has been absorbing new apartments in the last year — almost 4,500 new units in the Baltimore metro area with nearly as many under construction.
Average rents, however, have not been rising much and have been hurt by a decline of 3 percent downtown in the past year, where his data shows 1,157 apartments have been added and 950 are coming.
“Those new units are leasing at a healthy pace, but some rent concessions are typical at the properties still building an initial resident base,” Willet said. “And, there are rent cuts at the top-tier existing stock, as operators of those properties are working to hold on to residents who might be tempted to move to the new completions.”
Some incentives are to be expected, said Toby Bozzuto, president and CEO of the Bozzuto Group. It partnered with War Horse Cities on Anthem House, an upscale apartment building that opened just over a year ago in Locust Point near Federal Hill.
Bozzuto said the company typically offers one month’s free rent to fill its building more quickly. Anthem House, which opened in June 2017, is almost fully leased. The 292 apartments rent for an average of $2,450 a month, with the top-floor apartments renting into the upper $5,000s.
Bozzuto said he’s optimistic that all the new upscale buildings can lease without major incentives or poaching neighboring tenants. That includes a smaller, less pricey, Anthem House about to open across the street from the main building.
He said he picked Locust Point because of its proximity to nearby shopping and restaurants, including some in his building that became popular quickly after opening in recent months. But he said being near Interstate 95 was crucial in luring residents from the Baltimore-Washington corridor. About half the residents, many young professionals, commute 30 minutes to an hour to work.
They want to live in Anthem House because of the location and the amenities. There are an acre-sized outdoor rooftop park, high-end finishes and, he said, highly attentive service.
People, from millennials to empty nesters, are “happy and willing to pay for these experiences.”
Bozzuto is also building one of the upscale apartment buildings planned for Harbor East, which has become a high-end neighborhood within the city. The $123 million Liberty Harbor East project will have 317 units at comparable rents to Anthem House’s.
Still, he said, while his company has been mindful of not overbuilding for the market, he’s not sure if others are being as cautious.
“If you do the math, there are more apartments being developed in Baltimore than any time in history,” he said. “Economists will be pondering the effects. I don’t know. “
At 414 Light St., celebrity designer Kari Whitman focused on giving residents a return on their rent. There are small touches such as a “floating” desk in the business center and a custom pool table in the game room. There’s real grass in the outdoor park on the seventh floor, which also offers plots for garden-minded people and a giant TV screen, grill and pool with a waterfall for those more into relaxing.
Whitman, an avid dog lover and rescue group operator, included a dog park and wash room, complete with vending machine with essential doggie tools and treats.
But she said her focus in all of the 41 apartment designs, which are named after spices as a nod to McCormick, was ensuring there were large closets and bathrooms even in the smallest units, a 520-square-foot studio renting for $1,800. She also wanted high-end Bosch appliances, Poggenpohl cabinets and Ceasarstone quartz countertops in the kitchens, finishes that “no one would ever want to change.”
She said just as much attention was given to the common areas for exercising, socializing or gazing at, but not hearing, the bustle in the Inner Harbor. There will be three restaurants on the street level, likely offering ramen, vegan and Italian cuisine.