With a new team and coming rebrand, Baltimore’s Port Covington developers hope to turn a page. Will it work?

Published on: November 14, 2022 6:00 AM EST|Updated on: November 16, 2022 4:59 PM EST

MaryAnne Gilmartin, founder and CEO of MAG will redevelop, and re-brand Port Covington, Baltimore, MD, November 2, 2022.

The once-barren stretch of industrial wasteland has been replaced with towering structures of glass, brick and steel. Mature trees, rather than saplings, have been planted there, too.

The message from the new team tasked with selling Port Covington to potential tenants and visitors: Finally, the long-promised new era has arrived, and it’s here to stay.

Attached to one of the largest public subsidies in the country, the $5.5 billion, multi-phase waterfront development in South Baltimore spans more than 200 acres and will feature three direct access points to Interstate-95. Under Armour founder and executive chairman Kevin Plank and those affiliated with his Sagamore Ventures development firm began buying up the Port Covington land for more than $100 million starting about a decade ago, with the intention of building the once-dominant apparel company a new corporate headquarters surrounded by a “mini-city” akin to the existing Harbor East and Harbor Point sites.

The Baltimore City Council approved the city’s largest tax increment financing deal in 2016 to help fund the project. Since then, Under Armour’s corporate image has soured amid company scandals, high-profile departures and declining sales, forcing the company to tone down its plans for the new offices. Meanwhile, several iterations of plans for what Port Covington could become — including a hub for technology companies called Cyber Town USA — have not come to pass.

Now real estate development firm MAG Partners has taken over the project and set a new direction for the development. The question is: will it work?

MaryAnne Gilmartin says the first office, residential and retail tenants are expected to move in as early as March. The founder and CEO of MAG Partners officially took the reins of leasing and marketing the ambitious mixed-use project last May after about a year of quietly studying the city from the shadows. Former project lead Marc Weller of Weller Development Partners will stay on as the head of construction through the end of the development’s current phase before turning the keys over to the new team.

Now, about six months into the transition, MAG Partners — along with the co-developer, San Francisco-based MacFarlane Partners — has made agreements with at least two office space tenants, reached an agreement with an extended-stay hotel operator and are expected to roll out a new name and brand identity for Port Covington this week. Gilmartin said the new name will help turn a page on a contentious project that has come under intense scrutiny for its use of massive amounts of public funds — some $660 million in bonds have been approved — and its failure to land tenants under Weller’s direction, though Gilmartin said she appreciates the foundation laid by her predecessor.

She and her team have revised the master plan and expect the final layout of the project to look different from what developers sold in 2016; for example, they want to stretch the original Founders Park into a linear, diagonal “green artery” that connects the center of the new neighborhood and waterfront with the rest of the city. They also want to better connect to the rest of South Baltimore and Interstate 95.

Gilmartin also said the volume of square footage devoted to office space and retail, for example, could shrink in future phases, while the residential footprint could grow.

Critics of the effort said the original vision has finally met market realities: that 14.1 million square feet of commercial and residential space across 45 city blocks in a historically underutilized area would not necessarily be an easy sell. Several city officials who were not authorized to speak publicly said Plank and Sagamore oversold the vision and have since been compelled to scale it back, as evidenced by the dialed-down Under Armour headquarters.

One official also called Weller’s departure without a signed lease an “unprecedented disaster” that should spark concern from city residents about the developers’ ability to repay the bonds floated to fund the project. Ideally, the bonds are to be repaid with future property taxes accrued at the site, though that hinges on developers’ ability to attract tenants. Residents, lawmakers and housing advocates have voiced skepticism over such use of city funds, as well as subsidies and federal tax credits, despite Baltimore’s other numerous and pressing needs.

But Gilmartin, a New York-based developer with projects including The New York Times building, Barclays Center and Pacific Park in Brooklyn, New York, in her career portfolio, sees things differently. Port Covington, a diamond in the rough, she said, has all the tools — it just needed a new welder. She is aggressively pitching it as America’s next great hidden gem.

“This is about good real estate and the cost of the real estate. There is good access, transportation, workforce, a functioning government, and good sponsorship. So in many ways, there’s a not a lot of ‘other’ here other than the fact that the economy is challenging,” Gilmartin, whose initials make up the MAG in MAG Partners, said. “I would challenge you to go up and down the East Coast and find 14 million square feet, beside a highway that carries 46 million people annually, alongside a port in a permissible zoning environment. That’s not a common occurrence.”

‘We needed something bigger’

Gilmartin, 58, took over as the head of MAG Partners in 2020 after nearly three decades in development and real estate management. She and two partners started their own firm in 2018, but she bought them out to go solo.

In a male-dominated industry, Gilmartin said she is one of a handful of women with their own firms. She has described herself as intense and passionate, with a particular proclivity for complex, large-scale projects, including Pacific Park, a 22-acre site in downtown Brooklyn where she lives and helped develop.

Back in Brooklyn, Gilmartin and her colleagues at the Forest City Ratner firm came under fire for their work, which helped displace hundreds of residents and businesses, The New York Times reported. It set off political wrangling over elongated timelines, affordable housing and traffic and parking.

From the top floor of one of the completed office buildings in Port Covington, Gilmartin told The Baltimore Banner that its name change would come at the right time: before the arrival of tenants. She lauded the project as one that didn’t involve displacement.

Gilmartin said only a handful of U.S. firms have experience building, marketing and leasing developments of this scale. A benefit of Port Covington, she said, is flexibility: For example, she may include more residential space than previously imagined when market demand increases or shifts away from in-person work because of pandemic-related lifestyle changes.

The new Port Covington team is pushing a “national strategy” rather than a regional or industry-specific one; Weller’s attempts to brand Port Covington as a hub for cybersecurity and life sciences went too narrow, she said.

“We needed something bigger than a type of user, because with 14 million square feet, it’s kind of a lot of different things,” she said. “And the connective tissue felt like impact and mission-purpose.”

In an interview with The Banner earlier this year, Weller said his team delivered on all its promises and was successful. He said this week that the project is both ahead of schedule and on budget and is seeing gains due to his firm’s ability to bring in new investment and transition to new partners.

He said his team was heavily involved in the negotiations with interior design firm H. Chambers Co., the first company to sign a lease at Port Covington for about 9,000 square feet, as well as other partners and tenants including the extended stay hotel operator.

He also pushed back against reports that he was forced out; rather, he said, he always intended to step away, given the project’s multi-year timeline.

“There’s nothing that hasn’t been challenging at every step of the way, but we delivered,” he said earlier this year. He added that the team exceeded its commitments to “community and diversity” with $130 million awarded to minority and women-owned businesses.

The new Port Covington branding strategy emphasizes lifting up the city, especially six nearby neighborhoods, Gilmartin said. A community benefits agreement, signed in 2016, guaranteed funding for workforce development programs and small-business loans. The neighborhood coalition will also receive some proceeds from every lease.

At Visit Baltimore’s annual meeting last month, MAG Partners senior marketing director Matt Jahromi emphasized the national strategy.

“We’re looking to bring new companies, and not bring them from other parts of the city; that doesn’t benefit us,” Jahromi said during a panel discussion with developers working in Baltimore. “But we’re looking to bring other folks from around the country and, really, around the world, and to influence like-minded leaders that Baltimore’s not only a smart decision, but the right decision.”

‘Cranes in the sky’

Several people with connections to the project said the new vision and team came at a crucial moment — one meant to restore hope in Port Covington after years of controversy, delays and uncertainty.

Alicia Wilson, vice president for economic development and community partnerships at the Johns Hopkins University and Johns Hopkins Health System, who helped negotiate the $100 community benefits deal, said the new team can help revive the project and allay concerns about its trajectory. She said MAG’s team listens and wants to earn residents’ trust.

Unforeseen hurdles, such as a public health crisis, have distracted from the project’s mission, but can be overcome, she said.

“That we have buildings and cranes in the sky around Port Covington is a good sign,” she said. “No one could have imagined the pandemic. And I think the bet on office space is a big one. But I think it’s one that’s going to pay off.”

Mike Middleton, chair of the SB7 coalition, said the new team has helped bring more vibrancy to the vision and been more involved in the coalition’s work, offering technical advice and assistance handling funds.

“With Weller, it was more the buildings and the construction, getting the buildings up. But how will that be related to how lives will be changed going forward? Those are the types of issues being brought about and addressed by MAG,” he said.

Al Barry, a former Baltimore planner and the owner of consulting group AB Associates, said the changing development reflects a response to changing market conditions and feedback.

The original plans proposed to community members may have been “grandiose,” he said, but the city often sells itself short and plays it safe. He said the tax increment financing bonds serve as a check on developers’ powers.

“I don’t see it [the project] scaling back in any way as negative, but there were some reasonable doubts as to whether they would ever build to that scale,” Barry said. “Reevaluation should happen. It’s still getting built, though.”

‘Gambling’

The project’s current phase includes more than 1 million square feet of office, retail and residential space, plus green space for parks, parking and public space; about 500,000 square feet of development have been completed so far, which include City Garage, Sagamore Spirit Distillery, Rye Street Tavern and a portion of a new bike path. In addition to MAG and MacFarlane Partners and Sagamore Ventures, Goldman Sachs also is a partner.

Greg LeRoy, founder and executive director of Good Jobs First, a research organization that focuses on state and local economic development subsidies, called Port Covington a major risk. His organization has for decades criticized the over-subsidization of retail space; just look at the many vacant malls and strip shopping centers, he said.

“Now, too, demand for office space is down due to the rise of telecommuting, especially due to COVID,” he said.

The risks of subsidizing commercial space are far too great for cities, LeRoy added, and not worth “gambling” public dollars “on excess, fragile capacity,” unless it’s a grocery store in a food desert. He said even if the city isn’t technically responsible for covering potential bond shortfalls in the future, rarely do cities and jurisdictions allow them to default and end up paying for them anyway.

Gilmartin said her vision for Port Covington does not include room for failure. Her approach factors in long-term patterns and trends, including a changing economy and workforce, she said.

You don’t get an opportunity in our business to create a brand new place that often because you need to have that kind of square footage,” she said. “It’s a little different than putting up an office building, right? Because everything’s going to have to be thought through that much more intensely.”

This story was updated to include further comment from Weller Development Partners.