Downtown job report boasts of 7% growth

Change in fortunes cheered by business and economists

February 16, 2006|By JAMIE SMITH HOPKINS | JAMIE SMITH HOPKINS,SUN REPORTER

Downtown Baltimore employment took a sharp turn for the better last year, reviving after years of losses or modest gains.

Downtown Partnership of Baltimore Inc.'s annual "State of Downtown" report, released today, counted 97,500 jobs at the end of last year, up 6,200 jobs - or nearly 7 percent - from summer 2004. Nearly all sectors expanded, although professional services and health care led the way.

Mount Vernon saw the most growth, a 16 percent increase to about 2,200 jobs. But the rest of downtown did well too. The Inner Harbor, west side and central business district each added more than 1,000 jobs. Much of that came from small and midsize companies, not the behemoths.

About 230 businesses moved out of downtown - most to other parts of the city - but nearly 290 moved in, the report found.

"Downtown made impressive gains," said Kirby Fowler, president of the nonprofit group, which runs programs and acts as an advocate for the area. "I think it's because of the continued diversification."

Employment had been the lingering black eye as the heart of the city saw other signs of improvement, from redevelopment to population gains. Employment downtown, which was 96,000 jobs in 2000, dropped as low as 90,000 in 2003 before rising slightly in 2004. Businesses and economists cheered the change in fortunes for an area that represents a quarter of the city's job base.

"Downtown's stronger [than] at any point probably since the [development] of the Inner Harbor, when Baltimore was hailed as the comeback city," said Richard P. Clinch, director of economic research for the University of Baltimore's Jacob France Institute, which was not involved in the report. "And in reality, the fundamentals are probably stronger now."

He added: "The Inner Harbor was built with government money. ... What you're having now is private-sector-oriented development, and that's good."

Martin L. Millspaugh, chief executive of the now-defunct Charles Center-Inner Harbor Management Inc., a key player in the earlier redevelopment of downtown, called the report "wonderful."

"There are a lot of things that have happened to reinforce people's positive ideas about downtown Baltimore," Millspaugh said, noting that the construction of the Inner Harbor played a major role in revitalizing downtown. "It's really good news. It's something we've been hoping and seeing build up over the years."

Robert C. Embry Jr., president of the Abell Foundation, said it does appear that downtown trends are strong after years of struggles and false starts. "The two major downtown employers - Hopkins, in greater downtown, and the University of Maryland - have been tremendous growth engines," said Embry, who was city's housing commissioner from 1968 to 1977.

But experts can only guess at why other growth has followed, Embry said. Perhaps it's because crime has dropped, or because suburban housing restrictions have encouraged people to consider city living, he suggested. Or it might be because downtown looks cleaner and nicer, or it could be a complex mix of reasons, he said.

In any case, the good news isn't limited to jobs. Developers added nearly 1,000 new residential units during the 16-month period, mostly apartments. Some were carved out of existing real estate, particularly old offices, but three-quarters were new construction.

Meanwhile, the office vacancy rate dropped to 17.1 percent from 18.2 percent the year before, Downtown Partnership said. That's still significantly higher than the national average for downtowns, which was 12.7 percent during the final three months of last year, according to real estate services company CB Richard Ellis.

More than 60 new retail locations and other first-floor service businesses opened downtown in the 16-month period, including Office Depot, Best Buy and Starbucks.

"It really represents the first time in decades that large national retailers have shown up in downtown," Fowler said.

Economists think all three trends - more residents, more retail, more jobs - go hand in hand. Retailers want to be where the residents are, other businesses like to locate in healthy communities and people are more likely to move to areas convenient to jobs and shops. Clinch says the area is in a "virtuous cycle," the reverse of what downtown experienced when the suburbs drew jobs and stores away.

Fowler thinks the report shows that employment, far from suffering from office-to-housing conversions, has flourished as a result.

"As you get more people here with more activities, I think you'll continue to see the jobs increase," he said. "It's just a very rational business decision."

Downtown Partnership will present its findings this morning during a networking event at the Hyatt Regency Baltimore. It says the challenges that come with this growth include needs for better public transportation, schools and amenities.

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