There is a gleaming, new mixed-use neighborhood on the waterfront of South Baltimore. Residents are moving in. Restaurants and businesses are snapping up retail space.

But one thing is lagging behind expectations set in 2020 for Baltimore Peninsula. Most of its office space is vacant.

Unlike most developments, Baltimore Peninsula is required to disclose certain operational data because it’s partly financed with municipal bonds. These disclosures offer a rare glimpse into the state of Baltimore’s office market, showing that even some of the most attractive office space can take years to lease right now.

The project began more than a decade ago, when Sagamore Ventures — an investment firm controlled by Under Armour founder Kevin Plank — started buying land in the largely industrial neighborhood of Port Covington.

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In 2016, City Council authorized up to $660 million of public financing to build a massive, multiphase development there. In 2020, the development team drew on $137 million of those bonds for Phase 1 of the project.

The pandemic was raging, and many office workers were working remotely then, but the development team predicted the office buildings at Port Covington would lease a year or two before their completion, according to a December 2020 disclosure.

One building would feature 33,000-square-foot floors for big corporate tenants, and the other would have smaller spaces in different configurations. There was “significant activity” from potential office tenants, the disclosure said, and some firms were already committing to move there.

But, as the pandemic continued to disrupt life, companies embraced hybrid and remote work, and demand for office space plummeted. The development pivoted in 2022, hiring a new lead developer, MAG Partners, and rebranding as Baltimore Peninsula.

Baltimore Peninsula snagged a win in January when CFG Community Bank leased the top three floors of the building on House Street, a total of about 100,000 square feet, and the architectural firm Chambers already occupies roughly 10,000 square feet in the office building on Rye Street. Recently, the project started building out smaller office spaces — known as spec suites — to attract firms that want to move in quickly.

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While Baltimore Peninsula announced new leases Thursday, including 30,000 square feet leased by office tenants, about two-thirds of the total office space is still available to lease.

According to the project’s most recent public disclosure, Baltimore Peninsula predicts the office buildings on Rye Street and House Street won’t stabilize — meaning leasing all their space — until May 2025 and February 2026, respectively. The disclosures don’t include how much tenants will pay.

While every market is different, what’s happening at Baltimore Peninsula fits into the national trend in office space, said Julie Whelan, the head of global occupier research at CBRE. The national office vacancy rate continues to climb, hitting 18% this fall, in part because new buildings keep opening, Whelan said.

The hardest hit have been older office parks or business districts with few other amenities, Whelan said. Today, companies want new buildings near homes and entertainment, she said, which bodes well for Baltimore Peninsula.

The office buildings at Baltimore Peninsula have large windows with views of a shimmering Chesapeake Bay. There are gyms, greenspace and a rye whiskey distillery on-site. Parking is plentiful, Interstate 95 is accessible, and downtown Baltimore is a 10-minute drive north. Under Armour is building its global headquarters down the road.

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Another positive for Baltimore Peninsula is that the development won’t have to worry as much about new competition.

Thanks to market uncertainty and high interest rates, construction of new office space is slowing to a trickle, Whelan said. The country is on pace to add just 36 million square feet of office space in 2024, the lowest amount in a decade, she said.

Locally, the drop-off in new office space construction has been even more dramatic, according to Michael Cobb, a director of market analytics at CoStar, a firm that tracks and compiles real estate data.

While cities such as San Francisco and Austin, Texas, went on an office-building spree in recent years, Baltimore is one of a handful of major metropolitan areas to see its total office space decline since 2020, according to CoStar. Cobb said that’s because developers are demolishing or converting more office space than is being built — and there’s little new construction in the pipeline.

This year, builders in the Baltimore region have broken ground on just 365,000 square feet of office space, Cobb said, which is a fifth of the 30-year annual average of 1.7 million square feet.

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Courtenay Jenkins, an executive director at Cushman & Wakefield, took over leasing for Baltimore Peninsula in July, the Baltimore Business Journal reported. Jenkins is bullish about the development’s position as the “newest kid on the block.”

People will want to work at Baltimore Peninsula, because it is a safe, beautiful neighborhood where they can live, shop, play and enjoy all the best assets of Baltimore and the region, he said.

“First, you’ve got to create momentum. And, once the momentum is created, it builds on itself and it picks up pace,” Jenkins said. “Others will follow.”

MaryAnne Gilmartin, founder and CEO of MAG Partners, said her team is planning the second phase of development at Baltimore Peninsula. Gilmartin noted Baltimore’s “robust” housing market and said they’re considering a residential building and a supermarket — possibly in the same building.

Gilmartin said she’s also had conversations with regional companies interested in constructing a headquarters building at Baltimore Peninsula. Baltimore is a relatively affordable city, has its own identity and boasts the amenities of other big cities, said Gilmartin, a New Yorker. That appeals to people and businesses across the country, she said.

“People live in Baltimore by choice: young people, educated people,” Gilmartin said. “That’s why I’m betting on Baltimore Peninsula.”