The University of Maryland Baltimore’s nearly $300 million Collegetown development is poised to spur major growth in West Baltimore. But economic conditions, security concerns and government red tape could limit its economic development potential.
Approved by the University System of Maryland’s Board of Regents earlier this year, the development plan transitions long-underutilized, land-banked parcels in the West Lexington Corridor into productive development sites.
Crews are expected to begin construction of three facilities early next year: a 15-floor North Quad tower with 356 apartments and 15,800 square feet of ground-floor retail, conversion of the existing Pascault Row residences into a multi-family building, and renovation of the Pharmacy Learning Center into a 16,500 square foot indoor gathering and recreation center called the West Lexington Collective.
The following year, work will begin on phase two of Collegetown: a South Quad building with 380 apartments and 9,000 square feet of retail plus extensive streetscaping and installation of public placemaking features.
“The project is a once-in-a-generation opportunity to transform a critical avenue of our campus and strengthen our connection to the neighborhood,” said James Hughes, UMB Chief Enterprise and Economic Development Officer and Senior Vice President.
The creation of a major development site in an urban core is a rare opportunity, said Tom Fidler, Executive Vice President and Principal at MacKenzie Retail. “It’s a good example of forward momentum and the financial commitment shows UMB’s belief in our city.”
The development, along with the conversion of the former Social Security Administration building in Metro West to new Maryland Department of Health offices, raises the prospects of other commercial real estate projects in the area.
“I am aware of a handful of [potential projects] that are being looked at by the investment and development community,” Fidler said. “As the Collegetown development unfolds, you could see more projects ride their coattails and become complementary. I could envision hotel opportunities, residential conversions to student housing. I’m sure a few office buildings that continue to struggle with high vacancy will be looked at to determine their next chapter.”
Those opportunities, however, are emerging amid an especially difficult investment climate. High interest rates, rising construction costs, economic uncertainties, lengthy entitlement processes and safety concerns are all encouraging investors and developers to wait, Fidler said.
“We’re in a market right now where capital is sitting on the sidelines,” he said, adding that economic concerns and investment requirements are the worst he has seen in 30 years.
“It’s not just high interest rates; it’s high liquidity rates. Lenders aren’t interested in highly leveraged assets,” Fidler said. “They’re also asking for full entitlements. Well, full entitlement in Baltimore City could take years… And if you can’t check all the boxes for community safety, value add, streamlined approval processes, that investor, that developer will go out of state — to places like the Carolinas, the Midwest — where approvals are a fraction of the time compared to Baltimore and population growth is more vibrant.”
Featured in this article: MacKenzie Retail, University of Maryland Baltimore.