50-story Baltimore skyscraper mothballed pending market change

Robbie Whelan
Daily Record

A prime piece of undeveloped downtown Baltimore waterfront real estate could remain fallow for several more years, according to its developer.

The site of the former News-American building at 300 E. Pratt St., which is now occupied by a surface parking lot, has been awaiting a proposed 50-story skyscraper since it was purchased by UrbanAmerica LP and Doracon Contracting for $28 million in 2006. Initially the plan called for condominiums, but about a year ago, the developer gave up the for-sale housing component in favor of a hotel with offices on top.

Shortly after the purchase, UrbanAmerica CEO Richmond S. McCoy told The Daily Record he hoped to break ground by the end of 2007.

A soft condo market, followed by the devastating apocalyptic collapse of the commercial real estate market of the last year has led McCoy to think twice.

“We’re on hold until the economy shows some signs of life,” McCoy said in a recent interview. “I’m just grateful we didn’t put any debt on it and that we didn’t start digging. A lot of our colleagues started projects in this market, and we’ve seen where they are. … Debt is extremely hard to come by, and if you can get it it’s onerously expensive, and development doesn’t do well with expensive capital.”

Current plans have been scaled back to 40 stories and 300,000 square feet of office space, in addition to a 270-room hotel. But for the immediate future, the developer will continue to operate the surface lot, which McCoy said adequately covers the company’s expenses.

McCoy also said that UrbanAmerica, which owns about 5 million square feet of property nationwide, has stopped all new development and is focusing on stabilized, income-producing properties.

The money for the 300 East Pratt project would have been allocated from UrbanAmerica Fund 2, a $400 million equity portfolio that McCoy said has been used to bankroll other projects in the region, including a 235,000-square-foot office building near the New Carrollton metro station and a 200,000-square-foot building leased to the General Services Administration in Washington.

“We’re in the third inning of a nine-inning game in terms of this economy,” McCoy said. “I would need to see eight quarters of positive strength before we would start a project in this market. … I think you’ve got to see the job loss stopping, at least on a national basis. The banks are going to have to somehow get recapitalized, and a lot of the bad debts are going to be taken out of them. We would certainly not start building without debt.”

Peter Morici, a University of Maryland, College Park economist who has been critical of President Barack Obama’s administration for its failure to “systematically repair the banks” by buying bad assets, said McCoy is likely to be disappointed.

“If he wants eight positive quarters, he’s going to be waiting a long time,” he said. “Basically, [UrbanAmerica] is speculating in land, that over the long term, this Pratt Street real estate is going to be worth something. … We’re talking about booting this into at least 2012, and he might be just in time for the next recession.”