Two city condo projects eagerly watched

Ritz, Water Street could spark building wave


Two of the largest condominium projects planned for downtown Baltimore are moving ahead after lengthy delays and challenges, and will be closely watched as possible harbingers of an unprecedented wave of city condo development, city officials and housing experts say.

Construction of the $225 million Ritz-Carlton Residences has just begun on the waterfront at the foot of Federal Hill, marking the first time Ritz-Carlton will offer its hotel amenities in a condo-only project. The developer has scheduled a ceremonial groundbreaking for today and says the project is on pace to sell out before the first unit is completed in early 2007.

Yesterday, the city's Board of Estimates approved a $5.25 million purchase of land beneath a city-owned parking garage at Water and Gay streets in the central business district, clearing the way for the developer to start construction next month on a 22-story, $62 million condo tower atop the garage. The developer, a joint venture of Legacy Harrison Development of Baltimore and the Bush Cos. of Virginia, says buyers have reserved 170 of the proposed 312 apartments, which sell for $200,000 to $600,000.

Both projects have been dogged by delays, changes in ownership, legal disputes and market uncertainties. But even though mortgage rates have begun to rise, both projects are selling well as demand for downtown condos reaches an all-time high in a city that hasn't always embraced the condo lifestyle.

"The condo market has shown this is something that people are willing to buy," said Bob Aydukovic, a vice president of economic development for the Downtown Partnership. "With 414 [Water Street] and the Ritz-Carlton coming out of the ground, those two are going to set the next stage. If they do well, then you start the mad scramble. If it follows the same pattern as the [downtown] apartment market, this time next year you will see a lot more projects."

Much of the recent condo development has been selling well, Aydukovic said, noting the nearly completed 30-unit Brecco on Saratoga Street, the 17-unit Rombro Lofts on the west side and the Revels In Mount Vernon, with 13 units. The Ritz and Water Street projects could add an estimated 900 residents downtown and, if successful, could spur additional large projects, including some conversions of older downtown office buildings.

The Ritz has shown "there's enough of a demand for high-end condos on the water to support the cost to construct, and it's also confirmation that privately financed condo projects can be built without public assistance," said Andrew B. Frank, executive vice president of Baltimore Development Corp., the city's development arm. Units will be priced from $1 million to $5 million.

The more moderately priced Water Street project "speaks to the depth of the market," he said.

Tracy Gossen, executive director of Live Baltimore, a group that promotes city living, said more-affordable projects such as 414 Water Street should sell quickly.

She expects strong demand for new condos with amenities in the livelier parts of downtown, much of it from empty-nesters.

"There's no stairs, no maintenance, and they can pay for those amenities and they want to be where the action is," Gossen said.

Until recently, few new condos have been offered and resales aren't readily available, she said.

The Ritz and Water Street condo projects have long, tangled histories involving changes in ownership and uses other than condos.

The current developer of Water Street, Legacy Harrison, led by local developers Brian D. Morris and Dean Harrison, acquired the air rights above the city's Custom House Parking Garage in January 2002 for $1.7 million and initially planned to build a 351-unit apartment building. They shifted to condos to take advantage of strong demand for downtown residences at a time when local real estate prices have been rising sharply.

After they joined with the Bush Cos., plans to start construction last November were delayed after a company that owns the land beneath the garage sued in Baltimore Circuit Court in September 2004. The landowner, 414 Land LLC, objected to a condo development instead of an office building, which it said was planned as early as 1984 by the project's original developer.

The Board of Estimates, the city's spending panel, approved yesterday a deal to purchase the land from 414 Land for $5.25 million and retain ownership of the garage, enabling the condo association to lease parking for residents. As part of the agreement, 414 Land LLC has agreed to drop its lawsuit, clearing the way for the tower's construction.

"We've seen a really strong demand, and we're delighted with it," said Andrew A. Viola, vice president of Bush Construction Corp. He said about 65 percent of the buyers are moving up from their current homes and are primarily in their late 20s and early 30s. Some commute to Washington.

"We have a good handle on costs and can make a reasonable profit," Viola said. "If the market were to contract, we would still be OK."

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