STATE OF DOWNTOWN DOWNTOWN BALTIMORE REPORT 2014 ISSUED MARCH 2015 Station North 2014 ONE-MILE RADIUS TOTALS Employment .........................123,879 Bolton Residents ...............................41,606 Hill Office Space .........................28M S.F. Hotel Rooms ............................8,000 State Center Johnston Square University of Maryland Mount Medical Center Midtown Vernon Kennedy Heritage Krieger Crossing Institute Johns Hopkins Old Town Hospital Seton Hill Preston Gardens Cathedral Hill Mercy Medical Bromo Center Historic Jonestown Poppleton UMB City VA Hospital Charles Hall of Maryland Center University Royal Fells Point of Maryland Farms Medical Center Arena Little Inner Italy Harbor Ridgely’s Delight/ Stadiums Otterbein Harbor East Pigtown/ Washington Camden Village Yards Harbor Point Federal Sharp- Hill Leadenhall Locust Point South Baltimore Westport One mile radius from Pratt & Light intersection Mario Polèse, author of The Wealth and Poverty of Regions: Why Cities Matter, has observed that, “Not so long ago, most urbanists were predicting the demise of downtowns. The data, after all, pointed unambiguously to declining central-city populations and expanding suburban ones in nearly every American metropolitan area between 1950 and 1980. But downtowns didn’t go the way of the dinosaur. In fact, most of them have begun to grow again.” He’s right. Nationally, employment in city centers is growing while suburban employment growth is beginning to decline. Citing numerous studies, Polèse fi nds that the keys to this growth include a resurgence in business services jobs, neighborhoods that are active 24 hours a day, and, perhaps most importantly, a mixed-use symbiosis created when people cluster where they work with where they live. Downtown Baltimore, in 2014, continued to capitalize on all these trends, growing its employment and residential base, adding retail, welcoming performance venues like Chesapeake Shakespeare Theatre, and seeing increased private sector activity that included high-value commercial real estate transactions and progress on long-awaited projects such as One Light Street, Mechanic Center, and the former McCormick site. TOP 25 LARGEST U.S. METRO AREAS: ONE-MILE RADIUS STATISTICS AVERAGE HOUSEHOLD HOUSEHOLDS OVER $75,000 POPULATION EMPLOYMENT INCOME ANNUAL INCOME 1 New York 188,496 1 New York $157,807 1 New York 67,566 1 New York 1,193,065 2 San Francisco 119,707 2 Washington, DC $120,671 2 Chicago 31,114 2 Chicago 378,993 3 Chicago 92,316 3 Chicago $119,862 3 San Francisco 21,141 3 Washington, DC 308,639 4 Philadelphia 80,406 4 Boston $115,738 4 Philadelphia 18,243 4 Boston 244,628 5 Los Angeles 77,013 5 Charlotte $97,266 5 Seattle 12,811 5 Philadelphia 231,937 6 Seattle 61,211 6 Houston $93,140 6 Washington, DC 12,790 6 San Francisco 217,366 7 Boston 49,620 7 Philadelphia $91,570 7 Boston 12,685 7 Seattle 211,125 8 Washington, DC 44,120 8 Tampa $86,941 8 Denver 7,924 8 Houston 199,186 9 Baltimore (8) 41,606 9 Dallas $82,168 9 San Diego 7,892 9 Los Angeles 149,091 10 San Diego 40,486 10 San Diego $76,310 10 Minneapolis 6,566 10 Minneapolis 135,186 11 Denver 38,873 11 San Francisco $74,371 11 Miami 6,321 11 Denver 133,089 12 Miami 36,819 12 Miami $73,258 12 Los Angeles 5,916 12 Baltimore (12) 123,879 13 Minneapolis 34,856 13 Minneapolis $71,870 13 Baltimore (12) 5,854 13 Dallas 121,460 14 Houston 24,144 14 Seattle $71,793 14 Dallas 4,111 14 Pittsburgh 110,539 15 Portland 22,787 15 Baltimore (14) $71,625 15 Portland 3,708 15 Atlanta 99,413 16 Atlanta 20,163 16 Portland $71,298 16 Charlotte 3,215 16 Charlotte 81,047 17 Pittsburgh 18,145 17 Denver $68,751 17 Houston 2,977 17 San Diego 78,773 18 Orlando 17,986 18 Pittsburgh $63,177 18 Orlando 2,614 18 San Antonio 77,621 19 Dallas 16,488 19 Orlando $58,120 19 Tampa 2,413 19 Detroit 65,011 20 Charlotte 16,202 20 San Antonio $56,639 20 Atlanta 1,726 20 Miami 59,944 21 Phoenix 15,313 21 Atlanta $56,269 21 Pittsburgh 1,655 21 Phoenix 58,689 22 St. Louis 12,231 22 St. Louis $54,089 22 St. Louis 1,597 22 Orlando 56,752 23 Tampa 10,627 23 Los Angeles $44,781 23 Phoenix 817 23 St. Louis 55,235 24 San Antonio 9,061 24 Detroit $44,407 24 San Antonio 736 24 Tampa 43,145 25 Detroit 6,881 25 Phoenix $37,922 25 Detroit 706 25 Portland 38,896 ( ) - last year’s ranking *Source: Claritas 2 01. OFFICE SPACE There was a good deal of commercial activity in 2014 as international investors capitalized on Downtown’s growing market value, particularly in Charles Center where almost twenty major new projects were underway and companies such as Cigna and KAO announced they would be moving into Downtown and signed leases totaling more than 35,000 square feet. Three offi ce towers sold for strong prices and multiple additional properties were listed by year’s end. Pratt Street offi ce occupancy rates remained in the high 90th percentile last year in 2014, led by companies like R2Integrated (15,400 square-foot expansion) and Shapiro Sher Guinot & Sandler (new 15,000 square-foot lease). Last year also marked a signifi cant turn-around for Downtown in terms of attracting large companies from suburban Maryland. Pandora, KAO, and MAIF were among the fi rms that departed locations in adjacent counties and relocated into Downtown to take advantage of its diverse and growing pool of worker talent. Downtown-wide, some commercial brokerage analyses saw vacancy rates rise modestly, while others observed a decrease. Averaging these out, the vacancy rate was up very slightly to 16.8% in 2014 versus 16.1% in 2013, with Class A lease rates remaining unchanged at $22-$27 per square foot. NOTABLE LEASE TRANSACTIONS Name Address Type of Lease Business Type Sq. Footage OneMain Financial 100 International Dr. Relocation Financial Services Firm 109,156 Pandora Jewelry, LLC 250 W. Pratt St. New Lease Jewelry Manufacturing & Distribution 87,862 Maryland State Retirement and Pension System 120 E. Baltimore St. Renewal & Expansion State Government 72,373 Downtown Partnership of Baltimore, Inc. 20 S. Charles St. Relocation Nonprofi t Organization 22,027 Behavioral Health System Baltimore 1 N. Charles St. Relocation Nonprofi t Organization 21,998 Cigna 111 S. Calvert St. New Lease Insurance Company 21,417 CBRE Group, Inc. 100 E. Pratt St. Relocation Commercial Real Estate Firm 15,971 Shapiro Sher Guinot & Sandler 250 W. Pratt St. Relocation Law Firm 15,530 KAO USA Inc. 100 N. Charles St. New Lease Beauty Product Manufacturing & Distribution 14,486 2014 VACANCY: NATIONAL & REGIONAL STANDINGS 2014 OFFICE MARKET STATISTICS 5% 10% 15% 20% Year End 2013 Year End 2014 Vacancy 16.1% 16.8% 16.83% Downtown Baltimore Rents – Class A $22-$27 $22-$27 14.97% Baltimore City Rents – Class B $16-$19 $16-$20 Baltimore Metro 13.92% * Class A/B Rent Sources 2013: Cassidy Turley, CBRE, Cushman & Wakefi eld, and Newmark Grubb Knight Frank 14.56% National * Class A/B Rent Sources 2014: CBRE, Cushman & Wakefi eld, DTZ, JLL, MacKenzie, and Newmark Grubb Knight Frank * Downtown Baltimore Vacancy 2013 Sources: Cassidy Turley, CBRE, Cushman & Wakefi eld, * Downtown Baltimore, Baltimore City, and Baltimore Metro Vacancy Sources: MacKenzie, Newmark Grubb Knight Frank, and Transwestern CBRE, Cushman & Wakefi eld, DTZ, JLL, MacKenzie, Newmark Grubb Knight Frank, * Downtown Baltimore Vacancy 2014 Sources: CBRE, Cushman & Wakefi eld, DTZ, JLL, and Transwestern MacKenzie, Newmark Grubb Knight Frank, and Transwestern * National Vacancy Sources: CBRE, Cushman & Wakefi eld, DTZ, JLL, and Newmark Grubb Knight Frank 3 02. EMPLOYMENT OFFICE SPACE After adding 10,000 jobs in 2012 and more than 9,000 jobs in 2013, Downtown employment increased by approximately 1,600 jobs in 2014. With a total of nearly 124,000 jobs, Baltimore maintained its rank as the 12th largest downtown employment center among the top 25 largest metro areas in the U.S. EMPLOYMENT BY INDUSTRY SECTOR: PERCENT OF TOTAL EMPLOYEES 5% 10% 15% 20% 19% Healthcare & Social Assistance 14% Professional, Scientifi c & Technical Services 12% Public Administration 11% Accommodation & Food Services 8% Finance & Insurance 6% Information 4% Construction 4% Educational Services 4% Retail Trade 19% Other* * The “Other” category consists of the following sectors: Agriculture, Utilities, Manufacturing, Wholesale Trade, Transportation and Warehousing, Real Estate, Management of Companies, Administrative, Other Services, and Arts Entertainment and Recreation. Each of these categories consisted of less than 5% of total employment * Source: Claritas 4 03. HOUSING Downtown’s overall apartment occupancy rate was a strong 94%. A lack of available new units constrained supply, capping 2014 net population growth to just 635 people despite continued strong demand. Three large new buildings hit the market – 301 N. Charles (96 units), 520 Park Avenue (171 units), and The Lenore (102 units). Each has been leasing up ahead of schedule. Downtown’s overall population rose to just over 41,000. Despite the increase, Downtown’s national rank for population dropped one spot to 9th, as Washington, DC rose to number 8 with 44,000 residents. The rate of Downtown’s population increase is expected to rise more quickly as the pace of residential delivery speeds up. Almost 5,100 units are in the pipeline through 2017. Major properties expected to hit the market in 2015 include 10 N. Calvert (188 units), 10 Light Street (420 units), and 26 S. Calvert (167 units). NOTABLE RESIDENTIAL OPENINGS Project Name Address Project Type Housing Type # of Units The Lenore 114 E.