Renaissance often doesn't touch stores

Commercial space lags home values in resurgent areas

Storefronts left empty

Spaces too small for major retailers, too costly for others

July 23, 2000|By Meredith Cohn | Meredith Cohn,SUN STAFF

Tom and Betty Patton were not victims of a bad economy or competition. They just wanted to retire. But after a fruitless three-year effort to sell their thriving Federal Hill hardware business, the Pattons closed their doors permanently, hoping just to find a buyer for the building.

"I want to go fishing," said Tom Patton, owner of Singer's Hardware on Charles Street.

The effort illustrates the strange commercial reality in Baltimore's hottest waterfront neighborhoods. As existing businesses disappear, few people beyond the owners of a stable of restaurants, bars and discount shops want the storefronts along the main streets of Federal Hill, Canton or Fells Point, despite skyrocketing home prices.

To be sure, there is extensive commercial development in the Inner Harbor and along the outskirts of downtown. One commercial real estate company put development of office, retail and mixed-use projects under way or planned at 2 million square feet, enough space to fill two average-size suburban malls.

But back on the main streets, industry experts said there are myriad problems in attracting more upscale tenants to match the residential money pouring into the once blue-collar neighborhoods.

They include lack of parking for office workers and retail customers. There's a perception of crime and filth. The spaces are too small for national retailers and too expensive for smaller, local businesses.

Space is readily available in the suburbs and coming on line in large, redeveloped buildings nearby, where business can comfortably cluster together.

"You need more than your two hands to count the vacant and underutilized storefronts" said William F. Cassidy, manager of Long and Foster Real Estate Inc.'s Fells Point and Federal Hill offices. "The old-fashioned storefront is not as viable as it used to be because new shopping and office space is just a few minutes away by car."

Restaurants and bars, which have endured through the years, have made the waterfront areas known destinations. So more follow, he said. New, upscale retailers, with the same herd mentality, don't want to be pioneers, alone on the main streets. They've found suburban malls and a ready supply of shoppers and parking spaces more appealing.

Retailers used to fill all the storefronts, said Sonny Morstein, president of the Federal Hill-South Baltimore Merchants Association. He said a third of the retailers left the city between 1989-1998 and no neighborhood was spared.

"We need more retail and a better mix," he said. "With density starting to come back to the cities, businesses will return. ... But we've got to be cleaner and more attractive."

Despite the factors driving away business, residential real estate has made a stark comeback in some waterfront neighborhoods in the past two years, real estate agents said.

The average sale price of a home in Canton rose to $124,133 this year from $85,022 in 1998. And in Federal Hill, the price has risen to $153,927 from $121,925 two years ago. Agents said on premier blocks, those prices can double, and some homes get multiple offers and interest before they are even listed.

"There's an extreme shortage of properties" said Gillian Gabrielle, an agent with O'Connor, Piper & Flynn Realtors in Federal Hill.

But, she said, "I really don't expect more businesses to move in because people don't seem to be looking for them. Maybe all the money moving in will pressure all the `everything-for-a-buck' stores to make way for `everything-for-five-bucks' stores."

The city assessor's records show that commercial property values lag residential values and are growing more slowly. In Canton, residential property values rose during the last assessment in December to about $292 million from about $264 million, while commercial property values remained flat at $88 million. In Federal Hill, residential property values rose to $415 million from almost $368 million, while commercial property values remained nearly flat at $176 million.

Developer Bill Struever, president of Struever Bros. Eccles & Rouse, said there hasn't been a push until recently to fill the storefronts in waterfront neighborhoods or anywhere in the city. But some groups, including the Downtown Partnership, and city officials are stepping up efforts to market the city and recruit retailers and small businesses.

Struever said new and redeveloped properties along the edges of the neighborhoods will eventually draw more businesses to the main streets. But that will take time, even years, he said.

"Neighborhood revitalization does remain an issue," he said. "It needs a lot of work, but now there's more attention to it than there's been in a long time."

Terri Harrington, a senior associate at Miller Corporate Real Estate, said selling the spaces is a challenge. There are only a few blocks in each neighborhood where businesses would want to locate. Those are the high-visibility strips near other businesses. Start-ups often can't afford those spots, which can top $1,000 a month.

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