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| Waterfront glitz (Photo Philipsen) |
In the binary world of thinking the game is always zero-sum and the results are either-or. Conflicts are either won or lost and the loser is who blinks first.
Depending on the political perspective, in the binary view real estate moguls are either heroes who take action where others only talk, who save cities and risk their money in the process or they are bullies who throw their weight around to get what they want through bravado and testosterone fueled machismo. This latter perspective gave the industry a standing only slightly above used car salesman. The current occupant of the White House has done little to elevate that image and even Maryland's generally popular Governor acts occasionally like a bully. Of course both are real estate moguls. At State Center Hogan had the audacity to accuse his colleague of just wanting to "line her pockets", language usually used by radical activists.
With that he advanced the frequent Baltimore narrative that, when it comes to real estate, developers buy their politicians, that they care only about profit, that what is good for downtown must be bad for the neighborhoods or as Hogan's State Center logic goes, what is good for the neighborhood must be bad for downtown (or the State). That binary assumes that development is like musical chairs, that there is a set number of players and a set number of chairs and that the clear loser is the one left without a chair. Baltimore's favorite musical chair "theory" goes something like this: Harbor East is nothing but another player stealing tenants from downtown. State Center would steal even more business from downtown. HarborPoint steels from Harbor East and downtown and Canton Crossing finally steals from everybody. Which would make it the biggest villain of all these players which combined suck all the resources and energy out of the neighborhoods not located near the water. Interestingly, this view is shared by the left and the right.
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| Reinvestment in East Baltimore (Photo Philipsen) |
None of this describes a complicated reality correctly, though. The simplistic binary thinking and especially the zero-sum musical chair "theory" has a number of problems: Chiefly, it is static but a city and real estate is dynamic. Second, it is just about quantity, never about quality.
Overlooking "quality" is a big problem in a time when quality increasingly beats quantity. Just take the age of cities. No longer is a river, a port or a strong manufacturing base a sufficient driver for prosperity. Today's people are attracted to cities for the quality of experiences and interactions they can have there. Whether it is where they live, where they work or where they spend their spare time, quality matters most. Just ask real estate developers!
Employers come to cities not for the sheer quantity of the available workforce but for the quality of skilled labor. Real estate developers are acting on this. Corporate Office Properties Trust (COPT), traditionally a developer of spec offices in distant suburbs, has moved its own offices to Canton Crossing to stick their toe into the waters of this new quality based urbanity. So far, it is still open whether Canton Crossing will ever really achieve urbanity, but it may.
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| State Center redevelopment rendering (Mithun Architects) |
The office, retail and housing developers are in a full-on race to create the experiences the highly mobile younger generation is looking for. The incessive chatter about millenials and creatives has already begun to discredit the focus on these new urban trends, but a closer look at Baltimore's assumed game of musical chairs shows, that quality, indeed, matters.
Offices on Pratt Street fare better than those in the old financial district, and those on Harbor East and Harborpoint better yet. Offices, retail spaces and even apartments change over time in many ways. "Better" isn't just "location, location", but is is also what exactly it is that makes a space "class A" in 2018 versus what classification meant in 1990 or 1970. While in the past a luxurious but isolated building was enough, a better offic today not only means more daylight, better views, more flexible spaces, more amenities inside a building but more to do when one steps outside. Walkability, good access to transit and nearby restaurants and shops as well as a high quality public realm matter just as much as a creative building.
This is why the once hugely successful Research Triangle in North Carolina is engaged in a huge effort to become denser, more urban and transit accessible. Closer to home, Columbia is fanning a building boom with the sole objective of making its downtown dense enough to be urban, the same is true for Owings Mills in Baltimore County, the Odenton town center, or Parole in Anne Arundel County.
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| Downtown and at the water: New apartment towers (Photo: Philipsen) |
One can easily see that Baltimore City with its cultural institutions, authentic historic districts and its waterfront should have a leg up in the urbanity game. But to capture the new interest in quality, the city must offer brand-new class A spaces in a well designed setting. Through upgrades of tired buildings combined with improvements of the public spaces particulalry promoted by the Dowtown Partnership, Pandora and Lupin came to Baltimore, COPT moved from Howard County into the City, or Medifast relocated from Owings Mills, This is not musical chairs, at least not within Baltimore.
The BBJ writes this Thursday that 750 East Pratt Street, long known as "the Constellation Building" is fully leased again after Constellation Energy became Exelon and vacated half of the building to move to its new tower on HarborPoint. After BGE had become Constellation Energy it had vacated its old headquarters on Liberty Street, and with Constellation becoming Exelon, a building that was finished as recently as 2002 seemed doomed a mere 15 years later. What could be better proof for the musical chairs theory? What really happened, though, is not at all like musical chairs.
The old historic headquarters filled with new apartments, and the latest move to HarborPoint opened up an entire new urban quarter on a site that once was a polluting chemical plant and then an empty capped brownfield. The owners of the half vacated 750 building didn't throw up their hands in despair or sued the State for allowing the Constellation merger (a suit that may have had merit outside of real estate issues). Instead they set about refilling the place with a clear goal, a strategy, and tenacity utilizing the skills of the globally known firm Wakeman Cushfield and they succeeded in record time.
Of course, the musical chair theorists will quickly point out that one of the new tenants, KGPM, an accounting firm, moved only down the street from 1 East Pratt, leaving a vacancy there, a building which coincidentally just changed hands. But vacancy isn't the story of Pratt Street. Many new tenants have not just vacated another building but were attracted to Baltimore because it could offer excellent new class A spaces in a setting that could easily beat what most suburbs offer. 750 East Pratt wasn't just refilled by the moving accounting firm, it also has new Hopkins offices, pointing to another dynamic factor beyond attracting businesses from the outside. Growing enterprises on the inside: Maryland's largest employer is doing well and needs expansion space.
Sure enough, there are victims of the run towards better and better spaces. Peter Angelos who filed a lawsuit against the State Center redevelopment argued that another new office complex would make his life even harder. He already had to upgrade the 1970s Mies van der Rohe building known as One Charles Center, from Baltimore's first round of reinventing itself through high quality class A downtown office space. The retail space there is still empty after years of vacancy, and so is the adjacent former Hamburgers clothing store building after the Hopkins school of real estate moved into the glitzy Legg Mason tower at Harbor East. Angelos law suit against State Center may stem from those frustrations, but this defensive move is much less successful than the aggressive campaign to fill the space leveraged by Wallace Campbell with the help of real estate giant Cushman Wakefield to refill the Constellation building.
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| Urban playground open to all: Sandlot on HarborPoint (Photo: Philipsen) |
The point of this story is not to prove that the musical chair effect doesn't exist at all, nor that there are no victims of office moves within the old Baltimore downtown. Not everyone can manage upgrades or a conversion to apartments or condos. The point is neither to deny that real estate operations are often ruthless or to defend the disproportionate amount of resources that went to the newest and fanciest places along the waterfront.
Instead, the point is to show that urban development is not static, not binary and not zero-sum. The new emphasis on quality and the creation of public places that had never existed quite like that before, benefits everybody and is a matter of survival for a city. The "fathers" of Charles Center had a similar insight when, in the 60s they brought Baltimore out of an era of stagnation and made it an attractive location for a good number of new employers. 50 years later it still holds true that a city has to offer the right "product", as real estate people describe buildings. Right however, means something quite different today. Much more Jane Jacobs and much less Robert Moses. Much less pollution and much more culture. This is something to celebrate.
Critics of this view would object that in spite of all the new development, Baltimore has not been able to gain population and that all this change has not helped to make dis-invested neighborhoods any better. Both is largely true (There are some substantial private and public investments in neighborhoods as well and where it happens the zero sum thinkers quickly cry "gentrification"); but even conceding this point, it begs the question, would the city have grown or would the neighborhoods any better without all the new development along Baltimore's waterfront?
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| Investment in Baltimore Food Hub East Baltimore. The first tenant is already operating. (Photo Stephen Babcock) |
The answer to the first question is certainly: No. An analysis of zip codes and migration clearly shows that Baltimore has gained population in downtown, on the waterfront and in a few areas such as Highlandtown and Greektown. It also shows that the city is continuing to lose population in many well established older neighborhoods. But those losses are not caused by residents moving from old neighborhoods to the waterfront (musical chairs) but by residents moving to the suburbs or to other cities. In other words, would those new "products" not exist, Baltimore wouldn't be holding its overall population relatively stable, but would continue to bleed like it did in the 1990s. There would also be fewer jobs in Baltimore, because the new companies wouldn't have come without the refurbished or new class A buildings, without the investments in the public roam.
The answer to the second question is harder and more speculative since a city isn't a petri-dish where one can run experiments over and over until one has eliminated extra variables and identified the correct cause and effect relations. It is clear that the city continues to distribute funds in a lopsided manner which largely coincides with racial lines. However, before black Mayors get blamed for being racist, one has to realize that it isn't particularly surprising to see dollars go where development happens, this is a function of markets. Still, innovation, creativity and investment have been redirected to a surprising extent and are no longer just happening along the waterfront.
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| Constellation Building (Photo: 24, website) |
Further change of the distribution patterns of public funds is still needed, no doubt about it. However, it is quite doubtful that neighborhoods would have seen any more market based demand, i.e. less vacancy and abandonment in neighborhoods, if the waterfront areas would have seen fewer public and private dollars. It is far more likely that a more rapidly shrinking city would have had an even further diminished tax base and even more trouble keeping services in the disinvested neighborhoods. This isn't to promote a trickle-down theory, it is just observing that public investments alone usually can't create a market and that investments have to come from prosperous residents and businesses.
There may be some who would prefer the Baltimore from whatever past decade when it had more residents, more streetcars, a flourishing Pennsylvania Avenue, or more fortune 500 companies and less crime. But considering dynamics, innovation and quality, there are many more arguments to conclude that the best Baltimore there ever was, is the one we have today, no matter how extremely far it is from being a perfect city. It has never been perfect and very few places will ever be.
Klaus Philipsen, FAIA
Due to travel the articles on this blog will be less regular in the coming week or so.
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