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Posts Tagged ‘Real Estate’

A recent post on The Atlantic Cities website tallies up the economic benefits of urban trees. Each tree in Tennessee’s cities was found to have $2.25 in “measurable economic benefit” each year. The City of Baltimore holds between 2.6 and 2.8 million trees, depending on the source you consult. If the economic benefits hold consistent between Tennessee and Maryland, Baltimore saves between $5.85 and $6.3 million each year. The City of Baltimore’s Department of Recreation and Parks measures the benefits of its trees differently, calculating the following economic benefits:

  • $3.3 million a year in energy savings by shading buildings from the summer sun and blocking winter winds.
  • $10.7 million a year by storing 527 tons of carbon
  • $3.8 million a year by removing 700 metric tons of air pollutants such as carbon monoxide, nitrogen dioxide and sulfur dioxide
  • $1.6 million a year by removing 244 metric tons of ozone, the main ingredient in smog and a leading factor contributing to asthma

According to the Baltimore Tree Trust, Baltimore’s tree canopy has declined by one third and only covers about 25% of Baltimore’s land area. The goal of the Tree Trust is to increase the City’s tree canopy to 40% of its surface area by 2040. This seems like a pretty modest goal, but in order to achieve this goal, Baltimore City and its residents must plant a total of 750,000 trees over the next 28 years or about 26,000 trees per year. Baltimore City cannot do this by itself (the City doesn’t even plant 10,000 trees per year) but that’s only about 1.2 trees per person. So, as with so many other lofty goals, the key to reforesting Baltimore is public involvement.

A map of Baltimore’s tree canopy

In order to encourage people to plant trees in their neighborhood or on their property, it might be helpful to share some facts. For example, all property owners should know that both heating and cooling costs are reduced by 10% due to the tempered winds and shade provided by trees. Businesses might like to know that shoppers prefer shopping on tree-lined streets. In fact, shoppers tend to spend more time on shadier streets and are willing to pay %11 more for goods and services sold on such streets. Home values also tend to rise in areas with lots of trees. Finally, every taxpayer in Baltimore should know that neighborhoods with more street trees often have lower rates of violent and property crime.

Every city could benefit from more trees but Baltimore, in particular, has some issues that trees could help to address. With summer fast approaching, most Baltimoreans are not looking forward to the prospect of being outside in June, July, August and even September. A small amount of shade can make a huge difference in terms of reducing the Urban Heat Island Effect.

In order to combat this effect and increase its own canopy, Baltimore County, which suffers less from this effect than does Baltimore City, sells trees native to Maryland at a reduced rate. A similar program in Baltimore City could have a significant impact. Of course the residents are the ones who will make the biggest difference. Unfortunately, many Baltimoreans don’t have access to a car and can’t get to a nursery let alone bring a tree home. In order to reach its goal of a 40% land-cover tree canopy, strong partnerships must be forged between neighborhood associations, residents, the City and non-profits like Baltimore Green Works and The Baltimore Tree Trust. There is also no shortage of innovative programs across the country that aim to reduce the Heat Island Effect, any number of these programs could work well in Baltimore and help to address the other factors that contribute to the Heat Island Effect.

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A Brief Update:

Constellation Energy, Baltimore’s only remaining Fortune 500 Company is going to merge with Exelon, a Chicago-based energy company. The merger will likely eliminate around 600 jobs, most of them in Baltimore. Shortly after the  merger was made pubic, Exelon announced that it would be seeking new office space, abandoning its current home at 750 East Pratt Street.

Constellation Energy's current headquarters at 750 E Pratt Street

In this same statement, Exelon also affirmed its commitment to keep what was left of its Baltimore employee base in Baltimore. Several sites and proposals were considered but ultimately the soon-to-be energy giant chose Harbor Point, a 27 acre parcel just southeast of Downtown Baltimore.

Exelon’s decision to develop Harbor Point ruffled some feathers in the business community. Those upset contend that the construction of a new building will saturate a downtown office space market where vacancy rates are already high, surpassing 16% as of October, 2011.

A map showing the location of Harbor Point in relation to the Inner Harbor and Downtown Baltimore. Courtesy of the Baltimore Sun

A Question of Perspective:

Others worried that moving hundreds of employees farther from the traditional downtown core, centered at Pratt and Light Streets, would further destabilize and decentralize the business district. The trend of development toward Baltimore’s eastern waterfront has been happening for quite some time now. Exelon’s decision should have come as no surprise. Over the past five years, Harbor East has made itself into a destination in its own right, attracting high-end shops and restaurants and a clientele to match. The question is: why are downtown business leaders more upset by the location of a new office building than they are by the jobs that will be lost as a result of the merger? Why can’t what’s good for Harbor East be good for Baltimore’s downtown too? If we just moved the imaginary line between “Downtown” and Harbor East from President Street to Caroline Street, there might be less animosity and more cooperation in the business community.

A map of Downtown Baltimore with the Downtown Partnership's coverage area outlined in green and Harbor East shown in light blue at the bottom right

Changing with the Times:

As cities grow, so must their cores, either out or up. It’s a fact of urban development. The cities, districts and buildings that grow most are able to adapt to changing market conditions and make themselves more desirable to people and businesses. An excellent example can be found right here in Baltimore. In 2009, when Legg Mason left their headquarters at 100 Light Street, the owners of the building took the opportunity to redesign the plaza surrounding the building and renovate the interior. That investment helped attract Transamerica which now leases about 140,00 square feet, or 10 floors, and has its name on the tower at 100 Light Street.

The redesigned plaza in front of 100 Light Street

Baltimore’s traditional downtown hasn’t had many buildings follow the example set by 100 Light Street. The results of this lack of investment can be seen in the eastward trend of development in the past several years. Below is a series of aerial photos which illustrates this trend.

An aerial view of Harbor East in 1994

An aerial view of Harbor East in 2002

An aerial view of Harbor East in 2009, with all of the buildings either under construction or completed.

Show me the Money:

Harbor Point is in a Maryland Enterprise Zone. State approved enterprise zones are designed to bring development to areas that otherwise would not attract it. As a result, the benefits associated with building in an enterprise zone are pretty generous: the business owner is entitled to an eighty percent tax break for the first five years with the rate diminishing by ten percent in each successive year for five more years. The result is an estimated $64.5 Million in savings for Exelon due to the state enterprise zone. Tack that onto the $155 Million in Tax Increment Financing (TIF)  the City has to spend to get Harbor Point ready for development, build open space and add roads to the site. That’s quite a bill. Indeed, the amount of money being spent to develop a parcel that should sell itself has many Baltimoreans up in arms, and rightfully so. It’s hard to believe that no one saw this coming. When development trends showed that Harbor East and Harbor Point were becoming desirable locations for development, why didn’t anyone remove these areas from the list of state approved enterprise zones? This particular lapse in oversight is a costly one.

Raise Your Hand if You’re Surprised:

Given what development trends in Baltimore have looked like over the past ten years and the amount Exelon stands to save on taxes, it really shouldn’t come as any surprise that Exelon selected Harbor Point. Even without the development trends and the tax-related savings, Harbor Point is still an amazing site. It’s surrounded on three sides by water and it sits between Fells Point and Harbor Point two of Baltimore’s most desirable locations. The site is also a whopping 27 acres, allowing Exelon’s imagination to run wild. Some criticize how Exelon selected its site, charging they sought features one would expect in a suburban location including ample parking spaces and open space. These criticisms shouldn’t hold much water as they are features every good developer wants.

The fact of the matter is, Exelon got a great deal on a great site. City and State government reacted too slowly to real estate trends to take advantage of Harbor Point as a source of tax revenue. The real question is, has our government learned from this mistake? The State and especially the City cannot afford to make such huge concessions to developers.

Something to Look Forward to:

A large part of Baltimore’s transformation has been taking industrial sites and making them into developable land for retail and office space. Until 1985, Harbor Point was the site of Allied Chemical’s chromium factory.

A view of Harbor Point when Allied Chemical still had a factory on the site.

In 1999, the Environmental Protection Agency completed a cleanup of the site which resulted in a “cap” being placed over the top of the site, preventing rain water from leaching chromium into the harbor.

What Harbor Point looks like today, as seen from the top of the Legg Mason building in Harbor East

When completed, the site is expected to include about 1 Million square feet of office space, 150,00 sq. ft. of retail, 600 residences, 250 hotel rooms and 3,000 parking spaces. Exelon’s building is expected to earn a LEED Platinum rating, the highest available award for green building. The site will also include 11 acres of open space.

An artist's rendering of the proposed development at Harbor Point, courtesy of Harbor Point Development

The site plan for Harbor Point, including the waterfront promenade and a lacrosse field

Despite the lost tax revenue, in the long run this project should be good for the City. As Harbor Point is the last developable waterfront property, investment should shift back North and West toward the City’s core, which will strengthen as a result. Short term benefits include thousands more people coming “downtown” every day to work, eat and, hopefully, live.

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