Silver linings shine through economic clouds

PHILIP MOELLER

February 27, 1991|By PHILIP MOELLER

Is Baltimore's glass half empty or half full?

Support for the half-empty view has been all too evident in recent months, courtesy of a national recession, banking and retail problems, city fiscal ills, continued population losses, public-education woes, defense cutbacks, crime and little sign of economic strength anywhere in the area.

However, at the risk of losing my charter membership in the bad news bears club, there is an equal measure of support for a darkest-before-the-dawn view of Baltimore. If you want some good news to look forward to, here's an ode to silver linings, boomlets and better times.

Is the worst over for the battered real estate business? Many people think so. National economic policies have swung heavily toward relaxed lending policies and lower interest rates in recent weeks.

These policies, while hardly an economic elixir, can't help but take some of the heat off local lending institutions.

Local bankers have also come off the worst fourth quarter any of them may ever see. The banks may not be out of the woods yet, but at least some rays of light are penetrating the gloomy thickets that most bankers have called home for the past year.

Viewed against this backdrop, the slowdown in area building projects doesn't look so bad. In fact, Baltimore's development community has not had the bankruptcies and failures that have plagued other markets.

Is that an achievement? Well, in this environment, maybe the answer is yes.

Added to the city's commercial woes has been a painful shrinkage of its retailing base. General merchandise retailers, from Hutzler's on the higher end of the income spectrum down to L. Epstein & Sons, have played out a decline that began in earnest 20 years ago.

But this downturn has hurt lots of other retailers as well, including some of the specialty retailers that had been the only bright spot in the industry. W. Bell, Channel Home Centers, Stansbury Stereo and Video, Bernard Hill, g. Briggs, Annapolis Clothing and many smaller shops are gone, shrunk or under new ownership.

As with real estate, you have to factor in the double whammy of business-cycle hits, meaning the normal contraction that occurs during a recession, and longer-term secular declines.

This second set of factors represents permanent consolidations in the retailing industry, caused by a wave of heavily leveraged takeovers and subsequent retail mergers and, possibly, by shifts in consumer buying patterns away from general merchandise retailers in favor of specialty shops and catalog purchases.

As with real estate, there are signs that the worst is over for retailing.

New stores have announced plans to move into the market, including the K mart sporting-goods affiliate the Sports Authority and the successful Home Depot chain of home-repair and furnishings stores.

The Hahn Co.'s Towson Town Center, which will bring Nordstrom's to the Baltimore market, should provide some welcome excitement to area retailing later this year and into 1992 as well.

Despite well-placed concerns about the state's budget woes, the money is already flowing out for Maryland's light-rail system, which should begin this year to funnel people and dollars into Baltimore.

Gov. William Donald Schaefer's other huge gift to the citizens of Baltimore, the Orioles stadium near the Inner Harbor, shows signs of being an even greater engine of development growth, at least in the near future.

The stadium area has drawn strong interest as a site for new commercial office space, including a medical mart that would capitalize on the region's perceived strengths in medical services and technology. There also will be the related retail buildup that should occur nearby. And, should Baltimore receive a National Football League expansion franchise, a second stadium would be built that would draw more development.

Collectively, these projects should give the western side of downtown a badly needed boost.

Moving over to the eastern side of the Inner Harbor, a similar rejuvenation could be brought about by the combination of the expansion of the National Aquarium, the ambitious Inner Harbor East planned residential development and the proposed Christopher Columbus Center of Marine Research and Exploration.

Harborview, the substantial residential complex mapped out for the southern side of the Inner Harbor, provides another source of support for additional economic activity in the downtown area. Also, the University of Maryland at Baltimore is undertaking a major upgrading and expansion of its medical-school facilities that will further strengthen and stabilize the western area of downtown.

The downtown commercial-office market admittedly is in bad need of a visible "win." Vacancy rates of nearly 13 percent for Class A space downtown, while comparable to other cities, are uncomfortably high for Baltimore. And reported sightings of major new tenants have proved unfounded.

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