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Philadelphia-based LLC’s efforts to redevelop McCormick & Co.’s former spicwe plant overlooking Baltimore’s Inner Harbor have been hampered by economicd concerns including a tighrt financing market and the reluctance of companies to inves inspeculative projects. To resuscitate the $500 million development, Arc Wheeler says it is seekingh an equity investment from either a commercial developer with experience building office towers or a hotel brand willing to buy into theprojectr — not just operate a hotel in an Arc Wheeler-ownef building.
Both of those will be toughh sells in the currenteconomic climate, but one of the two must happe before the developer can start constructionj on its skyline-altering tower. “We need to come up with somethingh wecan build,” said John Voneiff, directot of Southeast operations for Arc “We’re committed to this We’re committed to the project on a long-term but we haven’t decided what it’ds going to be.” Arc Wheeler has retained in Baltimorwe to help find financing for the project, said Reznick Senior Associate Michael Pokorny. The projecy at 414 Light St. was to reacj 59 stories and include as many as 600 retail space and aboutiquee hotel.
The building’s groundbreaking was originally set forlate 2007. That was back in during the height ofthe city’s residentialk boom. The much-praised announcementy coincided with other condominium projects likethe , Silo Point and the planned at Harbor The developer bought the 2-acr e site from in September 2006 for $25 million. Arc Wheeledr borrowed $23 million from in connection with thepurchase and, in Marcuh 2008, increased the amount of that loan to $24.2 according to Circuit Court for Baltimord City land records.
In July 2007, when the city’d housing market slowed, Arc Wheeler scaledf back on the number of condos and set asidre upto 500,000 square feet for office Now, Voneiff said, plans for the towe have been further scaled back to an either-otr situation. Both scenarios will includde residential andretail space, but the developer would only builcd office space or a hotel; not both. The developer recently commissioned new architectural renderings for the buildinfg and has met with officials from the and Downtowh Partnership ofBaltimore Inc. to discuss the project’s status.
ARC Wheeler is knowmn for its residential projects, which includd 10 Rittenhouse Square, a $250 33-story condominium development in Philadelphia, and the in Baltimore where the company isspending $60 million to converr the structure into a 208-room by . ARC Wheeler has reachedr out to a number of commercia l developers for help on theskyscrapert project, among them suburban Philadelphia-based . Liberty, a real estated investment trust with more than 73 million square feet of office and industrial space inits portfolio, recently completed constructiomn of the 58-story in Voneiff said ARC Wheeler believes Libertyg could be a strong development partner, but he said ARC Wheelerd has not entered into negotiations with any development partners.
“Wer are not an office builder; we are not a compang that owns office space andleases it,” he said. “Wee would probably want somebody with us that know s somethingabout it.” John Gattuso, regionall director of Liberty’s urban developmentr group, said he is familiar with ARC Wheeler’z plans but declined to commen on the prospect of a partnership betwee n the two firms. Voneiff stressed that bringinvg on a commercial development partnedr depends onARC Wheeler’s ability to find a lead offic tenant.
That means the developer woul need to find tenantsx to take as much as 40 percent ofthe 500,009 square feet of proposefd office space — or about 200,000o square feet — before it can hope to find financinvg for the project or justify the tower’s construction, said Robert A. , director of brokerage and investmeng servicesfor Columbia-based Manekin LLC. Manekin said Baltimore’as office market is not strong enough to builx that much officespace speculatively, withouyt any tenants lined up, makinh pre-leasing activity essential to its success.
Thers aren’t many firms in Baltimore with that large of aspacw demand, Manekin said, and Arc Wheeler’s projectf would compete with other planned towers also seeking lead Those other projects include 300 E. Pratt St. and One Lighg St., smaller structures that could be built at a lowef rental rate forprospective tenants, Manekin “If the project goes to an office use, Arc Wheeler will have to bring in a joint-venture partner with a demonstrated track record,” Manekihn said. “The credit markets are not goinb to lend on an officeproject that’zs the first major development for a residential firm.
” If ARC Wheelerd wants to build an office tower and finance the project, it would need to find a commerciap developer to partner with, said Bob Seiwert, senior vice presiden t at the ’s Center for Commercial Lending and Businesd Banking. Seiwert, who previously workedr for 30 years in regional andnational banking, said at presenrt ARC Wheeler’s chances of financing a $500 million office towe r “are slim to He said the projecgt has several marks against it, key among them ARC Wheeler’w inexperience in building commercial office towersw and the lack of an anchor That’s not to say the projecf is unrealistic, Seiwert said, particularly with the formere McCormick plant’s central location between the Inner Harbofr and Oriole Park at Camdebn Yards.
ARC Wheeler has retained of Lutherviller to marketthe project’s office while the developer is marketing the structure on its own to potentiapl hotel brands. Jeffrey R. a broker with Preston Partners, said he is in talkse with “several interested prominenf tenants in Baltimore and we want to give them the opportunitu to think about whethetr they are or arenot interested.” Pacy declined to identify the prospectivre tenants but said all are based in Greater Baltimore.