Amtrak and a team of locally led developers have reached an agreement expected to kick-start a $400 million to $600 million transformation of the area around Baltimore’s historic Penn Station, creating a transit-oriented hub of apartments, shops, offices and a hotel.
Under a master development agreement announced Thursday, Amtrak will invest $90 million in station and track improvements and lease an adjacent lot to the Penn Station Partners team to build a mixed-use project.
The agreement allows the partnership, led by Beatty Development Group and Cross Street Partners and picked by Amtrak in December 2017, to start marketing the multi-year project to potential tenants.
The development team is also working toward reaching similar lease arrangements for nearby Amtrak-owned parcels in the Station North neighborhood.
Amtrak, which will be starting work this year on a high-speed rail platform in addition to station improvements included in the project, said it is expanding and modernizing the century-old station to accommodate passenger growth. The railroad plans to introduce the next generation of its high-speed Acela Express trains along the Northeast Corridor by 2021.
“Amtrak seeks to transform central Baltimore into a premier regional transportation hub that will provide new amenities and transit connections,” said Richard Anderson, Amtrak’s president and CEO, in the announcement.
Preliminary plans presented last summer include adding apartments, offices and retail space and ultimately building a total of 1.6 million to 2 million square feet of new space within a 5-acre area around the station.
Developers envision tying together the Station North area, home to new and upgraded apartments, shops, theaters and restaurants over the last decade, with redevelopment in surrounding neighborhoods while creating a regional transit hub for Amtrak, MARC commuter rail, light rail and bus service.
“It’s really knitting together that whole area with development” in a way that should entice new residents and businesses, including some seeking a less costly alternative to Washington, said Bill Struever, managing partner and CEO of Cross Street. “We think this will be a terrific new gateway for Baltimore that will create a much more cheerful and joyous greeting for folks coming from outside Baltimore.”
The master development agreement gives Penn Station Partners a 98-year ground lease on what is now a parking lot directly north of the station between Charles and St. Paul streets.
The agreement represents “the next critical step toward ensuring that Penn Station can finally achieve its full potential — and I am thrilled to learn that Amtrak will be committing significant capital to support revitalization of this Baltimore landmark,” said Rep. Elijah E. Cummings in the announcement.
The Democratic congressman from Baltimore said he would work closely with Amtrak, the developers and the community “to ensure that this project reflects our local priorities, creates opportunities for local minority- and women-owned businesses, and enables Penn Station to be both an inviting gateway and an economic engine for our City.”
Acting Baltimore Mayor Bernard C. “Jack” Young also applauded Amtrak’s investment and its formal agreement with developers.
“We salute Amtrak for the $90 million investment to renovate the existing station and to build a station expansion on the north side of the tracks,” Young said in an email. “This investment is critical to the Station North Arts District redevelopment plan, as well as for modernizing Penn Station to a 21st-century transportation hub.”
Amtrak and the developers are working on specific plans for the station and surrounding Amtrak properties.
Amtrak plans to renovate an existing platform at Penn Station to bring it back into service and build an additional platform. The national passenger railroad is making other infrastructure improvements in the Northeast Corridor, such as the high-speed rail expansion.
The developers have begun to meet with potential tenants, Struever said.
On the financing side, the project is expected to benefit from investment through the federal Opportunity Zone program, an economic development incentive designed to encourage investment into struggling communities. The development site falls into one of Baltimore’s 42 designated zones, where investments are eligible for capital gains tax relief using vehicles known as opportunity funds. Developers are in negotiations with the operator of one such fund and also are starting talks with city and state officials about possibly seeking public funding.
The development team, which also include Virginia Beach-based Armada Hoffler Properties and the architecture firm Gensler, held a public meeting in July in which about 75 people offered suggestions about public spaces, transit and the project’s identity. The developers said they plan to schedule additional meetings over the next six months, now that the commercial agreement has been finalized.
Ideas for redevelopment around Penn Station have been floated for years.
Beatty, the lead developer of Harbor Point, had been tapped previously by Amtrak to lead redevelopment at the station. The firm proposed building up to 1.5 million square feet of residential and commercial space around the station for $500 million in 2012, but that plan never moved forward.
Beatty and Cross Street are also involved in the $889 million Perkins Transformation Project, a large-scale redevelopment planned for a broad swath of East Baltimore, connecting the wealthier neighborhoods of Fells Point, Harbor Point and Harbor East through the Perkins Homes and Old Town Mall with Johns Hopkins Hospital’s development efforts.