Baltimore Outlook: Full Books

City's redevelopment is in full swing and not slowing down

By Debra Wood

Baltimore is bustling with construction activity, and more new starts are on the horizon in both the private and public sectors. The amount of work is straining labor supply and leading to adjustments in hiring strategies.

Baltimore contractors are busy today and optimistic about the future with government and private projects.

"We're seeing a lot of happy campers in the commercial construction industry," said Champe C. McCulloch, president of the Maryland Chapter of Associated General Contractors in Lutherville, Md. "The market is strong. Commercial builders, most of them, are running with full books and scratching their heads trying to figure out where they will get people to do the work."

Doug McCoach, a vice president at the architectural firm RTKL Associates Inc. in Baltimore, agreed. "It's crazy," he said. "We haven't seen a level of activity like this since the high point of 1999. We are working at maximum capacity and doing some nice projects."

RTKL designed a new 750-room convention center headquarters hotel for the Baltimore Development Corp., being built by Hensel Phelps Construction Co. of Greeley, Colo., and a 215-bed student residence hall - with a multipurpose performance venue, cafeteria and meeting and gallery spaces - at the Maryland Institute College of Art.

McCoach said Whiting-Turner Contracting Co. of Baltimore should break ground on the hall this fall.

"It's always nice to have cranes in the skyline that are our cranes," he added.

As on the construction side, McCoach said finding qualified architects to join the firm has proven challenging. Engineering firms also are hiring.

Joseph Makar, PE, managing partner for Whitman, Requardt and Associates LLP in Baltimore, which recently began engineering an upgrade to Baltimore's Back River Wastewater Treatment Plant, described the demand for engineers as tremendous, but added that resources to meet this demand are lacking.

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The Back River project began in September 2005 and includes rehabilitating five of 11 primary settling tanks and three of the four primary sludge pumping stations. It will wrap up in September.

Whitman, Requardt also has prepared a feasibility study and schematic design to expand and renovate the Violetville Elementary/Middle School for the Baltimore City Public School System.

Makar called Baltimore a great market, due to its proximity to Washington, D.C., and to the infrastructure, housing and commercial opportunities associated with the 2005 Base Realignment and Closure decisions. The Department of Defense expects to transfer thousands of jobs to the Baltimore area as it relocates operations to the nearby Aberdeen Proving Ground and to Fort George G. Meade.

"It will put a huge drain on skilled workers, and we're going to have a lot of workers coming to the area," said Mike Henderson, president of the Baltimore Associated Builders and Contractors.

"BRAC and Homeland Security are creating a lot of buzz," said Stephen Newhouse, vice president of business development for Atlantic Builders Group Inc. of Baltimore. "Everyone is planning for the next five years to be pretty active."

Newhouse estimated that every military job relocated to the Baltimore area will result in three additional civilian positions as defense contractors establish locations close to the bases they work with. Every person with a family adds another two or three people.

"What people are looking for are 60,000 new bodies here, between Washington, [D.C.,] and Cecil County by 2011," Newhouse said. "That creates all sorts of construction opportunities for roads, schools, health care-every market segment."

Within the City

"Downtown is hopping," and the Inner Harbor area is strong, the Maryland AGC's McCulloch said.

Bovis Lend Lease Inc. of New York began work in November 2005 on the $250 million Ritz-Carlton Residences on the Inner Harbor. The six-building complex is connected on the lower level and scheduled for completion in 2008.

"We're seeing young professionals and empty nesters moving to the city," Makar said.

Condominium development has cooled off, but people are still renovating many of the older row homes, Newhouse added.

Health care and medical education remain strong, with both the University of Maryland Medical Center and Johns Hopkins University in the city. Atlantic Builders is constructing a $15 million, 95,000-sq.-ft., four-story pediatric medical office building for Johns Hopkins.\

Johns Hopkins has leased 100,000 sq. ft. of the first 282,000-sq.-ft. building in the East Baltimore Development Science + Technology Park, adjacent to its current campus, said Jack Shannon, president and CEO of East Baltimore Development Inc.

A joint venture between Hensel Phelps and Commercial Interiors Inc. of Baltimore will complete the building by May 2008.

The team is striving to achieve at least a silver Leadership in Energy and Environmental Design certification, Shannon said. East Baltimore Development Inc. selected Forest City-New East Baltimore Partnership, a joint venture between Forest City Enterprises of Cleveland and Presidential Partners, a consortium of local minority builders, to develop the initial 31-acre phase of the 88-acre, mixed-use East Baltimore Redevelopment Project.

East Baltimore Development is crafting a master plan to outline the next phases.

"We now have a critical mass and some momentum that will allow for success of the first phase of the project, the success of the second phase as well future development for revitalization of the surrounding communities," Shannon said.

P & J Contracting Co. Inc. of Baltimore received a contract from East Baltimore Development to demolish 500 buildings, after a carefully orchestrated plan to minimize airborne particulate. About 400 families still live in portions of the project area.

The plan includes the use of watering techniques before, during and after demolition and removing heavy leaded material before tearing a structure down.

'"We are not experiencing any problems, and we are seeing levels below the thresholds for public health and community safety," Shannon said.

Forest City tapped the Shelter Group of Baltimore to develop the first housing stages, 74 senior apartments and 78 workforce rental units. Harkins Builders Inc. of Marriottsville was expected to break ground this fall on the buildings and deliver them for occupancy in a year, Shannon said.

"In the first phase, private investment will be approximately $850 million, with an additional public investment of roughly $100 million for infrastructure, acquisition and site development," Shannon said. "All told, the entire 30-block, 88-acre project area [will have] an investment of $1.2 billion or more."

In the Surrounding Areas

Obrecht Properties LLC of Baltimore broke ground last year on 226,000 sq. ft. of office space at Quarry Lake at Greenspring, a mixed-use development. The first office building was slated for completion in October, the second will be ready in January and the third will break ground in the spring and wrap up in 2008.

Obrecht began work in July on a 115,000-sq.-ft. retail center at Quarry Lake. Obrecht and Blue & Obrecht Realty of Baltimore own the $85 million commercial components at the development. Beazer Homes USA of Atlanta is the residential developer.

Atlantic Builders has several projects under way, including an $8 million, 130,000-sq.-ft. office condominium in Columbia, Md.; a $15 million, 77,500-sq.-ft., three-story-high technology center for Prince George's Community College; and a psychiatric addition to Howard County General Hospital in Columbia, Md.

Road work

While Baltimore is experiencing growth, Whitman, Requardt and Associates' Makar said funding for transportation improvements has dried up. He added that new tax funding will become critical during the next five years.

Baltimore Department of Transportation's largest endeavor is the $23 million Russell Street Gateway project, which includes replacing a 1,042-ft.-long bridge. Whitman, Requardt is developing design concepts for the beautification project. Flippo Construction Co. Inc. of Forestville, Md., will perform the work.

Clouds on Horizon

Despite all of the enthusiasm about new starts, industry experts expressed concern about labor and material costs.

"The three biggest issues now are lack of skilled manpower, material shortages and the crazy price escalations," Baltimore Associated Builders and Contractors' Henderson said.

Newhouse has estimated a 1 percent increase in material costs monthly for the past 1.5 years. If the owner delays signing for 60 or 90 days, he said it puts Atlantic Builders in trouble from day one. Therefore, he makes owners aware of the pricing situation and the need to move quickly to get commitments from subcontractors.

"Finding skilled labor is truly a challenge," McCulloch of Maryland AGC said. "When companies come into Baltimore, not domestic to Baltimore, frequently they will bring a core cadre with them, especially for a long-term project. Baltimore, like many other parts of the county, is dealing with temporary immigrant labor."

Henderson said Hispanic workers will have to develop more acumen in the skilled trades, such as electrical and plumbing, for the Baltimore area's construction industry to remain strong. He said that companies that do well typically hire bilingual foremen.

RTKL's McCoach said the cooling of the residential sector could "take some of the price and schedule pressure off the building industry."

Available land also presents challenges, with developers now considering brownfield sites, parcels with more challenging topography and tearing down outdated buildings for higher structures that better utilize the land, Newhouse said.

The Ritz-Carlton Residences on the Inner Harbor is a prime example of that sort of reuse. Greg Harris, spokesperson for the property, said that the complex sits atop a former Bethlehem Steel yard.

"It's on one of the last pieces of prime real estate along the Inner Harbor," Harris said.

Despite the labor and material issues, industry experts remain bullish heading into 2007.

"I see us having long-term project commitments for the next couple of years, and that's a nice feeling," McCoach said. "The city is doing a good job of rebuilding itself, and we hope it will continue."

Useful sources:

East Baltimore Development Inc.
http://www.ebdi.org

Russell Street Gateway
http://www.russellgateway.org/

Fort Meade BRAC
http://www.ftmeade.army.mil/bracinfo.html

Aberdeen Proving Ground BRAC
http://www.apg.army.mil/apghome/sites/local/

Quarry Lake at Greenspring
http://www.obrechtproperties.com/properties.htm