Baltimore jobs, construction rising after years of decline

Thursday, May 25, 2006

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Charlie Shoemaker⁄The Gazette
‘‘We’re addressing the problems urban cities face and making progress,” said Donald C. Fry, president since 2002 of the Greater Baltimore Committee, whose office overlooks the Inner Harbor. The city has seen a major revitalization that has brought 11,000 new jobs in two years.

Throughout much of the 1980s and all of the 1990s, the building that for decades had housed one of Baltimore’s most booming businesses sat empty, a symbol of the economic stagnation that plagued Maryland’s largest city.

The site had been the home of Montgomery Ward’s Eastern headquarters and catalog warehouse, which opened in 1925 and closed six decades later after the mass-merchandising catalog business became obsolete.

It was not the only Baltimore building gathering dust. Despite bright spots such as Oriole Park at Camden Yards, which opened in 1992, and the retail and tourist attraction Harborplace that formed in the 1980s, the city lost some 60,000 jobs and 85,000 residents in the 1990s.

Today, times have changed. Crime has dropped in recent years, while public housing projects and dilapidated structures have been renovated. Cranes and other signs of construction are spreading throughout Baltimore as officials say projects worth a total of almost $11 billion have been completed since 2000, are under way or are in the planning stages.

The city has added about 11,000 jobs in the past two years, and the March unemployment rate of 6 percent was the lowest in almost five years, according to state records. The residential population is also growing again, as hundreds of new townhouses, condominiums and apartments sprout up in downtown Baltimore, driving more commercial development.

‘‘We’re addressing the problems urban cities face and making progress,” said Donald C. Fry, president since 2002 of the Greater Baltimore Committee, an organization of prominent business and civic leaders.

The results can be seen in projects such as the Montgomery Park Business Center, a $100 million, 1.3 million-square-foot office development that opened in 2002 in the city’s southwest section. Renovated by Baltimore developers Samuel K. Himmelrich Jr. and David F. Tufaro, the center has attracted major operations of companies such as M&T Bank Corp. and The Chubb Corp.

M&T officials, who moved about 500 processing and information technology employees from a smaller space to Montgomery Park last year, particularly liked being able to have all the workers on one floor of its 168,000-square-foot office space.

‘‘Before, we were spread out on six floors in another office in Baltimore,” said Atwood ‘‘Woody” Collins III, president of M&T’s mid-Atlantic division. ‘‘Having everyone on the same floor lends itself better to workflow ... It’s a very open environment with high ceilings.”

Insurance giant Chubb Corp. of Warren, N.J., reviewed sites in 16 other cities across the nation before choosing Montgomery Park for a 250-employee policy processing center. Chubb is expected to occupy the space by September.

The reasonable operating costs, high-quality workforce, easy highway access and free parking for employees were key factors in the company’s decision, said Mark Schussel, a Chubb spokesman. Company officials also liked the building — which won an award in 2003 from the U.S. Environmental Protection Agency — for its ‘‘green” features that include a storm water recycling system and energy-saving lighting and elevators.

Another example of Baltimore’s resurgence was what happened last year when the 3.2 million-square-foot General Motors Corp. assembly plant southeast of downtown closed. In an earlier decade, the facility might have lain dormant for years.

But not now. Interest was so strong that potential buyers had to be whittled down to 20 before the final selection process. Duke Realty Corp., an Indianapolis commercial real estate firm, emerged with the 184-acre site and is demolishing the plant. Duke plans to invest about $150 million to convert the former GM facility into a 2.8 million-square-foot complex of some 16 buildings for port-related distribution businesses, as well as office and research and development uses, that officials hope will result in at least 3,000 jobs.

‘‘Baltimore is an exciting market,” said Andrew Kelton, a senior vice president for Duke who worked on the Baltimore bid. ‘‘There are so many growth opportunities.”

Baltimore efforts praised

Baltimore’s resurgence has not gone unnoticed in major media stories and industry publications, including The Wall Street Journal and Forbes magazine. The bulk of the $10.8 billion investment in projects completed since 2000, currently ongoing or being planned, is in housing, institutional and mixed-use development, said Andrew Frank, executive vice president of the Baltimore Development Corp., the city’s economic development agency.

In public addresses this year, Baltimore Mayor Martin O’Malley (D), who is running for governor, has touted programs such as one in which the city buys and renovates vacant downtown properties and distressed homes.

‘‘There are all sorts of people banging on our doors wanting to locate here,” O’Malley said during a news conference last month involving Chubb officials.

Kelton agreed, saying Duke already has a ‘‘long list” of companies interested in leasing space in the proposed industrial park.

Among the current projects in Baltimore are ones fueled by two major medical research institutions, which officials said have long been economic drivers for the city. The University of Maryland-Baltimore BioPark in West Baltimore and the Life Science + Technology Park at Johns Hopkins in East Baltimore each plan to have more than 1 million square feet of office and lab space.

The Hopkins-affiliated project, expected to open its first building by 2008, is estimated to cost more than $800 million, largely due to proposed residential units. The UMB park opened its first 120,000-square-foot building last year.

The biotech parks should not worry Montgomery County officials, who have built an extensive biotech corridor along Interstate 270, Fry said.

‘‘We see it as complementary to the I-270 corridor,” he said. ‘‘We will continue to collaborate and work together. Each center will have its own niche and own focus. For example, one area might focus on medical devices rather than the study of genes.”

Besides the projects adding tax revenue to the state’s coffers, the jobs create more opportunities for people living throughout the state who commute to the Baltimore area, Collins said. ‘‘I don’t see the region competing; I see the interdependency,” he said.

For example, the Baltimore Symphony Orchestra often performs at the Music Center at Strathmore in Bethesda — the symphony is a founding partner of the performing arts center — and, Collins said, he hasn’t noticed Baltimore residents resenting that.

‘‘It’s a boost to the symphony,” he said. ‘‘The broader you share, the more revenue you will generate.”

But this emerging concept of a cohesive, complementary, interdependent region stretching from Baltimore to the Washington, D.C., suburbs has an Achilles heel: a transportation infrastructure that can’t handle the growing load. Collins and others support such projects as extending the Metro to Baltimore-Washington International Thurgood Marshall Airport and even downtown Baltimore.

Role of incentives

Most of the developers of projects and companies that relocate in Baltimore have received incentives, including publicly funded loans, grants or tax breaks.

Montgomery Park is in a federal empowerment zone, which allows companies tax breaks based on the number of employees. Much of the land along Baltimore’s waterfront is in a foreign trade zone, which grants benefits to companies such as lower duty rates.

In Chubb’s case, the city of Baltimore kicked in a $500,000 loan, while the state gave a $100,000 workforce training grant, said Aris Melissaratos, secretary of the Maryland Department of Business and Economic Development.

However, such incentives play ‘‘relatively minor” roles in attracting companies, Melissaratos said. Companies such as Chubb move to Baltimore more because of the business climate, affordable office space and high-quality workforce, he said.

Staff Writer Steve Monroe contributed to this report, which originally appeared in The Business Gazette.