Modest growth is expected this year

Emphasis is being placed on attracting firms to area

The region

January 12, 2003|By William Patalon III | William Patalon III,SUN STAFF

In the face of the worst national downturn in a decade, the Baltimore region fared reasonably well in 2002, and local economic development leaders are predicting a slightly better year in 2003.

"Obviously, we will be linked with the fortunes of the state and national economies," said Robert L. Hannon, before he resigned as executive director of economic development for Baltimore County. "But looking at this long-term, I think we have a lot of opportunities" to create growth in the region.

But growth could be slow, said Peter Morici, a professor of international business at the University of Maryland.

"It's going to look a lot more like the economy of the early '90s than the late '90s," Morici said. "We're not going to see 4 or 4 1/2 [percent annual growth] for awhile."

If there's a common theme for the six jurisdictions that make up the Baltimore metropolitan region, it's that business recruiting efforts are being stepped up this year.

The corporate consolidations of recent years, combined with the failure of new industries to develop as anticipated, have put a premium on corporate recruiting, experts on the region said.

While the slowdown has, in several areas, led to office vacancy rates that are at their recent highs, regional economic development leaders are attempting to use the available space as a lure to land new companies -- with some notable successes.

Indeed, across the region, development of new offices, distribution facilities or speculative office, warehouse and factory space will be slow but steady, at least through the first half of this year.

Some of that development is being spurred by the hope that the Bush administration's push for a stronger U.S. defense, as well as its Homeland Security initiatives, will bring new tenants to many of these new facilities.

Here is how experts see the metropolitan area's prospects this year:

Anne Arundel County

William A. "Bill" Badger Jr., president and chief executive of the Anne Arundel Economic Development Corp., said the county has seen some of the effect on the downturn -- such as the partial pullback of the so-called "photonics cluster." Ciena Corp. has had a difficult time, and iPhotonics was acquired by Solectron Corp.

But Badger said he still thinks that sector has a bright future, after capital spending by corporations and the telecommunications industry resumes as expected in the next year or two.

A key project on which work will continue this year is the David Taylor Research Center, the former U.S. Navy installation, which scientists used for studying submarine and other warfare technology. The center was transferred from the Navy to a private development, which intends to construct an opulent office park that will be marketed to high-tech firms.

While Arundel's unemployment rate remains low, the county hopes to add more jobs from the continued focus on domestic security, via the newly created Homeland Security Department, Badger and other officials have said.

The county already has a huge baseline of government agencies with offices in it. That, coupled with Anne Arundel's proximity to Washington, makes it an ideal location for when the Homeland Security agency expands, as it is expected to, Badger said.

Baltimore-Washington International Airport has seen travel volumes drop about 8 percent because of the effects of terrorism, Badger said. But the airport had been growing at a 10 percent to 15 percent clip, "and that clearly was not sustainable," he said.

"The good thing is that this pause is allowing all the infrastructure and construction to catch up," he said. The state-owned-and-operated airport is in the middle of a major upgrade and renovation project.

The Arundel Mills mall in Hanover continues to perform up to promised levels, and in June will see the opening of one its last anchors, the Medieval Times Dinner & Tournament, a 1,000-seat medieval-themed restaurant.


Despite the downturn, development of top-tier office space continues, said M.J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development arm.

In fact, more Class A and Class B office space will come on line during the 2002-2003 period than during the prior 10 years combined, according to information provided by the BDC.

That expansion of available office space is crucial, experts say, since vacant space is the bait that helps economic development agencies land high-quality companies that are actually new to the area. And with those companies come new jobs.

One example is Bond Street Wharf, the new office development in the Fells Point area. Morgan Stanley recently announced that it was bringing an operation -- and at least 150 jobs -- to the city, using Bond Street Wharf as the unit's home.

"Do you think we would have landed Morgan Stanley without Bond Street Wharf?" asked Brodie. "I don't think so."

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