Is a Digital Harbor in Baltimore's future?

Dot.com dreams: City hopes to become rival to Silicon Alley, Boston and Northern Virginia.

March 26, 2000

IT'S ALL supposed to be very hush-hush. But local construction powerhouse Struever Bros. Eccles & Rouse is teaming up with the Paterakis bakery and real estate empire. Their goal: To turn a vacant 27-acre peninsula near Fells Point into a snazzy waterfront showpiece and symbol of the city's dot.com dreams.

Baltimore may never become another Silicon Valley, the concentration of computer industries between San Francisco and San Jose. But visionaries believe this city could duplicate the success of Boston's Route 128, lower Manhattan's Silicon Alley and Northern Virginia near Dulles Airport, which have become important centers of operational invention and brain power. "It's all about image and critical mass," says Bill Struever, whose firm is among the main champions of the concept.

In coming months, there will be plenty of talk about the Digital Harbor, the brand name Baltimore will use. In the meantime, the question is whether the city is nimble enough to take advantage of the momentum.

Sylvan Learning Systems Inc. is a critical test. Flush with $775 million in cash from the sale of a testing division, the Baltimore-headquartered education company is launching a new Internet incubator fund. Will its start-ups come here or choose a more established hotbed of ingenuity?

Logical solution

Rapidly growing Sylvan has run out of space at its Inner Harbor East headquarters. It wants to stay in Baltimore. Expansion to the neighboring peninsula long owned by AlliedSignal would be a logical solution. The location is central, zoned for offices, retail and top-end residences.

Blessed with spectacular views, the AlliedSignal property is among Baltimore's most prestigious development sites. There is a problem, however: For 140 years, chromium and other toxins were processed on the land that juts into the harbor between Fells Point and Little Italy, near two new hotels and office/retail complexes being built by Paterakis interests.

AlliedSignal spent $100 million to decontaminate and cap the site. But major potential liability issues remain. Smart lawyers handle these kinds of complicated issues every day, but indemnity questions have to be resolved by Honeywell International Inc., which acquired AlliedSignal in December, if the peninsula is to be developed at all.

The city has a peripheral-- but deal-breaker -- role in any redevelopment idea because it controls infrastructure. Last year, the administration of Mayor Kurt L. Schmoke took an uncompromising stand and said it would not construct any streets or public areas on AlliedSignal land because such taxpayer expenditures could drag the city into liability disputes. Mayor Martin O'Malley should now revisit the issue.

High-tech mecca

The Struever-Paterakis interest in the AlliedSignal parcel comes at a time when the Digital Harbor is already taking shape in scattered locations around the city. And there is more to come: Developers headed by Sam Himmelrich Jr. and David F. Tufaro plan to turn the long-vacant Montgomery Ward warehouse at I-95 and Washington Boulevard into a $75 million business and technology park. Meanwhile, Struever Bros. is scouting the harbor and Jones Falls Valley for other industrial properties.

Over the next several months, Tide Point, the old Procter & Gamble soap plant in Locust Point, is going to become a local beehive for dot.com start-ups, complete with such drawing cards as restaurants and a 24-hour gym.

In last week's wind and rain, the five-building plant was anything but inviting. There was mud everywhere. Rain was pouring onto vacant factory floors from huge window openings, while hammering and welding proceeded.

Meanwhile, roughly 200 twenty-somethings were busily working on computers in makeshift spaces. They will move into brand-new offices as the Struever Bros.' $53 million renovation of the plant progresses.

They are the vanguard of Baltimore's Digital Harbor dreams.

They work for such companies as Advertising.com and e.magination -- virtual unknowns to the general public but companies that hope to make it big in the new dot.com world.

Advertising.com was founded 18 months ago as TeknoSurf.com. It delivers more than a billion ads each month to more than 5,000 Web sites. Its explosive growth, fueled by venture capital, has produced a gargantuan hunger for new space. When it moved to Tide Point five months ago, it had 60 employees jammed into 8,000 square feet; by the end of the year, it expects to have 750 employees who will need 114,000 square feet of space.

"Advertising.com is everything you've heard about Internet companies, only better," it tells prospective hires. "There is the high energy level, the team oriented atmosphere, and the unlimited growth potential. We maintain a casual work environment coupled with an urgency to perform for our clients that is anything but casual. Think of us as `Silicon Valley East', complete with stock options but with a lower cost of living."

Attractive amenities

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