Baltimore’s labor market has demonstrated year-over-year gains since 2010. As of March 2016, Baltimore metro-area non-farm employment totaled 1.4 million, up 2.6% over the past year, as compared to 2.0% growth nationally over the same period, according to data from the U.S. Bureau of Labor Statistics. The professional and business services sector contributed the largest gains since March 2015, adding 13,500 jobs to Baltimore’s work force, representing a growth rate of 6.0% over the prior year. The recent surge in employment has driven sustained demand for rental housing, pushing vacancy rates to historic lows and placing upward pressure on rents.
Despite its rapid ascension, Baltimore continues to benefit from its proximity to other East Coast cities, which have experienced economic expansion as well, with Baltimore remaining the most affordable of these metropolises. Even as Baltimore average rents have increased 3.6% in 2016, the market is attractive to residents looking to be in close proximity to Washington, D.C. at a lower cost. Baltimore rents average $500 less than similar offerings in the nation’s capital, with the difference offsetting transportation costs. In response to this increase in employers relocating to Baltimore, as well as the widening tenant pool, 3,600 residential units are expected to be brought online in 2016, a 24% acceleration from the 2,900 constructed in 2015. The recent influx of workers is not the only driver of construction in the city.
Local business leaders, developers, and politicians are committed in lock step to sustaining the continued infrastructural improvement of the city and surrounding areas. Under Armour CEO Kevin Plank’s proposed redevelopment of Port Covington, an underutilized industrial area south of Downtown comprised of approximately 260 acres and three miles of waterfront, is a glaring example of the city’s changing landscape. With Under Armour as the anchor, Port Covington’s build out will include nearly four million square feet of condominiums, market and affordable residential units, parks, office buildings, and manufacturing space.
To supplement nearly $5.5 billion private investments secured for the project, Plank’s Sagamore Development is requesting subsidy support via the city’s tax increment financing (‘TIF’) program. The TIF program provides public financing for private infrastructure development initiatives via the issuance of publicly backed municipal bonds, to be repaid through tax revenues from the project. The requested $535 million TIF, which would amount to one of the largest in the country, follows the precedent set by the $107 million TIF awarded in 2013 for Beatty Development Group’s Harbor Point waterfront development currently underway on the east side of the Inner Harbor.
Beyond the TIF program, Baltimore Mayor Stephanie Rawlings-Blake recently expanded the Baltimore “High Performance Market-Rate Rental Housing Tax Credit,” implementing a 10-year tax credit available to developers citywide and a 15-year tax credit for construction in target areas. Currently in the pipeline is the Time Group’s 500 Park Avenue, a $29 million, 153-unit complex located on a once desolate section of Park Avenue in Mount Vernon, the latest installment in The Time Group’s “The Mount Vernon Center.” The Time Group is well-known for its 2015 installation, “The Mount Vernon Marketplace,” located on the ground floor of 520 Park Avenue. The 15,000-square-foot market has quickly become a hotspot for Baltimore foodies. The food hall features over a dozen local, independent artisan vendors, indoor and outdoor seating, and has been subject to rave reviews in Baltimore Magazine, The Baltimore Sun, and CBS News.
Long known in provincial circles as a hip, affordable, and enterprising city, Baltimore has emerged on the national scene as a viable investment option. The Baltimore multifamily market has lagged behind national growth in recent years, however 2015 analytics and early 2016 indicators point to sunny skies ahead. Baltimore’s multifamily transaction dollar volume reached $1.4 billion in 2015 while cap rates have compressed. The development wave in Baltimore has been multifaceted including the arts and affordable housing, which has been historically neglected in large-scale urban projects. Baltimore’s evolution has also been diverse, spreading to parts of the city long overlooked, which in turn has linked neighborhoods, dispelling the long-standing notion that Baltimore is a fragmented community. While new high-rises emerge, so do creative office conversions, artisan food halls, and performing arts centers. Blending traditional charm with modern amenities and a flow of attractive professional opportunities ensures Baltimore retains its newfound status.