Work Resumes at Port Covington, Construction Slated to Begin on Five Buildings

| January 5, 2021 | 0 Comments

Construction crews are back at Port Covington doing prep work for the first phase of vertical construction on the 235-acre, $5.5-billion, multi-decade development in South Baltimore. Construction on five new buildings totaling 1.1 million sq. ft. is expected to begin in the next three weeks.

The Port Covington Team is comprised of lead investors Sagamore Ventures and Goldman Sachs Urban Investment Group, and lead developer Weller Development Company. The team announced today that financing for the current Chapter 1B of development has been finalized. The capitalization totals more than $650 million, including approximately $137 million in Tax Increment Financing (TIF) bonds, loans from two lenders, and about $150 million in Opportunity Zone funds raised.

Infrastructure work for Chapter 1B started in May 2019, but was paused in recent months during the COVID-19 pandemic and in anticipation of the delivery of the TIF bonds.

The next five buildings in Port Covington are scheduled to begin delivering in late 2022. This development phase will have 440,000 sq. ft. of office; 586,000 sq. ft. of residential from 537 total housing units which break down as 367 market-rate residential dwelling units, 89 affordable dwelling units (ADU), and 81 extended-stay units; 116,000 sq. ft. of retail; more than 1,000 parking spaces; and 10 acres of parks and public space. Upon delivery of Chapter 1B, 20 percent of the residential units in Port Covington will be ADU.

The buildings include:

  • Building E1: 223,000 sq. ft. building (162 residential units and 40,000 sq. ft. retail)
  • Building E5A: 221,500 sq. ft. building (212,000 sq. ft. office and 9,500 sq. ft. retail)
  • Building E5B: 133,000 sq. ft. building (40 residential units, 81 extended-stay units, and 6,000 sq. ft. retail)
  • Building E6: 293,000 sq. ft. building (254 residential units and 16,000 sq. ft. retail)
  • Building E7, Rye Street Market: 273,000 sq. ft. building (228,000 sq. ft. office and 45,000 sq. ft. market)

Alexandria Real Estate Equities, a California-based life sciences developer, is also actively marketing a 170,000 sq. ft. laboratory building for lease at lot E8.

The team noted that any Light Rail spur to Port Covington or improvements to I-95 exits would come later in the project.

At full completion, Port Covington is planned to include up to 18 million sq. ft. of new, mixed-use development, with 2.5 miles of restored waterfront and more than 40 acres of parks and green space. Under Armour has planned a 50-acre campus and headquarters at the former site of the Port Covington Shopping Center. While the company converted the former Sam’s Club to a 170,000 sq. ft. office building known as Building 37, it has not yet broken ground on Phase 1 of its campus and has not announced a timetable for this project.

Already completed at Port Covington in Phase 1A is City Garage, which redeveloped an existing building in 2015 into a 133,000 sq. ft. office building that is “a hub for manufacturing, innovation and entrepreneurship;” Building 37; Impact Village at 240 W. Dickman St. which underwent some renovations and is now the home to workforce development non-profits; Sagamore Spirit whiskey distillery; Rye Street Tavern; and renovations to the Baltimore Yacht Basin marina and Nick’s Fish House. 

The Port Covington Development Team also made public space improvements which include landscaped medians, taking over maintenance of West Covington Park where it added outdoor bar South Point, the first phases of East Waterfront Park, a new mural, and adding new off- and on-street bike and pedestrian paths.

The Port Covington Development Team has funded more than $9 million to the South Baltimore 7 (SB7) Coalition as part of its Community Benefits Agreement (CBA). In total, the Port Covington Development Team has funded more than $19 million toward combined Memorandum of Understanding (MOU) and CBA commitments to date.

Weller Development partner Steve Siegel said leasing is “exactly where we need it be be.” He said they have four to five prospects they are in the process of converting to leases and said there is a “robust pipeline” of interest. He also noted they are engaging in conversations to bring a grocery store to Building E1. Siegel said they are seeing interest from a broad spectrum of sectors for office leases and from specified data science, life science, and deduction sectors.

DataTribe, AllegisCyber, and Evergreen Advisors were announced as the first new office tenants of the project in October of 2018.

When asked if the COVID-19 pandemic and the rise in virtual work has added any momentum to the project as Baltimore is a much cheaper option than many prominent business cities in the country, Founding Partner at Weller Development Marc Weller noted the unfortunate aspects of COVID-19 but said, “It has been an accelerant – you are seeing a lot of positive momentum from the Northeast heading south.”

Margaret Anadu, managing director and head of the Goldman Sachs Urban Investment Group, said her company believes that “Baltimore is a strong investment, this isn’t charity.”

When asked about new developments surrounding the project on Wells St. in the South Baltimore and Riverside Neighborhoods and the new  mixed-use development planned for the 43-acre Westport waterfront parcel, Weller said “a lot of energy has been building for years and you can feel it.”

He noted the Westport project, which sits across the Middle Branch from Port Covington where Stonewall Capital is planning 1,575 housing units, retail, innovation/office space, parks, trails, and green spaces, is a “thoughtful development” that will be an “additive” to the project at Port Covington. Stonewall Capital is under contract on the property that is currently owned by Sagamore Ventures.

Additional reactions about today’s Port Covington announcement:

Kevin Plank, lead investor in Port Covington: “Port Covington is a long-term, bold vision for helping to build a better Baltimore. The TIF bond sale was met with overwhelming demand, and the overall deal successfully closed last week, which is significant proof of institutional investors’ belief in the future success of the project. We are thrilled about this important milestone, and what it means in validating our vision. Port Covington, a decades long-endeavor, will have a fundamental and far-reaching impact on Baltimore’s future, and we are eager to bring additional economic benefits, investment and jobs to the City and our surrounding neighborhoods.”

Anadu: “We are excited to see the continued progress towards delivering on the collective vision for Port Covington as a hub of opportunity, growth and inclusivity. In what has been an incredibly challenging year, today’s milestones provide hope — both the significant funding under the community benefits agreement and the financing to build space for community members seeking affordable quality places to live, businesses looking to launch and expand, and those who believe what we do — that Baltimore is a dynamic city on the rise!”

Weller: “The team and many stakeholders across the City and in the community have worked tirelessly for a long, long time to get to this point, and we are so proud to have reached this important milestone together. There are many things to be proud of, but what rises to the surface most is the emphasis the team has put on equity and diversity of participation in the project – minority owned businesses, women owned businesses, local hiring, and all the jobs that are being created. We have worked alongside the South Baltimore community for years to ensure that the rising tide of Port Covington does in fact lift all boats in Baltimore. The momentum continues for Port Covington, and we look forward to great things ahead for the entire City and our South Baltimore neighbors.”

Eric Costello, Baltimore City Council, 11th District: “Port Covington continues to deliver on the promise of being a vibrant and inclusive waterfront neighborhood. With today’s news of 1.1 million square feet of vertical construction to be delivered in late 2022, Port Covington will bring more new jobs and economic opportunities to not only our neighbors in South Baltimore, but residents of our entire City.”

Maryland Governor Larry Hogan: “It is exciting to see this transformational project moving forward despite the many challenges the global pandemic brought this year,” said Governor Larry Hogan. “This project has the potential to bring tens of thousands of new jobs into the region and create significant economic growth not only for Baltimore City, but our entire state. This is truly an outstanding example of years of collaboration between the City, State, and the private sector to ensure that Maryland continues to be open for business.”

Baltimore Mayor Brandon M. Scott: “This is an example of collaboration between the developer, City government and residents that will create thousands of jobs for local residents, invest in the surrounding neighborhoods and generate economic impact across the city. I’m committed to ensuring the Port Covington project is a benefit for the local South Baltimore community and speaks to how we can do business in an equitable, inclusive and accountable way.”

Renderings courtesy of the Port Covington Development Team (click to enlarge)

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