About 3,300 Maryland state workers will relocate to leased office space in downtown Baltimore under a plan to relocate a dozen state agencies announced Monday by Gov. Larry Hogan.
Hogan framed the move as “a shot in the arm” for the economy of downtown Baltimore, where vacancies in office buildings have been on the rise during the coronavirus pandemic and the departures in recent years of several corporations from the city’s traditional commercial core.
The influx of state workers to downtown will help prop up local restaurants and keep the area vibrant, the Republican governor said.
Most of the workers already are located in Baltimore at the aging state office complex known as State Center less than a mile northwest of downtown. Hogan said the state recently budgeted about $50 million to fund the planned move to newly leased commercial office space.
Hogan administration officials said leasing space for state agencies could end up saving money because of how badly deteriorated current state-owned buildings in Baltimore have become. Upkeep on those facilities now costs state taxpayers more than renting “well-kept property downtown,” Lt. Gov. Boyd Rutherford said.
The state hasn’t begun selecting the particular buildings or negotiating leases. The Hogan administration kicked off the hunt for new office space Monday by soliciting bids for a new headquarters for the Maryland Department of Human Services, the state’s primary social welfare agency, which is seeking roughly 105,000 square feet downtown for 720 employees.
Bidding to house the Maryland Department of Health’s headquarters, along with about 1,200 agency employees currently at State Center, will open soon as well, Hogan said.
“These two agencies will bring the first nearly 2,000 workers of what will be 3,300 workers total to the downtown area, which will be a big boost for the revitalization and transformation of downtown Baltimore,” Hogan said.
Ten other state agencies based at State Center will follow. Ellington Churchill Jr., secretary of the Department of General Services, which handles state facilities and office space, said the state’s goal is to finish selecting office space for all 3,300 workers by October 2022.
Shelonda Stokes, president of Baltimore’s Downtown Partnership, said the vacancy rate for office buildings in downtown Baltimore is now “approaching 24%” after the coronavirus pandemic “accelerated” existing trends of business consolidation and office downsizing that already were robbing the area of tenants.
The influx of state workers will help “stabilize” the city’s core and help foster a vibrant, flourishing downtown and help boost other jobs in the area, said Stokes, who appeared alongside Hogan for the announcement in McKeldin Plaza near the Inner Harbor.
“The future influx of new State employees into downtown is exciting for the restaurants, who count on a strong lunch business,” said Kristin Speaker, executive director of the Charles Street Development Corp., in a statement. “More feet on the street will bring additional life and vibrancy, and will be a long-term boost for the downtown community.”
Donald C. Fry, who leads the Greater Baltimore Committee, welcomed the governor’s announcement as a major boost to “the many businesses downtown that rely on office workers to stay profitable.”
Fry also said the governor’s decision “underscores that the downtown area remains highly attractive as a location to base major office operations and may help attract other tenants.”
Terri Harrington, a longtime Baltimore real estate professional, said the size of the Department of Human Services’ headquarters falls right in the “sweet spot” of empty office space now available in the city’s Central Business District, the heart of downtown.
Hogan’s announcement comes as a welcome boost to the downtown market, which appears to be rebounding more slowly from the pandemic slump than suburban office parks, Harrington said.
“Any news about the opportunity to backfill vacancies — as opposed to always hearing news about businesses going out of downtown — boosts confidence for the future and will get some momentum going,” said Harrington, a senior vice president at MacKenzie Commercial Real Estate Services.
State Center’s future has been the subject of ongoing debate and litigation amid stalled redevelopment plans for years. Plans first hatched in 2004 called for a 28-acre redevelopment of State Center and surrounding properties near Eutaw Street and Martin Luther King Jr. Boulevard into a mixed-use complex of government offices, apartments, condos and a grocery store.
The project was held up for years by an ultimately unsuccessful lawsuit that attempted to invalidate the redevelopment deal brought by 15 business owners and backed by attorney Peter G. Angelos, who owns office buildings downtown as well as the Baltimore Orioles. A judge ultimately tossed that lawsuit.
But Hogan pushed the state to back out of the project in late 2016, citing slow progress and mounting costs. The decision prompted dueling lawsuits between the state and Ekistics, the Baltimore-based developer that won the contract for the proposed $1.5 billion project under former Gov. Martin O’Malley, a Democrat.
The lawsuits contend the decision to cancel the deal was politically motivated and that contracts prohibit the state from relocating government workers — key tenants in the proposed project — or handing over the site to another developer.
The plans announced Monday, once complete, will move all remaining state employees out of the government office complex at State Center, Churchill said.
That litigation remains ongoing.
Michael Edney, attorney for State Center developers, criticized Hogan’s announcement Monday as a “broken” commitment to the neighborhood around State Center and “blatant disregard” to the ongoing legal case over the site’s future.
Edney contended that relocating state employees “would leave a wasteland in midtown Baltimore that would impede the community’s growth for decades to come” and that the project could have provided new modern offices for state employees years ago without Hogan’s opposition.
“The governor never mentioned the words ‘State Center’ today, making the governor’s latest betrayal of and callous indifference to midtown Baltimore all the more apparent,” Edney said.
Senate President Bill Ferguson, a Baltimore Democrat, called the standoff over the future of State Center “stuck” and “intractable.” Appearing alongside Hogan at Monday’s news conference, Ferguson said the move downtown represents “an opportunity to build new momentum” around development downtown and spur private investment in the area.
Ferguson, who said he’d grown concerned over the future of downtown amid relocations and increasing shifts in the private sector toward smaller offices, likened the state’s planned moves to the government-led redevelopment of the Inner Harbor decades ago.
Breaking News Alerts
Millions in federal stimulus dollars recently delivered to Maryland will help cover the cost of the moves, Ferguson said.
The shift to downtown office buildings will keep the 3,300 state jobs in Baltimore, easing some long-standing concerns that those public-sector positions might leave the city. But the newly announced plans leave open questions about the future of the sprawling State Center site.
Baltimore Mayor Brandon Scott, in a brief statement Monday, thanked Hogan and Ferguson for committing to downtown “amid recent vacancy trends.”
“While this timely investment seeks to retain jobs and stimulate absorption in the downtown office market, my administration will work with stakeholders to ensure surrounding neighborhoods can also benefit,” Scott said. “State Center investment has the potential to bind communities across Baltimore, and it is important that the State of Maryland and the City work together to achieve this.”
Hogan said Monday that new efforts to redevelop the State Center site and demolish those older buildings likely will begin once those structures are vacant. The governor argued that all of Baltimore benefits from keeping those state jobs in the city and if state investments in the city’s commercial core can reverse the area’s decline.
Asked whether state investment should have been directed toward economically struggling Black neighborhoods in the city, Hogan responded: “I think the whole city is impacted by the fact that the downtown area is not doing very well and that we’re losing jobs and that all these businesses are closing.”
Baltimore Sun reporter Lorraine Mirabella contributed to this article.