Downtown shows signs of making comeback

More people coming for work and play, business alliance says

November 17, 1999|By Tom Pelton | Tom Pelton,SUN STAFF

Downtown is on the rebound.

Baltimore's central business district, battered by competition from suburbia and slow to reap the benefits of a national economic surge, has seen its office vacancy rate fall by almost half over the past 2 1/2 years, according to a report released yesterday.

The number of tickets sold to downtown events has also jumped by 11 percent in the past year, said the Downtown Partnership's annual report on the health of the city's downtown.

And a 3 percent growth rate in jobs downtown in fiscal 1999 compared with fiscal 1998 was slightly ahead of the national (2.1 percent) and state (2.3 percent) growth rates, the business alliance reported.

"Baltimore was very slow in coming out of the recession of the early 1990s," said Laurie Schwartz, president of the Downtown Partnership. "But the fact that our employment growth rate now exceeds that of the nation as a whole shows we're no longer lagging behind."

The falling vacancy rate in downtown offices -- at nearly 11 percent in Baltimore in June, compared with 20 percent in December 1996 -- is part of a national trend, said Matthew Bond, director of research for the Building Owners and Managers Association in Washington.

Over the past five years, urban business districts have seen vacant office buildings filling up as a surge in the national economy has led to an increase in the demand for office space, Bond said.

"We've seen a rise in interest in downtown areas in general," he said. "Some of this has been driven by a demand for offices near downtown sports complexes and entertainment. But we've also seen more people wanting to live downtown, because people want to live in areas that are alive 24 hours a day."

The Baltimore office vacancy rate is similar to those of downtown Atlanta, Chicago, Phoenix and Wilmington, Del., which all have rates of between 10 percent and 11 percent, the Downtown Partnership reported.

Baltimore remains significantly behind Boston and San Francisco, which each have a 4 percent vacancy rate; and Washington and Denver, which have vacancy rates between 6 percent and 7 percent, the report said.

One real-estate management company that has been successful in attracting tenants into downtown Baltimore is Boxer Property.

The Houston-based company bought eight downtown office buildings in August 1998, including 301 N. Charles St., 110 St. Paul St. and 204 E. Lombard.

Since then, the company has gotten almost 100 companies to sign leases, boosting the total occupancy rate in the eight buildings from 40 percent to 86 percent, said Michael Bradley, regional director of leasing for Boxer Properties.

The company has succeeded in part by offering discount rates for the first year of leases and by making cosmetic improvements to older buildings that had looked rundown, Bradley said.

"If you just add fresh paint, new carpets, new windows, it's amazing how much people are attracted to the architectural details of these older buildings," he said. "People really don't want to work in cookie-cutter buildings."

Syscom, a Baltimore-based information-technology firm, recently leased more downtown office space at 400 E. Pratt St. and 300 E. Lombard St.

Ted Bayer, president of the 300-employee firm, said he moved to the city from suburban Catonsville three years ago because he found downtown office rental rates about 8 percent cheaper than suburban rates.

"At first, we were concerned about traffic and security issues, but downtown turned out to be a very attractive location," Bayer said. "Customers and employees love the city and the Inner Harbor."

Attendance at downtown sporting and cultural events rose 11 percent, to 8.7 million, in the year ended June 30, according to the Downtown Partnership report.

Although total attendance at Orioles games dropped by about 90,000 compared with the previous fiscal year, the team remained the biggest draw in the American League.

The overall jump in attendance came in part from the opening of the PSINet Stadium, which attracted 600,000 fans to Ravens football games and other events, according to the report. Also important was the success of the Port Discovery children's museum, which drew more than 130,000 visitors between its opening in December 1998 and June 30.

Lisa Raimundo, director of business development for the Downtown Partnership, said that the 3 percent job growth downtown was led by more than 7 percent increases in the information-technology and entertainment industries.

To benefit from the surge in the downtown economy, the city needs to build more parking garages and apartment buildings downtown, the report said.

"It is very encouraging to see economic growth spreading from the Inner Harbor throughout the downtown area," Raimundo said.

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