Project stall

Housing woes, economy put $1 billion in city development on hold amid rethinking of plans, hopes for better market

April 27, 2008|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

More than $1 billion in development projects - offices, residences, stores and hotels that would change Baltimore's skyline and help to revitalize the city - have stalled in the face of the nationwide housing slump and faltering economy.

The projects, including towers that would be Baltimore's tallest, would swell the tax base and potentially attract new - and well-heeled - city dwellers. But the housing slump has dulled the market for new condominiums and houses, and the subsequent credit crunch has made financing difficult to obtain.

As a result, at least 11 major projects have been recast or are in limbo, waiting out the market. At the Inner Harbor, two sites planned for condominium and hotel skyscrapers are still parking lots. In Charles Village, the neighborhood's first proposed luxury condo building is on hold and likely to switch to apartments. And in Greektown, plans for 1,000 new residences on a gritty lot have been drastically scaled back.

"Some of the big developments are clearly going to be put on hold" from a year or two to a couple of decades, depending on the economy, said Richard Clinch, director of economic development at the University of Baltimore's Jacob France Institute. "I think we're stuck where we are in terms of renewing neighborhoods."

Developer Richard W. Naing had ambitious plans for property he bought in the 300 block of Guilford Ave. and along Holliday, Saratoga and Gay streets, just north of City Hall. He envisioned as many as three 50-story towers filled with apartments, condos and shops, and his RWN Development expected to start razing buildings this year, including the former Hammerjacks nightclub.

But now his plans are on hold.

"We have definitely postponed our development and are feeling out the market until the market comes back," said John Ginnever, executive vice president at RWN in Baltimore. "It would be too hard to get financing and break ground now."

Meanwhile, the company will operate an existing garage on Guilford and has leased the nightclub to a club operator.

The market downturn has already slowed the momentum that would bring new life to decaying or underused areas such as the Guilford Avenue corridor. But experts aren't sure how much it will affect downtown's transformation.

Clinch said he believes that Baltimore will likely suffer less than some other cities because of the underlying strength of the state economy, bolstered by anticipated job growth in government contracting and the biotechnology and health sectors. Development should benefit, too, from an influx of new residents expected from federal base realignment. And in the longer term, urban redevelopment is inevitable as the suburbs, with their restrictive building policies, fill up - as long as city officials make progress in reducing crime and improving schools, he said.

"It doesn't mean development stops tomorrow like it does in other cities," Clinch said. "Baltimore still deserves its reputation as a comeback city."

M.J. "Jay" Brodie, president of the Baltimore Development Corp., said the city is better equipped to weather the downturn than it was during the early 1990s recession. Most projects proposed now are based on sound economic deals rather than on tax breaks, he said. He added that no BDC-involved projects - such as the superblock redevelopment on downtown's west side - have been halted because of a lack of financing.

Still, even during the boom he doubted the viability of some big condominium projects.

"I have never been a big believer in condos in Baltimore," Brodie said. "There's little evidence of successful condos."

It's inevitable that more commercial projects will face delays because of financing, said Martin Luskin, a senior partner at Blank Rome LLP in New York, who heads the law firm's real estate and financial services department.

"Some projects will be stalled either because there is a credit crunch right now or ... the sellout at the end is not as predictable as it might have been in people's minds six months ago," Luskin said. "It makes people nervous about putting up debt dollars or equity dollars."

Some big, long-term projects are continuing on their scheduled timetable, including the mixed-use redevelopment of the Westport waterfront, with the first buildings to get under way next year, and Gateway South, a $200 million office park planned south of M&T Bank Stadium on the Middle Branch waterfront.

Developer Hekemian & Co., which bought the Rotunda retail and office complex on West 40th Street, said it is applying for permits to start building shops, apartments, condominiums, townhouses and a 140-room hotel.

And development driven by universities and hospitals remains strong, including the University of Maryland, Baltimore's biotechnology park on the west side and a Johns Hopkins Hospital-affiliated project on the east side to transform 88 acres into a research park, new businesses and housing.

But other plans have ground to a near halt.

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