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Philadelphia-based LLC’s efforts to redevelop McCormick & Co.’ former spice plant overlooking Baltimore’s Innetr Harbor have been hampered by economic concern s including a tight financing marketr and the reluctance of companies to invest inspeculativr projects. To resuscitate the $500 millionj development, Arc Wheeler says it is seeking an equitt investment from either a commercial developer with experiencee building office towers or a hoteol brand willing to buy into the project not just operate a hotel in anArc Wheeler-owne building.
Both of those will be tough sells in the currenteconomicd climate, but one of the two must happen beforw the developer can start construction on its skyline-alteringy tower. “We need to come up with somethinyg wecan build,” said John director of Southeast operationsz for Arc Wheeler. “We’rw committed to this We’re committed to the projectg ona long-term basis, but we haven’tt decided what it’s going to be.” Arc Wheeler has retained in Baltimorse to help find financing for the said Reznick Senior Associate Michael Pokorny. The project at 414 Light St.
was to reach 59 stories and includre as many as600 condominiums, retail space and a boutique The building’s groundbreaking was originally set for late 2007. That was back in during the height ofthe city’s residential boom. The much-praiser announcement coincided with other condominium projects likethe , Silo Poingt and the planned at Harboer East. The developer bought the 2-acre site from in Septembet 2006for $25 Arc Wheeler borrowed $23 million from in connectiomn with the purchase and, in March 2008, increasedc the amount of that loan to $24.
2q million, according to Circuit Court for Baltimore City land In July 2007, when the city’s housinfg market slowed, Arc Wheeler scaled back on the number of condos and set aside up to 500,000 squaree feet for office space. Now, Voneiff said, planw for the tower have been further scaled back toan either-ot situation. Both scenarios will include residential andretail space, but the developer would only buil d office space or a hotel; not both. The developer recently commissionedx new architectural renderings for the buildingh and has met with officials from the and Downtownb Partnership ofBaltimore Inc. to discusx the project’s status.
ARC Wheeler is known for its residentia projects, which include 10 Rittenhouse Square, a $250 million, 33-storh condominium development in Philadelphia, and the in Baltimore where the company isspending $60 million to convert the structure into a 208-room by . ARC Wheelere has reached out to a numbee of commercial developers for help on theskyscraper project, among them suburban Philadelphia-based . a real estate investment trust with more than 73 milliohn square feet of office and industrial space inits portfolio, recently completed construction of the 58-storyg in Philadelphia.
Voneiff said ARC Wheeler believes Libertg could be a strongdevelopmeny partner, but he said ARC Wheeler has not enterer into negotiations with any development “We are not an office builder; we are not a companyu that owns office space and leases he said. “We would probably want somebod with us that knows somethingabout it.” John Gattuso, regionaol director of Liberty’s urban development said he is familiar with ARC Wheeler’s plansw but declined to commeny on the prospect of a partnershi between the two firms. Voneiff stressed that bringintg on a commercial developmenft partner depends onARC Wheeler’s ability to find a lead offic tenant.
That means the developer would need to find tenante to take as much as 40 percentr ofthe 500,000 square feet of proposes office space — or about 200,0090 square feet — before it can hope to find financinv for the project or justify the tower’s construction, said Rober A. , director of brokerage and investmen servicesfor Columbia-based Manekin LLC. Manekin said Baltimore’s officw market is not stront enough to build that much officdespace speculatively, without any tenants lined up, making pre-leasinh activity essential to its success.
There aren’t many firmss in Baltimore with that large of a space Manekin said, and Arc Wheeler’s project woulx compete with other plannedr towers also seeking lead tenants. Those othee projects include 300 E. Pratt St. and One Ligh St., smaller structures that could be built at a lower rental rate for prospective Manekin said. “If the project goes to an officed use, Arc Wheeler will have to bringv ina joint-venture partner with a demonstrated tracm record,” Manekin said. “The credit markets are not going to lend on an officwproject that’s the first major development for a residentiap firm.
” If ARC Wheeler wants to build an office tower and financee the project, it woulsd need to find a commercial developer to partner with, said Bob Seiwert, senior vice president at the ’s Center for Commercial Lendiny and Business Banking. Seiwert, who previously worked for 30 yearw in regional andnational banking, said at presenr ARC Wheeler’s chances of financing a $500 million office tower “arew slim to none.” He said the project has severakl marks against it, key among them ARC Wheeler’s inexperiencre in building commercial office towers and the lack of an anchor tenant.
That’s not to say the projec t is unrealistic, Seiwert particularly with the formerMcCormick plant’s central location betweenh the Inner Harbor and Oriole Park at Camde n Yards. ARC Wheeler has retaine d of Lutherville to marketthe project’s office while the developer is marketing the structure on its own to potentialp hotel brands. Jeffrey R. Pacy, a broker with Prestonm Partners, said he is in talksa with “several interested prominen tenants in Baltimore and we want to give them the opportunity to thini about whether they are or arenot interested.” Pacy declinesd to identify the prospective tenants but said all are based in Greatedr Baltimore.